Document:

EXHIBIT
      10.12

    

     

    Dated:
      April 13, 2007

     

    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.
                ETLS 4-1

            	
              $72,000

            
	 	 

    

    ETOTALSOURCE,
      INC.

     

    Secured
      Convertible Debenture

     

    

     

    Due:
      April 13, 2009

     

    This
      Secured Convertible Debenture (the “Debenture”)
      is
      issued by ETOTALSOURCE,
      INC., a
      Colorado corporation (the “Obligor”),
      to
CORNELL
      CAPITAL PARTNERS, L.P.
      (the
“Holder”),
      pursuant to that certain Agreement (the “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 Seventy Two Thousand Dollars ($72,000) together with accrued
      but unpaid interest on or before April 13, 2009 (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 twelve percent (12%). 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
      4)
      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, with three (3) business days advance
      written notice (the “Redemption
      Notice”),
      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 Price at the time
      of
      the Redemption Notice. 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”).
      The
      Obligor shall deliver to the Holder the Redemption Amount on the third
      (3rd)
      business day after the Redemption Notice.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Notwithstanding
      the foregoing in the event that the Obligor has elected to redeem a portion
      of
      the outstanding principal amount and accrued interest under this Debenture
      the
      Holder shall still be entitled to effectuate Conversions as contemplated
      hereunder. 

     

    Security
      Agreements.
      This
      Debenture is
      secured by a security interest in all of the assets of the Company as evidenced
      by the Amended
      and Restated Security Agreement dated November 2, 2005 among the Obligor and
      the
      Holder (the
      “Security
      Agreement”).

     

    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 common stock or preferred stock without
      consideration or for a 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 a
      consideration less than such Common Stock’s Closing Bid Price determined
      immediately prior to it’s 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.

     

    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):

     

    (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 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)
      hereof),
      the Agreement, or any Transaction Document (as defined in Section
      4),
      which
      is not cured with in the time prescribed;

     

    (iii)    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

      
        
           

        

        
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    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;

     

    (iv)    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;

     

    (v)    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 “Primary
      Market”)
      and
      shall not again be quoted or listed for trading on any Primary Market within
      five (5) Trading Days of such delisting;

     

    (vi)    The
      Obligor or any subsidiary of the Obligor shall be a party to any Change of
      Control Transaction (as defined in Section
      4);
      

     

    (vii)    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; 

     

    (viii)    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; 

     

    (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

      
        
           

        

        
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    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)    (i)    Conversion
      at Option of Holder.

     

    (A)    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 4) (subject to the limitations on
      conversion set forth in Section
      3(a)(ii)
      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.

     

    (B)    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; or (3) the
      Obligor has failed to timely satisfy its conversion, then, at the option of
      the
      Holder, the Obligor, in lieu of delivering shares of Common Stock pursuant
      to
Section
      3(a)(i)(A),
      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 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.

      
        
           

        

        
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    (C)    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.

     

    (ii)    Certain
      Conversion Restrictions.

     

    (A)    The
      Company shall not effect any conversions of this Debenture and the Holder shall
      not have the right to convert any portion of this Debenture or receive shares
      of
      Common Stock as payment of interest hereunder to the extent that after giving
      effect to such conversion or receipt of such interest payment, the Holder,
      together with any affiliate thereof, would beneficially own (as determined
      in
      accordance with Section 13(d) of the Exchange Act and the rules promulgated
      thereunder) in excess of 4.99% of the number of shares of Common Stock
      outstanding immediately after giving effect to such conversion or receipt of
      shares as payment of interest. Since the Holder will not be obligated to report
      to the Company 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 Company 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
      4(a)(i)
      and, any
      principal amount tendered for conversion in excess of the permitted amount
      hereunder shall remain outstanding under this Debenture. 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 Company. Other Holders
      shall be unaffected by any such waiver.

     

    (b)    (i)    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. 

      
        
           

        

        
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    (ii)    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)(A)
      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)(A).
      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. 

     

    (c)    (i)    The
      Holder is entitled, at its option, to convert, and sell on the same day, at
      any
      time, until payment in full of this Debenture, all or any part of the principal
      amount of the Debenture, plus accrued interest, into shares of the Company’s
      common stock, no par value per share, at the price per share equal to the lesser
      of (a) $0.0018
      (the
“Fixed
      Price”)
      or
      (b) an amount equal to eighty percent (80%) of the lowest Closing Bid
      Price of the Common Stock for the five (5) trading days immediately preceding
      the Conversion Date Subparagraphs (a) and (b) above are individually
      referred to as a “Conversion
      Price”
and
      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 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

      
        
           

        

        
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    Conversion
      Price, then the 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 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 Conversion Price pursuant to this Section,
      if
      any such right, option or warrant shall expire and shall not have been
      exercised, the 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
      Conversion Price made pursuant to the provisions of this Section after the
      issuance of such rights or warrants) had the adjustment of the 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.

     

    (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 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 Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price),
      then, at the sole option of the Holder, the 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 Conversion Price at which this Debenture
      shall thereafter be convertible shall be determined by multiplying the
      Conversion Price in effect immediately prior to the record date fixed
      for

      
        
           

        

        
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    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.

     

    (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 maintain a share reserve of not less than one hundred percent
      (100%) of the shares of Common Stock issuable upon conversion of 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
      price
      calculations under this Section
      3
      shall be
      rounded to the nearest $0.0001.

     

    (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

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    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.

     

    (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.

     

    (d)    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.

     

    (e)    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.

     

    (f)    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.

     

    (g)    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:

            	
              eETotalSource,
                Inc.

            
	 	
              1510
                Poole Boulevard 

            
	 	
              Yuba
                City, California 95993

            
	 	
              Attention: Frank
                Orlando

            
	 	
              Telephone: (530)
                751-9615

            
	 	
              Facsimile: (530)
                674-4624

            
	 	 
	 	 
	
              If
                to the Holder:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street, Suite 3700

            
	 	
              Jersey
                City, NJ 07303

            
	 	
              Attention: Mark
                Angelo

            
	 	
              Telephone: (201)
                985-8300

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              With
                a copy to:

            	
              Troy
                Rillo, 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
      4.    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).

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock, no par value, of the Obligor and stock of any other class
      into
      which such shares may hereafter be changed or reclassified.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    “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.

     

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

     

    “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 Primary Market or
      the
      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
      (i) the Securities Purchase Agreement dated October 6, 2004 and any and all
      related agreements, documents or instruments thereto, (ii) the Securities
      Purchase Agreement dated August 19, 2005 any and all related agreements,
      documents or instruments thereto, including without limitation the Warrant
      dated
      August 19, 2005, (iii) the Securities Purchase Agreement dated November 2,
      2005
      and any other agreement delivered in connection therewith, including, without
      limitation, the Security Agreement, (iv) the Agreement dated December 21, 2006,
      and (v) all prior secured convertible debentures issued by the Obligor to the
      Holder.

     

    “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.

     

    Section
      5.    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.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Section
      6.    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
      7.    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
      8.    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
      9.    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
      10.    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
      11.    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.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Section
      12.    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
      13.    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
      14.    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.

     

    [SIGNATURE
      PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONLLY BLANK]

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

    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.

     

    
      	 	ETOTALSOURCE,
              INC.
	 	 	 
	 	By: 	
              /s/
                Frank Orlando

            
	 	 	
              Name: Frank
                Orlando

            
	 	 	
              Title: Chief
                Restructuring Officer

            

    

    

    

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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 Debenture No. ETLS 4-1 into Shares of Common Stock of
ETOTALSOURCE,
      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:

            	
            
	 	 
	
              Authorized
                Signature:

            	  

	
              Name:

            	   

	
              Title:

            	  

	
              Broker
                DTC Participant Code:

            	 
	
              Account
                Number:EXHIBIT
      10.1

    

    TURKS
      AND CAICOS ISLANDS

    

    REGISTERED
      LAND ORDINANCE 1967

     

    

    COMMERCIAL
      LEASE

    of

    Premises
      Consisting of

    All
      of the First Floor

    Commercial
      Building

    The
      Queen Angel Luxury Condominium Resort

     

     

    SAUNDERS
      & CO.

    P.O.
      Box 257

    Town
      Centre Mall 

    Providenciales

    Turks
      and Caicos Islands

    British
      West Indies

    Telephone:
      941-4500

    Facsimile:
      941-4533

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TURKS
      AND CAICOS ISLANDS

    

    REGISTERED
      LAND ORDINANCE 1967

    

    COMMERCIAL
      LEASE

    

    
      	
              TITLE
                NUMBERS

            	 	
              SECTION

            	 	
              ISLAND

            
	
              60713/90K57,
                90K58 & 90K59 

            	 	
              Cheshire
                Hall & Richmond Hill

            	 	
              Providenciales

            

    

     

    Particulars

    

    In
      this
      Lease the following expressions (where the context so admits) shall have the
      following meanings.

     

    
      	
              1.

            	
              DATE
                OF THIS LEASE

            	 	
              August
                1, 2006.

            
	 	 	 	 
	
              2.

            	
              THE
                LESSOR

            	 	
              CARL
                ENTERPRISES LTD.,
                2nd
                Floor, Commercial Building, The Queen Angel Luxury Condominium Resort,
                Providenciales, Turks and Caicos Islands, British West Indies.
                

              Telephone:
                941-9707 and Facsimile: 941-9708

              (which
                shall be the address and facsimile number for service of all notices
                to
                the Lessor pursuant to this Lease).

            
	 	 	 	 
	
              3.

            	
              THE
                LESSEE

            	 	
              Rounders
                Ltd. of PO Box 97,

              Providenciales,
                Turks and Caicos Islands, British West Indies.

              Telephone:
                946-8244and Facsimile: 941-4565

              (which
                shall be the address and facsimile number for service of all notices
                to
                the Lessee pursuant to this Lease).

            
	 	 	 	 
	
              4. 

            	
              THE
                RESORT 

            	 	The Queen
              Angel
              Luxury Condominium Resort, Turtle Cove, Providenciales, Turks and Caicos
              Islands. 
	 	 	 	 
	
              5. 

            	
              THE
                BUILDING 

            	 	
              The
                three-storey commercial building at the Resort. 

            
	 	 	 	 
	
              6.

            	
              THE
                PREMISES

            	 	
              The
                land comprised in Title Numbers 60713/90K57, 90K58 & 90K59, Cheshire
                Hall & Richmond Hill, Providenciales, being the three (3) strata lots
                situated on the ground floor of the Building, more particularly shown
                edged in red on the plan attached hereto as Schedule “A” (for the purposes
                of identification only).

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              DATE
                OF COMMENCEMENT OF THE TERM

            	 	
              August
                1, 2006. 

            
	 	 	 	 
	
              8.

            	
              TERM

            	 	
              Five
                (5) years from the Date of Commencement of the Term.

            
	 	 	 	 
	
              9.

            	
              EXPIRY
                DATE

            	 	
              July
                31, 2011, subject to the Renewal Right. 

            
	 	 	 	 
	
              10.

            	
              THE
                RENT

            	 	
              $11,000.00
                per calendar month payable in advance throughout the first two (2)
                years
                of the Term and $13,000.00 per calendar month payable in advance
                throughout the final three (3) years of the Term. 

            
	 	 	 	 
	
              11.

            	
              DATE
                OF FIRST PAYMENT OF RENT

            	 	
              August
                1, 2006, payment of which the Lessor hereby
                acknowledges.

            
	 	 	 	 
	
              12.

            	
              LAST
                MONTH’S RENT

            	 	
              The
                Lessor acknowledges receipt of the sum of $13,000.00 from the Lessee
                which
                the Lessor shall apply in payment of the last month’s Rent due pursuant to
                the terms of this Lease.

            
	 	 	 	 
	
              13.

            	
              DUE
                DATE FOR SUBSEQUENT PAYMENTS OF RENT

            	 	
              1st
                day of each month during the Term following the Date of First Payment
                of
                Rent. The Lessor acknowledges receipt of the sum of $11,000.00 from
                the
                Lessee which the Lessor shall apply in payment of the Rent for the
                month
                of August, 2006. The Lessor acknowledges receipt of the further sum
                of
                $6,000.00 from the Lessee which the Lessor shall apply in partial
                payment
                of the Rent due on September 1, 2006. 

            
	 	 	 	 
	
              14.

            	
              PERMITTED
                USER

            	 	
              Only
                for business purposes as a club-gaming room - poker room and all
                other
                purposes incidental thereto including, without limitation, the
                installation of gaming machines and gaming tables, subject to the
                Lessee
                obtaining all required business and other licences and consents to
                permit
                it to do so. In no event shall the Premises or any part or parts
                thereof
                be used as a café or restaurant. Notwithstanding the foregoing, the
                Premises may include a bar for the purposes of providing patrons
                of the
                gaming facility with refreshments.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              15.

            	
              RENEWAL
                RIGHT

            	 	
              The
                Lessee shall have the right to renew this Lease for a further term
                of five
                (5) years from the expiry of the Term upon the terms and conditions
                contained in clause 18 hereof.

            
	 	 	 	 
	
              16. 

            	
              RENEWAL
                TERM

            	 	
              The
                five (5) year renewal term resulting from the exercise by the Lessee
                of
                the Renewal Right. 

            

    

     

    NOW
      THIS DEED WITNESSETH as
      follows:-

     

    
      	1.0	
              IN
                THIS LEASE

            

    

    

    
      	1.1	
              The
                details, descriptions and definitions appearing in the Particulars
                set out
                above  shall
                be included in, and form part of, this Lease.

            

    

    

    
      	1.2	
              If
                there shall be more that one person included in the expression “Lessee”
                the  covenants
                by them shall be joint and several.

            

    

    

    
      	1.3	
              Where
                any act is prohibited under this Lease, the Lessee shall not allow
                or
                suffer  such
                act to be done.

            

    

    

    
      	1.4	
              Wherever
                in this Lease the word “Term” is used, it shall be construed to include
                 the
                Renewal Term where the Lessee shall exercise the Renewal
                Right.

            

    

     

    
      	2.0	
              DEMISE

            

    

     

    IN
      CONSIDERATION of
      the
      Rent and covenants on the Lessee’s part herein  contained,
      the Lessor HEREBY
      DEMISES unto
      the
      Lessee the Premises TO
       HOLD
      unto
      the
      Lessee, its successors and permitted assigns, for the Term,  subject
      nevertheless to the covenants, conditions and reservations hereinafter
 contained.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    COVENANTS

    

    
      	3.0	
              RENT

            

    

    

    
      	3.1	
              The
                Rent, as set out in the Particulars to this Lease, shall be payable
                monthly in  advance
                without deduction or set off on the due date of each month as set
                out
                in the
                Particulars to this Lease.

            

    

    

    
      	3.2	
              If
                the Rent is unpaid for seven (7) days after the due date, the Lessee
                will
                pay a  late
                payment fee equal to five per cent (5%) of the amount of the unpaid
                Rent
                and,  in
                addition, will pay to the Lessor interest on the overdue amount at
                the
                rate of one
                per cent (1%) per month from the due date thereof until the date
                of
                actual payment.

            

    

    

    
      	3.3	
              No
                later than the 31st
                day of December, 2006, the Lessee shall provide the Lessor with
                a series of post-dated cheques representing the Rent for the balance
                of
                the  first
                year of the Term and, thereafter, on the anniversary date of the
                Date
                of Commencement
                of the Term, the Lessee shall provide the Lessor with a series
                of post-dated
                cheques representing the Rent payable hereunder for the
                ensuing twelve
                (12) months.

            

    

     

    
      	4.0	
              LESSEE’S
                OBLIGATIONS

            

    

    

    
      	4.1	
              The
                Lessee covenants with the Lessor to punctually pay the Rent contemplated
                by  clause
                3.1 hereof, the Stamp Duty contemplated by clause 31.1 hereof and
                all
                 other
                amounts whatsoever contemplated by the terms hereof to be paid by the
                 Lessee.

            

    

    

    
      	4.2	
              The
                Lessee further covenants with the Lessor as
                follows:-

            

    

     

    (a)
       Not
      to
      part with or share the possession of the Premises or any part thereof
 or
      assign
      its interest therein or sublet any part of the Premises at any time during
       the
      Term
      without the previous written consent of the Lessor, such consent not to
 be
      unreasonably withheld. 

    

    (b) To
      permit
      the Lessor and/or its agents at all reasonable times on written  notice
      to
      enter the Premises and to view the state and condition thereof, and  further
      upon reasonable written notice to permit the Lessor, or its agents or
 workmen
      at all reasonable times to enter upon the Premises to effect such repairs
 or
      renovations to the Premises for which the Lessor is liable pursuant to the
       terms
      of
      this Lease.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    (c)
       Not
      to
      make any structural alterations in the Premises without first  obtaining
      the written consent of the Lessor and the Strata Corporation in each
 instance,
      and not to make any other alterations, additions or improvements to the
 Premises
      without first obtaining the written consent of the Lessor in each  instance,
      no such consents of the Lessor to be unreasonably withheld. 

     

       (d)
       Not
      to
      affix any antennae, cord, speaker, light, sign or other object to any
 part
      of
      the exterior of the Premises or in any window or windows of the Premises
 without
      the written consent of the Lessor and the Strata Corporation.

    

    (e)
       To
      effect
      all repairs that the Lessee is obligated to do pursuant to the terms
 of
      clause
      4.2(f) hereof as the same may become necessary and to indemnify and  keep
      indemnified the Lessor against any and all claims for any and all loss or
 damage
      to
      the Premises arising out of or caused by the negligence of the Lessee,
 its
      servants, agents, invitees or licensees.

    

    (f)
       Throughout
      the Term, to keep the Premises and all fixtures, fittings and  equipment
      (including, without limitation, all doors, windows, locks, drains and
 other
      pipes) in the same state of repair and order as the same are on the Date of
       Commencement
      of the Term, fair wear and tear excepted, and from time to time  replace
      such of the said fittings and equipment as may be broken, damaged or
 destroyed
      during the Term, fair wear and tear excepted, with other articles equally
 valued
      to
      the satisfaction and approval of the Lessor, and not to remove the said
 fittings
      and equipment or any part thereof from the Premises nor to lend or part
 with
      possession of the same either directly or indirectly to any person.

    

    (g)
       Not
      to do
      or suffer any waste, damage, disfiguration or injury to the  Premises
      or the fixtures, fittings, or equipment therein and not to commit, suffer
 or
      permit
      any part of the Premises to be used for any illegal, immoral, dangerous,
 noxious
      or offensive purpose or any purpose that shall be deemed by the Lessor to
 be
      a
      nuisance to the Lessor, other tenants, owners or occupants of residential
 strata
      lots in the Resort or any of their agents, invitees, customers and
      licensees.

    

    (h) except
      as
      hereinafter provided, not to use any traveling or flashing lights,  or
      any
      signs, television or other audio-visual mechanical devices in any manner so
       that
      they
      can be seen outside of the Premises, and not to use any loudspeakers,
 televisions,
      phonographs, radios or other audio-visual or mechanical devices in a
 manner
      so
      that they can be heard outside of the Premises and, where the Lessee
 shall
      be
      in breach of this covenant, the Lessor shall be entitled to remove such
 equipment
      without notice to the Lessee at the cost of the Lessee (including the
 making
      good, in each case, of any damage done in such removal).  Notwithstanding
      the foregoing, the Lessee shall be entitled to install at its sole  expense
      and maintain throughout the Term the following signage: (i) one
      twenty- four
      inch
      (24”) metal logo with eighteen inch (18”) metal lettering above the  entrance
      door and one twenty-seven inch (27”) by forty-one inch (41”) light box
 on
      a
      freestanding pole adjacent to the entrance from the Lower Bight
      Road.

     

       (i)
       Not
      to
      keep the property of any third party on the Premises without  permission
      of the Lessor, save and except such property that is necessary for the
 proper
      functioning of the Lessee’s business.

    

    (j)
       Not
      to
      keep or permit any pets or animals on the Premises.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (k)
       Not
      to
      keep, store or permit to be kept or stored any object whatsoever on  the
      common walkways, parking area or other areas surrounding the Premises.

    

    (l) Upon
      the
      expiration or sooner determination of the Term to peaceably  yield
      up
      and surrender the Premises together with all additions and improvements
 made
      thereto to the Lessor in as good and substantial repair and condition as they
       were
      at
      the Date of Commencement of the Term, fair wear and tear and the  Lessor’s
      obligations excepted, together with all improvements whether  installed
      prior to or after the Date of Commencement of the Term, and to remove
 all
      furniture, furnishings and other chattel items belonging to the Lessee or
 brought
      upon the Premises by the Lessee, it being understood and agreed that if
 any
      furniture, furnishings or other chattel items belonging to the Lessee shall
      be
 left
      on
      the Premises upon the expiration or sooner determination of the Term, the
 Lessee
      shall be deemed to have abandoned same and the Lessor shall be entitled
 to
      remove
      and dispose of the same as it deems fit at the cost of the Lessee.

    

    (m)
       Not
      to
      suffer execution to be levied at the Premises.

    

    (n) Not
      to
      permit the washing or repair of any kind of vehicles on the common  areas
      surrounding the Premises.

     

       (o)
       To
      place
      garbage cans only in the areas specified by the Lessor or the  Strata
      Corporation for the Lessee’s own use or to dispose of garbage only in areas
 specified
      by the Lessor or the Strata Corporation, whether solely for the Lessee’s
 use
      or
      for use in common with other  tenants
      and occupants of the Resort.

    

       (p) To
      be
      responsible for and pay when due all fees, rates, taxes, utility  charges
      including, without limitation, telephone, cable television, water (whether
       pursuant
      to a service charge or otherwise) and electric current supply for the
 Premises
      and other services payable in respect of the Premises during the  continuance
      of this Lease and further agrees that Lessor shall not be responsible
 for
      any
      damages directly or indirectly resulting from the provision of such  services
      or any failure of the suppliers thereof to provide same to the
      Premises.

    

    (q) To
      be
      solely responsible for the repair and maintenance of air-conditioning
 units
      serving the Premises, but not their replacement.

    

    (r) At
      all
      times during the Term to observe and comply in all respects with the
 provisions
      and requirements of any and every enactment (which expression in this
 context
      includes any and every Ordinance of the Turks and Caicos Islands already
 or
      hereafter passed and every order, regulation and by-law already or hereafter
      to
 be
      made
      under or in pursuance of any such Ordinance) so far as they relate to or
 affect
      the Premises or any additions or improvements thereto or the user of the
 Premises,
      including without limiting the generality of the foregoing, obtaining all
 development
      permissions and building permits and to serve all notices as may be  required
      for carrying out any improvements to the Premises.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (s) Not
      at
      any time during the Term do or omit or suffer to be done or  omitted
      on or about the Premises any act or thing by reason of which the Lessor
 may
      under
      any enactment incur or have imposed or become liable to pay any  penalty,
      damages, compensation, costs, levy, tax, charges or expenses
      whatsoever.

    

    (t) Not
      at
      any time during the Term do or omit or suffer to be done or  omitted
      any act, matter or thing whatsoever the doing or omission of which would
 make
      void
      or voidable any policy of insurance effected by the Lessor or the Strata
 Corporation
      in respect of the Building or the Resort or which have the effect of
 causing
      the premiums payable in respect of any such insurance to be increased
 beyond
      the normal rates therefor.

    

    (u)
       The
      Lessee acknowledges and agrees that the parking area located  adjacent
      to the Premises is provided for use in common with all owners, tenants
 and
      occupants of the Resort and their servants, agents, invitees and
      licensees.

    

    (v) To
      comply
      with the By-laws of the Strata Corporation and all rules  and
      regulations enacted by the Strata Corporation in respect of the Resort and,
       without
      limiting the generality of the foregoing, to provide to the Strata  Corporation
      a key to the Premises and each and every part thereof such that the  Strata
      Corporation has access to the entire Premises as contemplated by the said
 By-laws
      and not to change the locks to the Premises or any part thereof without
 the
      consent of the Strata Corporation.

    

    (w) That
      it
      has full right and authority to enter into this Lease and to  perform
      its obligations as herein contained, and that the execution of this Lease
 has
      been
      duly authorized by the board of directors of the Lessee.

    

    
      	5.0	
              LESSOR'S
                OBLIGATIONS

            

    

    

    
      	5.1	
              The
                Lessor agrees with the Lessee as
                follows:

            

    

     

       (a)
       That
      so
      long as the Lessee shall pay the Rent hereby reserved and perform  its
      other
      covenants and obligations herein contained, the Lessee may peaceably
 hold
      and
      enjoy the Premises during the Term without any interruption by the  Lessor
      or
      any person rightfully claiming through, under or in trust for it or by title
       paramount.

    

    (b)
       The
      Lessor or the Strata Corporation shall maintain and repair the  structure
      of the Building, the exterior walls, roof, electrical wires installed and
 other
      installations of a structural nature, originally provided by the
      Lessor.

    

    (c) To
      pay
      all strata fees and insurance charges imposed by the Strata  Corporation
      from time to time payable in respect of the Premises to the Strata  Corporation.

    

    (d)
       Subject
      to clause 5.1(e) hereof, upon the destruction or damage of the  Premises
      or and part or parts thereof by an insured risk, to lay out all policy
 moneys
      recovered by it in the reconstruction or reinstatement of the Premises,
 provided
      however that no Rent shall be payable by the Lessee during the said  period
      of
      such destruction or damage, and provided further that if in the  reasonable
      opinion of the Lessor it is uneconomical or impossible to reconstruct
 or
      reinstate the Premises, the Lessor shall have the right to terminate this Lease
       and,
      upon
      such termination, repay to the Lessee any Rent paid in respect of that
 period
      subsequent to the occurrence of the insured risk. In no case shall the Lessor
       be
      liable
      to the Lessee, its servants, invitees or licensees for any loss or damage
 occasioned
      by such destruction or damage as set forth in this clause.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

       (e) In
      the
      event of any destruction or damage to the Premises or the Building  which
      renders the Premises or any part thereof unfit for use or occupation and the
       Lessee
      shall desire to determine this Lease, and on giving the Lessor no less than
       fourteen
      (14) days’ previous notice in writing then in such case this Lease and
 everything
      herein contained shall cease and determine but without prejudice to  any
      claim
      by either party against the other in respect of any antecedent breach of
 any
      covenant or condition herein contained.

    

       (f) In
      the
      event that the Premises or access thereto shall at any time during the
 Term
      be
      unavailable for use by the Lessee for a period in excess of seven (7) days
       due
      to
      any default of the Lessor, then the Rent hereby reserved and payable
 hereunder
      shall be suspended in proportion to the extent to which the  Premises
      or access thereto are unavailable for use until the Premises or access
 thereto
      shall again become available, provided that in the event such availability
       shall
      continue for a period of thirty (30) days, the Lessee shall thereupon be
 entitled
      at its option to terminate this Lease.

    

    
      	6.0	
              DEFAULT
                AND RIGHT TO RE-ENTER

            

    

    

    
      	6.1	
              In
                case any Rent shall not be paid on the due date thereof or if default
                shall be  made
                by Lessee in any of the other covenants or agreements herein contained
                and
                 such
                non-payment or default (as the case may be) shall continue for ten
                (10)
                days  after
                service of a notice in accordance with Section 56 of the Registered
                Land
                 Ordinance
                1967, then it shall be lawful for the Lessor, by its agents, attorneys,
                 successors
                or assigns to re-enter and repossess the Premises and require the
                 Lessee
                and each and every occupant to vacate the Premises, and upon re-entry
                as
                 aforesaid,
                possession of the Premises shall thereupon automatically vest in
                the
                 Lessor
                and this Lease shall terminate.

            

    

    

    
      	6.2	
              If
                as a result of an inspection or otherwise, the Lessor becomes aware
                of any
                 breach
                of agreement or condition by the Lessee, the Lessor may give notice
                in
                 writing
                to the Lessee requiring the Lessee to remedy the breach, and within
                ten
                 (10)
                days after the giving of such notice the Lessee shall remedy such
                breach
                in  accordance
                with the notice to the reasonable satisfaction of the Lessor.
                

            

    

     

    
      	7.0	
              NOTICE

            

    

    

    
      	7.1	
              Any
                notice permitted, required or contemplated by this Lease to be given
                by
                 either
                party hereunder to the other shall be deemed duly served and given
                if
                 delivered
                by hand against receipt or transmitted by facsimile transmission
                to the
                 other
                party at its address and/or facsimile number shown in the Particulars.
                In
                the  case
                of delivery by hand, receipt of such notice shall be deemed to have
                occurred  on
                delivery. In the case of facsimile transmission, receipt shall be
                deemed
                to take  place
                the day following apparently successful transmission of such
                facsimile.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    
      	8.0	
              CONDITION
                OF PREMISES

            

    

    

    
      	8.1	
              The
                Lessee taking possession of the Premises shall be conclusive evidence
                against  the
                Lessee that the Premises and all fixtures and fittings therein were
                in
                good  order
                and repair at the Date of Commencement of the Term and that no
                 promise
                or undertaking of the Lessor to alter, remodel or improve the Premises
                 and
                no representations concerning the condition of the Premises have
                been made
                 by
                the Lessor save as herein expressly set forth. The Premises are leased
                to
                the  Lessee
                as unfurnished.

            

    

    

    
      	8.2	
              The
                Lessee acknowledges that it is solely responsible for, and has satisfied
                itself  that,
                the Premises may be used for the purposes intended by the Lessee
                and that
                 the
                Lessor has made no representations nor given any warranties that
                such
                usage  is
                permissible under law.

            

    

     

    
      	9.0	
              USE
                OF PREMISES AND CONDUCT OF
                BUSINESS

            

    

    

    
      	9.1	
              The
                Lessee shall not allow the Premises to be used for any purpose which
                will
                 increase
                the insurance rates thereon and will not permit to be kept or used
                therein
                 any
                inflammable liquid or explosive, and in the event of the insurance
                rates
                of the  Lessor
                or the Strata Corporation being increased by reason of things brought
                on
                 the
                Premises or the Lessee’s use of the Premises, the Lessee shall on
                 demand
                pay to the Lessor as additional rent the amount of such increase;
                 providing
                that if any insurance policy upon the Building shall be cancelled
                by the
                 insurer
                by reason of the use or occupation of the Premises by the Lessee,
                and the
                 Lessee
                declines or is unable to provide a substitute policy of insurance
                issued
                by  an
                insurer acceptable to the Lessor within the period of notice of such
                cancellation  as
                provided by the Lessor’s or the Strata Corporation’s insurers, as the case
                may  be,
                then the Lessor may, at its option, terminate this Lease forthwith
                by
                giving  notice
                in writing of its intention to do so and, thereupon, any other payments
                for  which
                Lessee is liable under this Lease shall be apportioned and paid in
                full to
                the  date
                of such termination and the Lessee shall immediately upon receipt
                of such
                 notice
                deliver up possession of the Premises and each and every part thereof
                to
                the  Lessor,
                and the Lessor may re-enter and take possession of the same. For
                greater
                 certainty,
                under no circumstances shall alcoholic beverages be considered as
                 inflammable
                liquids.

            

    

    

    
      	9.2	
              The
                Lessee shall occupy the Premises from and after the Date of Commencement
                 of
                the Term and thereafter throughout the Term shall conduct the business
                set
                out  in
                sub-clause 14 of the Particulars continuously, diligently and actively
                in
                the  whole
                of the Premises. In the conduct of its business the Lessee shall
                operate
                its  business
                with due diligence and in such a manner as not to disturb the Lessor,
                 other
                tenants, owners or occupants of residential strata lots in the Resort
                or
                any of  their
                agents, invitees, customers and
                licensees.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    
      	10.0	
              ORDINANCES

            

    

    

    
      	10.1	
              The
                Lessee shall, at its expense, comply with all laws, orders, ordinances
                and
                 regulations
                of all governmental agencies in the Islands, including payment of
                any
                 government
                fees and/or stamp duties owing pursuant to the execution and  enforcement
                of this Lease and the Lessee’s occupation and use of the Premises.
                

            

    

     

    
      	11.0	
              INSURANCE

            

    

    

    
      	11.1	
              The
                Lessor shall not be responsible for any damage to any person in or
                about
                the  Premises
                or to any merchandise, goods, chattels, machinery, fixtures, fittings
                or
                 equipment
                contained therein, or to any person in the Building with the express
                or
                 implied
                consent of the Lessee or in respect to the Lessee’s occupation, except
                 where
                such damage is as a result of the gross negligence of the Lessor,
                its
                 employees
                or agents.

            

    

     

    
      	11.2	
              The
                Lessee shall throughout the entire Term, at its sole cost and expense,
                take out  and
                keep in force and effect in the name of the Lessee and, in the case
                of the
                 comprehensive
                general liability insurance, in the names of the Lessee and the
                 Lessor,
                the following  insurance:

            

    

    

    (a) insurance
      upon property of every description and kind owned by the  Lessee
      or
      for which the Lessee is legally liable situated from time to time within
 the
      Premises in an amount not less than the full replacement cost (new) thereof
       against
      destruction or damage by fire, explosion, flooding, storm, tempest or other
       acts
      of
      nature and such other additional perils as are usually covered by insurance
       policies
      in the Turks and Caicos Islands covering commercial buildings and  property.

    

    (b) comprehensive
      general liability insurance in the amount of no less than  One
      Million United States Dollars (US$1,000,000.00) against claims for personal
       injury,
      death, property damage or other loss arising out of the negligence of the
 Lessee
       or
      the
      Lessor and their respective employees, servants and agents in and  about
      the
      Premises.

    

    All
      policies of insurance contemplated herein shall be taken out with insurers
       acceptable
      to the Lessor, acting reasonably, and shall contain a provision  requiring
      the insurers to notify the Lessor not less than thirty (30) days’ prior to
 any
      material change, cancellation or termination thereof. The Lessee shall duly
       and
      promptly pay all premiums for the insurance contemplated in this clause 11.2.
       Prior
      to
      the Commencement Date of the Term, the Lessee shall provide the Lessor
 with
      certificates of insurance or certified copies of each of the aforesaid policies
       and,
      further, shall from time to time during the Term as such policies are renewed,
       provide
      the Lessor with updated certificates of insurance or certified copies of
 each
      such
      renewal policy.

     

    
      	12.0	
              DAMAGE
                TO THE PREMISES

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	12.1	
              In
                the event of damage to or destruction of the Premises by fire, flooding,
                storm  or
                other insured cause such that the Premises become uninhabitable (such
                damage  or
                destruction not being as a result of the Lessee’s act or negligence, or
                the act or  negligence
                of the Lessee’s servants, agents or invitees), this Lease shall terminate
                 on
                that date and the Lessor will refund to the Lessee the balance of
                the
                unused  portion
                of the Rent and the Security
                Deposit.

            

    

    

    
      	12.2	
              The
                Lessee acknowledges that the Building and the Premises form part
                of a
                Strata  Plan
                and that the Strata Corporation (and not the Lessor) has the obligation
                to
                 insure
                against damage to or destruction of the
                Premises.

            

    

     

    
      	13.0	
              LIENS

            

    

    

    
      	13.1	
              The
                Lessee shall promptly pay when the same fall due all accounts for
                labour
                and  material
                done or supplied at the Lessee’s request for all improvements,
                 installations,
                partitions, fixtures or work done by or for it on the Premises and
                will
                 not
                suffer or permit any encumbrance, lien or charge to arise on the
                Premises
                in  respect
                thereof.

            

    

     

    
      	14.0	
              LIGHTING

            

    

    

    
      	14.1	
              The
                Lessee agrees to install and replace from time to time, as required,
                all
                electric  light
                bulbs, fluorescent tubes and other lighting in the Premises at the
                Date of
                 Commencement
                of the Term and shall maintain and repair all light fixtures in the
                 Premises;
                provided that the Lessee may remove any light bulbs, fluorescent
                tubes
                 and
                other lighting (but not light fixtures) installed by the Lessee during
                the
                Term  on
                the expiry of the Term.

            

    

     

    
      	15.0	
              SUBORDINATION

            

    

    

    
      	15.1	
              The
                Lessee agrees that this Lease shall be subject and subordinate to
                any
                 mortgage
                or charge which is now in place against the Premises or which the
                 Lessor
                shall hereafter grant, and the Lessee agrees to execute such  postponements,
                acknowledgments of priority, attornment agreements and other  documents
                as any lender to the Lessor reasonably requests as may be desirable
                or
                 necessary
                to give effect to the foregoing
                provisions.

            

    

     

    
      	16.0	
              NO
                DIMUNITION OF RENT

            

    

    

    
      	16.1	
              Except
                as expressly provided otherwise in this Lease, there shall be no
                allowance
                 to
                the Lessee for diminution of Rent on account of, and no liability
                on the
                part of  the
                Lessor for, any inconvenience, personal annoyance, illness, or injury
                to
                Lessee  arising
                from acts of God or Queen’s enemies. The Lessor agrees to use its best
                 endeavours
                to do any work required by the terms of this Lease to be done by
                it in
                 a
                manner so as not to materially interfere with the Lessee’s use of the
                Premises.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    
      	17.0	
              RIGHT
                TO SHOW PREMISES AND TO ERECT
                SIGNS

            

    

    

    
      	17.1	
              The
                Lessor shall have the right to show the Premises to prospective purchasers
                 thereof
                or to prospective tenants thereof from time to time during the last
                four
                (4)  months
                of the Term provided that, where the Lessor desires to show the Premises
                 during
                a time when they are not open for business, the Lessor shall give
                the
                 Lessee
                no less than twenty-four (24) hours’ notice of the desire to show the
                 Premises
                and, in such circumstances, the Lessee shall permit the Lessor entry
                 thereto.

            

    

    

    
      	17.2	
              The
                Lessor shall have the right at any time or times during the last
                four (4)
                 months
                of the Term to fix and retain without interference a reasonably sized
                 notice
                or sign advertising the Premises for sale or for lease (or both),
                provided
                 that
                such notice or sign shall not unreasonably affect the light or air
                enjoyed
                by  the
                Premises, and the Lessee will not remove or obscure the same.
                

            

    

     

    
      	18.0	
              RENEWAL
                RIGHT

            

    

    

    
      	18.1	
              It
                is understood and agreed between the Lessor and the Lessee that,
                provided
                that  the
                Lessee has not been substantially in default of any of its obligations
                under this  Lease
                during the Term, the Lessee shall have the option to renew this Lease
                for
                a  further
                term of five (5) years (the “Renewal Term”) by giving written notice to
                 the
                Lessor of its intention to renew at least six (6) months before the
                expiration  of
                the Term, such renewal to be on the same terms and conditions as
                in this
                Lease,  except
                for the Rent which shall be the greater of (i) $15,000.00 per month;
                or
                (ii)  the
                then current market rent for similar premises in a similar location
                (as to
                which  the
                Lessor and the Lessee shall use their respective best efforts to
                agree
                upon) and  except
                that there shall be no further renewal right. In the event that the
                Lessor
                 and
                the Lessee shall fail to agree on the Rent to be paid during the
                Renewal
                Term  by
                the date which is two (2) months before the expiration of the Term,
                the
                 determination
                of the amount thereof shall be subject to arbitration in accordance
                 with
                the Arbitration Ordinance 1974 and either party hereto shall be entitled
                to  submit
                the matter for resolution pursuant to such Ordinance and the provisions
                of
                 such
                Ordinance shall govern the procedure for determination of the Rent
                during
                 the
                Renewal Term. 

            

    

     

    
      	19.0	
              EXPROPRIATION

            

    

    

    
      	19.1	
              If
                the whole or a substantial portion of the Premises are taken by any
                public
                 authority
                under the powers of expropriation of that authority this Lease shall
                cease
                 and
                terminate from the day possession shall be taken for such public
                purposes
                and  the
                Lessee shall be liable for Rent only up to the date of the taking
                of
                possession  thereof
                by such public authority. All appropriate adjustments shall be made
                 between
                the Lessor and the Lessee where Rent has been paid beyond the day
                 possession
                shall be taken for such public
                purposes.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    
      	20.0	
              BANKRUPTCY
                AND SEIZURE 

            

    

    

    
      	20.1	
              If
                the Term hereby granted shall be at any time seized or taken in execution
                or on  attachment
                by any creditor of the Lessee, or if the Lessee shall make an  assignment
                for the benefit of its creditors, or become bankrupt or insolvent
                or take
                 the
                benefit of any Ordinance which may be in force for bankrupt or insolvent
                 debtors,
                the Term shall, at the option of the Lessor, immediately become forfeited
                 and
                void and the Rent then owing, including the then current month’s Rent, and
                 three
                (3) months’ additional Rent shall thereupon become due and payable and the
                 Lessor
                may without notice re-enter and take possession of the Premises as
                though
                 the
                Lessee or its employees or other occupants of the Premises were holding
                over  after
                the expiration of the Term.

            

    

     

    
      	21.0	
              WAIVER
                IN WRITING

            

    

     

    
      	21.1	
              Failure
                of the Lessor to insist upon strict compliance by the Lessee with
                the
                 performance
                of all terms, conditions, obligations, covenants and agreements
                 contained
                herein in any one or more instances shall not operate or be construed
                as
                 a
                waiver of any other breach of such term, condition, obligation, covenant
                or  agreement
                or of any other term, condition, obligation, covenant or agreement
                 hereof.
                The Lessor shall not be considered to have waived any of its rights
                to
                 performance
                by the Lessee of the terms, conditions, obligations, covenants and
                 agreements
                herein contained unless evidenced by the written waiver of the
                Lessor.

            

    

     

    
      	22.0	
              RECOVERY
                OF MONEYS DUE

            

    

    

    
      	22.1	
              All
                sums reasonably paid or expenses reasonably incurred by the Lessor
                for the
                 purposes
                of collecting Rent in arrears or to enforce the late performance
                of any of
                 the
                Lessee’s obligations, covenants or agreements hereunder shall be
                recoverable  from
                the Lessee and shall bear interest at the rate of twelve per cent (12%)
                per  annum.

            

    

     

    
      	23.0	
              GOVERNING
                LAW

            

    

    

    
      	23.1	
              This
                Lease shall be governed in all respects by the laws of the Turks
                and
                Caicos  Islands.
                Should any term or provision of this Lease be illegal, invalid or
                 unenforceable
                 under
                the laws of the said jurisdiction, it or they shall be  considered
                severable, and this Lease and its remaining terms and provisions
                shall
                 remain
                in force and be binding upon the parties as though the illegal, invalid
                or
                 unenforceable
                 terms
                and provisions had never been
                included.

            

    

     

    
      	24.0	
              IMPLIED
                TERMS

            

    

    

    
      	24.1	
              The
                agreements implied by Sections 52 and 53 of the Registered Land Ordinance
                 1967
                are hereby excluded from this Lease, having been replaced by alternate
                 provisions
                or having been deemed by the parties hereto not to be
                applicable.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	24.2	
              The
                provisions of Section 55(1) of the Ordinance are hereby excluded
                from this
                 Lease,
                having been replaced by alternative
                provisions.

            

    

     

    
      	25.0	
              OVERHOLDING

            

    

    

    
      	25.1	
              If
                at the expiration or other termination hereof the Lessee shall remain
                in
                 possession
                of the Premises with or without the consent of the Lessor without
                 further
                written agreement, the Lessee shall be deemed to be a tenant from
                month- to-month
                and no other tenancy shall be created by implication of law or otherwise
                 and
                the monthly rental installment provided hereinbefore shall be paid
                on the
                first  day
                of each month, and such month-to-month tenancy shall otherwise be
                subject
                 to
                all of the terms of this Lease.

            

    

     

    
      	26.0	
              TIME
                OF THE ESSENCE

            

    

    

    
      	26.1	
              Time
                shall be of the essence in respect of all obligations and payments
                to be
                made  hereunder.

            

    

     

    
      	27.0	
              SUCCESSORS
                AND ASSIGNS

            

    

    

    
      	27.1	
              This
                Lease and the terms and provisions hereof shall enure to the benefit
                of
                and  be
                binding upon the Lessor and its successors and assigns and to the
                benefit
                of  and
                be binding upon the Lessee and its permitted successors and
                assigns.

            

    

     

    
      	28.0	
              ASSIGNING
                AND SUB-LETTING

            

    

    

    
      	28.1	
              The
                Lessee shall not be entitled to assign this Lease nor to sublet the
                Premises or  any
                part or parts thereof without the prior written consent of the Lessor,
                which  consent
                may be granted or withheld in the sole discretion of the
                Lessor.

            

    

     

    
      	29.0	
              TOTAL
                AGREEMENT

            

    

    

    
      	29.1	
              This
                Lease supersedes any and all understandings and agreements, written
                or
                oral,  between
                the parties relative to the leasing of the Premises and constitutes
                the
                 entire
                agreement between them concerning the subject matter
                hereof.

            

    

     

    
      	30.0	
              HEADINGS

            

    

    

    
      	30.1	
              The
                headings contained in this Lease are for convenience of reference
                only and
                 shall
                not affect the construction or interpretation of this
                Lease.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    
      	31.0	
              COSTS
                AND STAMP DUTY

            

    

    

    
      	31.1	
              Each
                party shall bear its own costs for preparation and negotiation of
                this
                Lease.  The
                Lessee shall be responsible for, and shall pay as and when due, all
                Stamp
                 Duty
                payable as a consequence of the entering into of this Lease and the
                making
                 of
                the payments of Rent hereunder, and the Lessee shall indemnify and
                save
                 harmless
                the Lessor in respect of the obligation to pay such Stamp
                Duty.

            

    

     

    IN
      WITNESS WHEREOF
      the
      parties hereto execute this Lease as of the day, month and year first above
      written.

     

     

    
      	Executed
              by the
              Lessor,	 	 	 
	
              CARL
                ENTERPRISES LTD.

            	 	 	
            
	 	 	 	 
	 	 	 	 
	
              
Zdzislaw
              Materski - Director	 	 	
              
Zdzislaw
              Materski - Secretary

       

       

      
        	Executed by the Lessee,	 	 	 
	
                THE
                  GAME INTERNATIONAL TC LTD.

              	 	 	
              
	 	 	 	 
	 	 	 	 
	
                
Director	 	 	
                
Secretary

      

       

      
        
          
          

        

        
          16

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