Document:

Exhibit 10.20

                     AMENDED AND RESTATED PLEDGE AND ESCROW AGREEMENT

     THIS AMENDED AND RESTATED PLEDGE AND ESCROW AGREEMENT (the  "Agreement") is
made and entered  into as of June 30, 2006 (the  "EFFECTIVE  DATE") by and among
HIGHGATE HOUSE FUNDS, LTD. ("Highgate"),  CORNELL CAPITAL PARTNERS, LP ("CORNELL
CAPITAL"),  CITY NETWORK,  INC., a corporation  organized and existing under the
laws of the State of Nevada (the "COMPANY"), and DAVID GONZALEZ, ESQ., as escrow
agent ("ESCROW AGENT").

                                    RECITALS:

     WHEREAS,   the  Company  and  Highgate  entered  the  Securities   Purchase
Agreement,  dated August 10, 2005 (the "PRIOR SECURITIES  PURCHASE  AGREEMENT"),
pursuant  to  which  the  Company  issued  the  Amended  and  Restated   Secured
Convertible  Debenture,  dated  August 17, 2005,  in favor of Highgate,  and the
Secured  Convertible  Debenture,  dated as of  December  16,  2005,  in favor of
Highgate, for an aggregate principal amount of $250,000 (the "ORIGINAL Notes");

     WHEREAS, in connection with the Prior Securities  Purchase  Agreement,  the
Company,  Highgate  and the  Escrow  Agent  entered  into the  Pledge and Escrow
Agreement,  dated August 10, 2005 (the "PRIOR  PLEDGE  AGREEMENT"),  pursuant to
which the Company  pledged to Highgate  Four  Million  Four  Hundred  Forty Five
Thousand Four Hundred  Fifty Five  (4,445,455)  shares of the  Company's  common
stock,  par value  $0.001  per share (the  "COMMON  STOCK,"  and such  shares of
pledged  Common  Stock,  the "PRIOR  PLEDGED  SHARES"),  to secure the Company's
obligations  under the Original Notes, the Prior Securities  Purchase  Agreement
and certain related agreements;

     WHEREAS,  the  Company,  Cornell  Capital,  Highgate,  and the Escrow Agent
entered a Securities Purchase  Agreement,  dated March 13, 2006 (the "SECURITIES
PURCHASE  AGREEMENT"),  pursuant  to  which  the  Company  shall  issue  secured
convertible  debentures  to Cornell for an  aggregate  principal  amount of Four
Hundred Thousand Dollars ($400,000) (the "CONVERTIBLE DEBENTURES");

     WHEREAS, as a condition to the closing of the transactions  contemplated by
the Securities  Purchase Agreement,  the Company,  Highgate and the Escrow Agent
desire to amend and restate, and Cornell Capital desires to become party to, the
Prior Pledge Agreement in order to secure any and all obligations of the Company
now existing or hereinafter  incurred to Cornell  Capital and Highgate under the
Convertible Debentures and the Original Notes (the "OBLIGATIONS");

     WHEREAS,  the Company has agreed to irrevocably  pledge to Cornell  Capital
and Highagte Six Million Four Hundred  Forty Five  Thousand  Four Hundred  Fifty

----------
1.   Of this amount, the Company's pledge of 2,000,000 shares of Common Stock is
     subject to over  $275,000  in  aggregate  principal  amount of  Convertible
     Debentures being funded pursuant to the Securities Purchase Agreement.
<PAGE>
Five  (6,445,455)  shares of Common Stock (the  "PLEDGED  Shares") to secure the
Obligations, which shares shall include all Prior Pledged Shares; and

     WHEREAS,  subject  to the  terms  of the  Convertible  Debentures  and  the
Original  Notes,  Cornell  Capital and Highgate have the right to convert any or
all of the  Convertible  Debentures or the Original  Notes into shares of Common
Stock (the  "CONVERSION  SHARES") in accordance with the Convertible  Debentures
and the Original Notes.

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
warranties,  and  representations  herein  contained,  and for  other  good  and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

                              TERMS AND CONDITIONS

     1. PLEDGE AND TRANSFER OF PLEDGED SHARES.

     1.1. The Company  hereby grants to Cornell  Capital a security  interest in
all Pledged  Shares as security  for the  Obligations.  Simultaneously  with the
execution of this Agreement, the Company shall deliver to the Escrow Agent stock
certificates  representing the Pledged Shares, together with duly executed stock
powers or other appropriate  transfer documents executed in blank by the Company
(the "TRANSFER  DOCUMENTS"),  and such stock certificates and Transfer Documents
shall be held by the Escrow  Agent until the full  payment of all amounts due to
Cornell  Capital  under the  Convertible  Debentures  and through  repayment  in
accordance with the terms of the Convertible  Debentures,  or the termination or
expiration of this Agreement.

     1.2. Upon each  conversion by Cornell  Capital or Highgate into  Conversion
Shares,  the Company shall provide  written  notice to the Escrow Agent,  with a
copy to Cornell Capital and Highgate,  of the number of Conversion Shares issued
to Cornell  Capital or Highgate  pursuant to such  conversion  and the number of
Pledged Shares pursuant to this Agreement shall be reduced,  share for share, by
the number of Conversion Shares issued.

     2. RIGHTS  RELATING TO PLEDGED  SHARES.  Upon the occurrence of an Event of
Default  (as  defined  herein),  Cornell  Capital  shall be entitled to vote the
Pledged Shares, to receive  dividends and other  distributions  thereon,  and to
enjoy all other rights and  privileges  incident to the ownership of the Pledged
Shares.

     3. RELEASE OF PLEDGED SHARES FROM PLEDGE. Upon the payment or conversion of
all the  Obligations,  the parties  hereto shall notify the Escrow Agent to such
effect in writing.  Upon receipt of such written notice,  the Escrow Agent shall
return to the  Company all  certificates  representing  the  Pledged  Shares and
Transfer  Documents  delivered  to the Escrow Agent  pursuant to this  Agreement
(collectively the "PLEDGED MATERIALS"),  whereupon any and all rights of Cornell
Capital   and   Highgate  in  the  Pledged   Materials   shall  be   terminated.
Notwithstanding  anything to the contrary contained herein, upon full payment or
conversion  of  all  amounts  due  to  Cornell  Capital  under  the  Convertible
Debentures and Highgate under the Original  Notes,  in accordance with the terms
thereof,  this Agreement and Cornell Capital's and Highgate's  security interest
and rights in and to the Pledged Shares shall terminate.

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<PAGE>
     4. EVENT OF DEFAULT. An "EVENT OF DEFAULT" shall be deemed to have occurred
under this Agreement upon an Event of Default under the Convertible Debentures.

     5. REMEDIES.

     5.1. Upon and anytime after the occurrence of an Event of Default,  Cornell
Capital shall have the right to acquire the Pledged  Shares in  accordance  with
the following  procedure:  (a) Cornell  Capital shall provide  written notice of
such Event of Default (the "DEFAULT NOTICE") to the Escrow Agent, with a copy to
the Company;  (b) in a Default Notice,  Cornell Capital shall specify the number
of Pledged Shares to be issued to Cornell Capital, subject to any adjustments in
Pledged Shares pursuant to Section 1,2 hereof,  PROVIDED  HOWEVER,  that Cornell
Capital shall not have the right to acquire such number of Pledged  Shares which
would cause Cornell Capital,  together with its affiliates (including Highgate),
to beneficially own in excess of 9.99% of the outstanding capital of the Company
(unless  Cornell  Capital  waives such  limitation by providing 65 days' advance
written  notice);  and (c) as soon as  practicable  after  receipt  of a Default
Notice,  the Escrow Agent shall deliver the specified  number of Pledged  Shares
along with the  applicable  Transfer  Documents to the Company's  Transfer Agent
with  instructions to issue such Pledged Shares to Cornell Capital in accordance
with the Irrevocable  Transfer Agent  Instructions of even date herewith,  among
Company,  Cornell  Capital,  Highgate,  the Escrow Agent,  and the Pacific Stock
Transfer.

     5.2. Upon receipt of the Pledged Shares issued to Cornell Capital,  Cornell
Capital  shall  have the right to (i) sell the  Pledged  Shares and to apply the
proceeds  of such sales  (pro  rata),  net of any  selling  commissions,  to the
Obligations  owed to Cornell  Capital and  Highgate by the  Company,  including,
without limitation,  outstanding principal,  interest, legal fees, and any other
amounts owed to Cornell Capital,  and exercise all other rights and (ii) any and
all  remedies  of a  secured  party  with  respect  to such  property  as may be
available  under the  Uniform  Commercial  Code as in effect in the State of New
Jersey.  To the extent that the net  proceeds  received  by Cornell  Capital are
insufficient  to satisfy  the  Obligations  in full,  Cornell  Capital  shall be
entitled to a deficiency  judgment against the Company for such amount.  Cornell
Capital shall have the absolute  right to sell or dispose of the Pledged  Shares
in any  manner it sees fit and shall  have no  liability  to the  Company or any
other  party for  selling or  disposing  of such  Pledged  Shares  even if other
methods of sales or  dispositions  would or  allegedly  would  result in greater
proceeds  than the method  actually  used.  The Company  shall remain liable for
shortfalls,  if any,  that may exist after  Cornell  Capital has  exhausted  all
remedies hereunder. Cornell Capital shall be entitled to keep any Pledged Shares
released to it and remaining  after Cornell Capital has applied the net proceeds
to all amounts owed to Cornell Capital.

     5.3. Each right,  power and remedy of Cornell Capital and Highgate provided
for  in  this  Agreement,  the  Securities  Purchase  Agreement  and  any  other
Transaction Documents (as defined in the Securities Purchase Agreement) shall be
cumulative  and  concurrent  and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by Cornell Capital of
any  one or  more  of the  rights,  powers  or  remedies  provided  for in  this
Agreement,  the Securities Purchase Agreement or any other Transaction  Document
or now or  hereafter  existing  at law or in equity or by statute  or  otherwise
shall not preclude the  simultaneous or later exercise by Cornell Capital of all
such other  rights,  powers or remedies,  and no failure or delay on the part of
Cornell  Capital to exercise any such right,  power or remedy shall operate as a

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<PAGE>
waiver thereof.  No notice to or demand on the Company in any case shall entitle
it to any other or further notice or demand in similar or other circumstances or
constitute  a waiver of any of the rights of Cornell  Capital or Highgate to any
other further  action in any  circumstances  without  demand or notice.  Cornell
Capital  shall have the full power to enforce or to assign or contract is rights
under this Agreement to a third party.

     6. DEMAND REGISTRATION  RIGHTS. In addition to all other remedies available
to Cornell Capital, upon an Event of Default, the Company shall promptly, but in
no event more than thirty (30) days after the date of the Default Notice, file a
registration  statement to register with the Securities and Exchange  Commission
the Pledged  Shares for the resale by Cornell  Capital.  The Company shall cause
the  registration  statement to remain in effect until all of the Pledged Shares
have been sold by Cornell Capital.

     7. CONCERNING THE ESCROW AGENT.

     7.1.  The  Escrow  Agent  undertakes  to  perform  only such  duties as are
expressly set forth herein and no implied  duties or  obligations  shall be read
into this Agreement against the Escrow Agent.

     7.2. The Escrow Agent may act in reliance upon any writing or instrument or
signature  which it, in good  faith,  believes  to be  genuine,  may  assume the
validity and accuracy of any statement or assertion  contained in such a writing
or  instrument,  and may assume that any person  purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner, and execution, or validity of
any instrument deposited in this escrow, nor as to the identity,  authority,  or
right of any  person  executing  the same;  and its  duties  hereunder  shall be
limited to the safekeeping of such certificates,  monies,  instruments, or other
document  received by it as such escrow holder,  and for the  disposition of the
same in accordance with the written instruments accepted by it in the escrow.

     7.3.  Cornell Capital and the Company hereby agree, to defend and indemnify
the Escrow  Agent and hold it  harmless  from any and all  claims,  liabilities,
losses,  actions,  suits,  or  proceedings  at law or in  equity,  or any  other
expenses, fees, or charges of any character or nature which it may incur or with
which it may be  threatened  by reason of its acting as Escrow  Agent under this
Agreement;  and in connection  therewith,  to indemnify the Escrow Agent against
any and all  expenses,  including  attorneys'  fees and costs of  defending  any
action,  suit, or  proceeding or resisting any claim (and any costs  incurred by
the Escrow Agent pursuant to Sections 7.4 or 7.5 hereof). The Escrow Agent shall
be vested with a lien on all property deposited  hereunder,  for indemnification
of attorneys' fees and court costs regarding any suit,  proceeding or otherwise,
or any other expenses, fees, or charges of any character or nature, which may be
incurred by the Escrow Agent by reason of disputes arising between the makers of
this escrow as to the correct  interpretation of this Agreement and instructions
given to the Escrow Agent hereunder, or otherwise,  with the right of the Escrow
Agent, regardless of the instructions aforesaid, to hold said property until and
unless said additional expenses, fees, and charges shall be fully paid. Any fees
and costs charged by the Escrow Agent for serving hereunder shall be paid by the
Company.

                                       4
<PAGE>
     7.4.  If  any  of  the  parties   shall  be  in   disagreement   about  the
interpretation  of this Agreement,  or about the rights and obligations,  or the
propriety of any action  contemplated by the Escrow Agent hereunder,  the Escrow
Agent may, at its sole discretion  deposit the Pledged  Materials with the Clerk
of the United  States  District  Court of New  Jersey,  sitting  in Newark,  New
Jersey,  and, upon notifying all parties concerned of such action, all liability
on the part of the Escrow  Agent  shall fully  cease and  terminate.  The Escrow
Agent shall be  indemnified  by the  Company and Cornell  Capital for all costs,
including   reasonable   attorneys'   fees  in  connection  with  the  aforesaid
proceeding,  and shall be fully  protected  in  suspending  all or a part of its
activities  under this Agreement  until a final decision or other  settlement in
the proceeding is received.

     7.5.  The Escrow  Agent may consult with counsel of its own choice (and the
costs of such  counsel  shall be paid by the Company and  Cornell  Capital)  and
shall have full and complete  authorization  and protection for any action taken
or suffered by it hereunder in good faith and in accordance  with the opinion of
such  counsel.  The Escrow Agent shall not be liable for any mistakes of fact or
error of judgment, or for any actions or omissions of any kind, unless caused by
its willful misconduct or gross negligence.

     7.6. The Escrow Agent may resign upon ten (10) days' written  notice to the
parties in this Agreement.  If a successor  Escrow Agent is not appointed within
this ten (10) day period,  the Escrow  Agent may  petition a court of  competent
jurisdiction to name a successor.

     8. CONFLICT WAIVER.  The Company hereby  acknowledges that the Escrow Agent
is general  counsel  to Cornell  Capital,  a partner in the  general  partner of
Cornell  Capital,  and  counsel  to  Cornell  Capital  in  connection  with  the
transactions  contemplated and referred  herein.  The Company agrees that in the
event of any dispute  arising in connection  with this Agreement or otherwise in
connection with any transaction or agreement  contemplated  and referred herein,
the Escrow Agent shall be permitted to continue to represent Cornell Capital and
the Company will not seek to  disqualify  such counsel and waives any  objection
Company  might have with  respect to the Escrow Agent acting as the Escrow Agent
pursuant to this Agreement.

     9.  NOTICES.  Any  notices,  consents,  waivers,  or  other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) ten (10) business  days after being sent by U.S.  certified  mail,  return
receipt requested, or (iv) two (2) business days after deposit with a nationally
recognized overnight delivery service or worldwide courier service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

                                       5
<PAGE>
If to the Company, to:     City Network, Inc.
                           6F-3, No.16, Jian Ba Road
                           Jhonghe City, Taipei County, 235
                           Taiwan, ROC F5 235
                           Attention: Mr Tiao-Tsan Lai

With a copy to:            Mitch Nussbaum, Esq.
                           Loeb & Loeb LLP
                           345 Park Avenue
                           New York, NY 10154-0037
                           Telephone: (212) 407-4159
                           Facsimile: (212) 407-4990

If to Cornell Capital:     Cornell Capital Partners, LP
                           101 Hudson Street, Suite 3700
                           Jersey City, NJ 07302
                           Attention: Mark A. Angelo
                           Telephone: (201) 985-8300
                           Facsimile: (201) 985-8744

With copy to:              Troy Rillo, Esq.
                           101 Hudson Street, Suite 3700
                           Jersey City, NJ 07302
                           Telephone: (201) 985-8300
                           Facsimile: (201) 985-1964

If to the Escrow Agent:    David Gonzalez, Esq.
                           101 Hudson Street - Suite 3700
                           Jersey City, NJ 07302
                           Telephone: (201) 985-8300
                           Facsimile: (201) 985-8266

     Each party shall provide five (5) days' prior  written  notice to the other
party of any change in address or facsimile number.

     10. BINDING EFFECT.  All of the covenants and obligations  contained herein
shall be binding upon and shall inure to the benefit of the respective  parties,
their successors and assigns.

     11. GOVERNING LAW; VENUE; SERVICE OF PROCESS. The validity,  interpretation
and  performance  of this Agreement  shall be determined in accordance  with the
laws of the State of New Jersey applicable to contracts made and to be performed
wholly  within that state  except to the extent that  Federal law  applies.  The
parties hereto agree that any disputes, claims, disagreements, lawsuits, actions
or controversies of any type or nature whatsoever that,  directly or indirectly,
arise from or relate to this Agreement,  including,  without limitation,  claims
relating to the  inducement,  construction,  performance  or termination of this
Agreement,  shall be  brought  in the state  superior  courts  located in Hudson
County, New Jersey or Federal district courts located in Newark, New Jersey, and
the parties  hereto  agree not to challenge  the  selection of that venue in any

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<PAGE>
such proceeding for any reason,  including,  without limitation,  on the grounds
that such venue is an inconvenient  forum. The parties hereto specifically agree
that  service  of process  may be made,  and such  service  of process  shall be
effective if made, pursuant to Section 9 hereto.

     12.  ENFORCEMENT  COSTS. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default  or   misrepresentation  in  connection  with  any  provisions  of  this
Agreement,  the  successful or prevailing  party or parties shall be entitled to
recover  reasonable  attorneys'  fees,  court costs and all expenses even if not
taxable as court costs (including,  without limitation, all such fees, costs and
expenses  incident  to  appeals),  incurred  in that  action or  proceeding,  in
addition to any other relief to which such party or parties may be entitled.

     13.  REMEDIES  CUMULATIVE.  No remedy  herein  conferred  upon any party is
intended to be  exclusive  of any other  remedy,  and each and every such remedy
shall be  cumulative  and  shall be in  addition  to every  other  remedy  given
hereunder  or now or  hereafter  existing  at law,  in equity,  by  statute,  or
otherwise.  No single or partial  exercise  by any party of any right,  power or
remedy hereunder shall preclude any other or further exercise thereof.

     14.   COUNTERPARTS.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute the same instrument.

     15. NO PENALTIES.  No provision of this Agreement is to be interpreted as a
penalty upon any party to this Agreement.

     16. AMENDMENT AND RESTATEMENT.  This Agreement amends and restates,  and is
given in  substitution  for but not  satisfaction  of,  the  Pledge  and  Escrow
Agreement  dated  August 10, 2005 among the  Company,  Highgate,  and the Escrow
Agent.

     17. JURY TRIAL.  EACH OF THE  PLEDGEE  AND THE  PLEDGOR  HEREBY  KNOWINGLY,
VOLUNTARILY AND  INTENTIONALLY  WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY
JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION BASED HEREON,  OR ARISING
OUT OF,  UNDER OR IN ANY WAY  CONNECTED  WITH THE DEALINGS  BETWEEN  PLEDGEE AND
PLEDGOR, THIS PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,  STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY  HERETO OR THERETO IN EACH CASE  WHETHER NOW
EXISTING  OR  HEREAFTER  ARISING,  AND  WHETHER  IN  CONTRACT,  TORT,  EQUITY OR
OTHERWISE.

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<PAGE>
     IN WITNESS WHEREOF,  the parties hereto have duly executed this Amended and
Restated Pledge and Escrow Agreement as of the date first above written.

                            CITY NETWORK, INC.

                          By: /s/ Alice Chen
                             ----------------------------------
                          Name:  Alice Chen
                          Title: Chairman, President and Chief
                                 Executive Officer

                                       8
<PAGE>
                            HIGHGATE HOUSE FUNDS, LTD

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

                            CORNELL CAPITAL PARTNERS, LP

                            By:  Yorkville Advisors, LLC
                            Its: General Partner

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

                            "ESCROW AGENT"

                            /s/ David Gonzalez
                            -----------------------------------
                            David Gonzalez, Esq.

                                       9Exhibit 10.21

                                                            DATED: JUNE 30, 2006

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

No. CCP-1 $400,000

                               CITY NETWORK, INC.

                          SECURED CONVERTIBLE DEBENTURE

                                DUE JUNE 30, 2008

     This Secured  Convertible  Debenture  (the  "DEBENTURE")  is issued by CITY
NETWORK,  INC.,  a  Nevada  corporation  (the  "COMPANY"),  to  CORNELL  CAPITAL
PARTNERS,  LP (the  "HOLDER"),  pursuant  to that  certain  Securities  Purchase
Agreement (the "SECURITIES  PURCHASE  AGREEMENT") dated March 16, 2006 among the
Company and the Holder.

     FOR VALUE RECEIVED, the Company hereby promises to pay to the Holder or its
successors  and assigns  the  principal  sum of Four  Hundred  Thousand  Dollars
($400,000)  together with accrued but unpaid interest on or before June 30, 2008
(the "MATURITY DATE") in accordance with the following terms:

     INTEREST. Interest shall accrue on the outstanding principal balance hereof
at an annual rate equal to seven percent (7%).  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 in whose name this  Debenture is  registered  on the records of the
Company  regarding  registration  and  transfers of Debentures  (the  "DEBENTURE
REGISTER").

     RIGHT OF REDEMPTION.  The Company 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  Company's
Common Stock,  as reported by Bloomberg,  LP, is less than the Fixed  Conversion
Price at the time of the  Redemption  Notice.  The  Company  shall pay an amount
equal to (i) the principal amount being redeemed, plus (ii) a redemption premium
equal to twenty percent (20%) of the principal amount being redeemed, plus (iii)
<PAGE>
accrued interest on the principal amount being redeemed,  which shall be paid to
the Holder within two (2) business days after the  expiration of the  Redemption
Notice period.

     Notwithstanding the forgoing,  in the event that the Company has elected to
redeem a portion of the outstanding  principal amount and accrued interest under
this  Debenture,  the Holder shall be permitted to convert all or any portion of
this Debenture during such three (3) business day notice period. .

     SECURITY AGREEMENTS.  This Debenture is secured by Common Stock pursuant to
a Pledge and Escrow Agreement (the "PLEDGE AND ESCROW AGREEMENT") dated the date
hereof by and among the Company, the Holder and David Gonzalez,  Esq., as Escrow
Agent; the Amended and Restated Security  Agreement dated the date hereof by and
among the Company and the Holder;  the Amended and Restated  Security  Agreement
dated  the date  hereof by and  among  City  Technology,  Inc.,  a  wholly-owned
subsidiary  of the Company,  and the Holder;  the Amended and Restated  Security
Agreement  dated the date  hereof by and among  City  Network,  Inc.--Taiwan,  a
wholly-owned subsidiary of the Company, and the Holder; the Amended and Restated
Security  Agreement  dated the date hereof by and among City  Construction  Co.,
Ltd., a wholly-owned subsidiary of the Company, and the Holder (all four amended
and restated security agreements, collectively, the "SECURITY AGREEMENTS").

     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) provided that the Company does not cure such Event of Default
within ten (10) days of receipt of written  notice of the Event of Default  from
the Holder:

          (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 the Maturity Date
or by acceleration or otherwise);

          (ii) The Company 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) or any Transaction Document (as defined in SECTION 5) which is not cured
with in the time prescribed;

          (iii) The Company or any subsidiary of the Company shall commence,  or
there shall be commenced  against the Company or any  subsidiary  of the Company
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any  successor  thereto,  or the  Company or any  subsidiary  of the  Company
commences any other proceeding under any reorganization, arrangement, adjustment

                                       2
<PAGE>
of debt,  relief of debtors,  dissolution,  insolvency or liquidation or similar
law of any  jurisdiction  whether  now or  hereafter  in effect  relating to the
Company or any  subsidiary  of the  Company or there is  commenced  against  the
Company or any  subsidiary  of the Company any such  bankruptcy,  insolvency  or
other proceeding which remains  undismissed for a period of sixty-one (61) days;
or the Company or any  subsidiary  of the Company is  adjudicated  insolvent  or
bankrupt;  or any  order of  relief or other  order  approving  any such case or
proceeding is entered;  or the Company or any subsidiary of the Company  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  Company  or any
subsidiary  of the  Company  makes  a  general  assignment  for the  benefit  of
creditors; or the Company or any subsidiary of the Company 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 Company or any  subsidiary  of the Company
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  Company  or any  subsidiary  of the  Company  for the  purpose  of
effecting any of the foregoing;

          (iv) The Company or any subsidiary of the Company shall default in any
of its obligations  under any other  debenture  issued to the Holder pursuant to
the Securities  Purchase  Agreement 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  Company or any  subsidiary  of the Company 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 eligible for trading or listed
for trading on either the Nasdaq OTC  Bulletin  Board  ("OTC"),  Nasdaq  Capital
Market, New York Stock Exchange,  American Stock Exchange or the Nasdaq National
Market (each, a "SUBSEQUENT MARKET") and shall not again be eligible for trading
thereon within five (5) Trading Days of such delisting;

          (vi) The Company or any  subsidiary of the Company shall be a party to
any Change of Control Transaction (as defined in SECTION 5);

          (vii)  The  Company   shall  fail  to  file  the   Underlying   Shares
Registration Statement (as defined in Section 5) with the Commission (as defined
in Section 5) within  thirty  (30) days of the  Scheduled  Filing  Deadline  (as
defined in the Investor  Registration Rights Agreement (the "REGISTRATION RIGHTS
AGREEMENT")  dated March 16, 2006  between the Company and the  Holder),  or the
Underlying  Registration Statement shall not have been declared effective by the
Commission  within one sixty (60) days of the Scheduled  Effective  Deadline (as
defined in the Registration Rights Agreement),

         (viii)  If the  effectiveness  of the  Underlying  Shares  Registration
Statement  lapses for any reason or if after the initial  effective  date of the
Underlying  Shares  Registration  Statement the Holder shall not be permitted to
resell the shares of Common Stock underlying this Debenture under the Underlying

                                       3
<PAGE>
Shares  Registration  Statement,  in  either  case,  for  more  than  eight  (8)
consecutive  Trading  Days or an  aggregate  of fifteen (15) Trading Days (which
need not be consecutive);

         (ix) The  Company  shall fail for any reason to  deliver  Common  Stock
certificates  to the  Holder  prior  to the  fifth  (5th)  Trading  Day  after a
Conversion Date or the Company 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 Company  shall fail for any reason to deliver the payment in
cash  pursuant to a Buy-In (as defined  herein)  within  three (3) Trading  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  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 Company.
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 Company hereby waives, any presentment,  demand, protest or
other notice of any kind, and the Holder may immediately and without  expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such
rescission or annulment  shall affect any subsequent  Event of Default or impair
any right  consequent  thereon.  Upon an Event of Default,  notwithstanding  any
other provision of this Debenture or any Transaction Document,  the Holder shall
have no obligation to comply with or adhere to any  limitations,  if any, on the
conversion of this Debenture or the sale of the Underlying Shares.

     SECTION 3. CONVERSION.

     (a) CONVERSION AT OPTION OF HOLDER.

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

          (ii) Notwithstanding  anything to the contrary contained herein, if on
any  Conversion  Date:  (1) the  number of  shares  of Common  Stock at the time
authorized, unissued and unreserved for all purposes, or held as treasury stock,
is  insufficient  to pay  principal  and interest  hereunder in shares of Common

                                       4
<PAGE>
Stock; or (2) the Common Stock is not listed or quoted for trading on the OTC or
on a Subsequent Market;  then, at the option of the Holder, the Company, in lieu
of delivering shares of Common Stock pursuant to SECTION 3(A)(I), shall deliver,
within three (3) Trading Days of each applicable  Conversion  Date, an amount in
cash equal to the product of the  outstanding  principal  amount to be converted
plus any interest due therein divided by the Conversion  Price and multiplied by
the highest closing price of the stock from date of the conversion  notice until
the date that such cash payment is made.

     Further, if the Company 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
Company, require the Company to issue shares of Common Stock pursuant to SECTION
3(C), except that for such purpose the Conversion Price applicable thereto shall
be the lesser of the Conversion  Price on the Conversion Date and the Conversion
Price on the date of such Holder demand.  Any such shares will be subject to the
provisions of this Section.

          (iii) The Holder shall effect conversions by delivering to the Company
a  completed  notice in the form  attached  hereto as  Exhibit A (a  "CONVERSION
NOTICE").  The date on  which a  Conversion  Notice  is  delivered  shall be 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  Company  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  Company
shall maintain  records showing the principal  amount  converted and the date of
such conversions.

     (b)  CERTAIN  CONVERSION  RESTRICTIONS.  A  Holder  may  not  convert  this
Debenture or receive shares of Common Stock as payment of interest  hereunder to
the extent such  conversion or receipt of such interest  payment would result in
the  Holder,  together  with any  affiliate  thereof,  beneficially  owning  (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
promulgated  thereunder)  in excess of 4.9% of the then  issued and  outstanding
shares of Common  Stock,  including  shares  issuable  upon  conversion  of, and
payment of interest on, this Debenture held by such Holder after  application of
this  Section.  Since the Holder will not be  obligated to report to the 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 4.9% 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 3(A)(I) and, at the option
of the Holder,  either retain any principal  amount  tendered for  conversion in

                                       5
<PAGE>
excess of the permitted amount  hereunder for future  conversions or return such
excess  principal  amount to the Holder.  The  provisions of this Section may be
waived by a Holder (but only as to itself and not to any other  Holder) upon not
less than 65 days prior notice to the Company. Other Holders shall be unaffected
by any such waiver.

     (c) CONVERSION PRICE AND ADJUSTMENTS TO CONVERSION PRICE.

          (i) The Holder shall be entitled to convert, at its sole option at any
time,  a portion or all amounts of principal  and  interest due and  outstanding
under this Debenture into shares of the Company's Common Stock at the lesser per
share price of (i) $0.268 (the "FIXED CONVERSION  PRICE") or (ii) ninety percent
(95%) of the lowest  Volume  Weighted  Average  Price of the Common Stock of the
thirty (30) trading days immediately  preceding the Conversion Date as quoted by
Bloomberg,  LP (the "MARKET CONVERSION  PRICE").  The Fixed Conversion Price and
the Market  Conversion  Price are  collectively  referred to as the  "CONVERSION
PRICE." The Conversion Price may be adjusted  pursuant to the provisions of this
Section 3(c).

           (ii) If the Company, 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 Company, then the Fixed Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding  treasury shares, if any) outstanding  before such event
and of which the  denominator  shall be the  number  of  shares of Common  Stock
outstanding after such event. Any adjustment made pursuant to this Section shall
be determined as of and become effective  immediately  after the record date for
the  determination  of  stockholders   entitled  to  receive  such  dividend  or
distribution  and  shall be  determined  as of  immediately  before  and  become
effective  immediately  after the effective  date in the case of a  subdivision,
combination or re-classification.

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

                                       6
<PAGE>
expiration  be  recomputed  and effective  immediately  upon such  expiration be
increased  to the  price  which it would  have been  (but  reflecting  any other
adjustments  in the Fixed  Conversion  Price made pursuant to the  provisions of
this Section after the issuance of such rights or warrants)  had the  adjustment
of the Fixed Conversion Price made upon the issuance of such rights,  options or
warrants  been made on the basis of offering for  subscription  or purchase only
that number of shares of the Common Stock  actually  purchased upon the exercise
of such rights, options or warrants actually exercised.

          (iv) If the Company or any subsidiary thereof,  as applicable,  at any
time while this  Debenture  is  outstanding,  other  than  issuances  covered in
Section  3(c)(iii)  hereof,  shall  issue  shares  of  Common  Stock or  rights,
warrants,  options  or other  securities  or debt that are  convertible  into or
exchangeable for shares of Common Stock ("Common Stock  Equivalents")  entitling
any Person to acquire shares of Common Stock, at a price per share less than the
Fixed  Conversion  Price (if the  holder  of the  Common  Stock or Common  Stock
Equivalent so issued shall at any time,  whether by operation of purchase  price
adjustments, reset provisions,  floating conversion, exercise or exchange prices
or otherwise, be entitled to receive shares of Common Stock at a price per share
which is less than the Fixed Conversion  Price, such issuance shall be deemed to
have  occurred  for less  than the Fixed  Conversion  Price;  provided  that the
calculation  set forth  below  shall not account for any amount of the price per
share below the Fixed Conversion Price already in effect as of the date hereof),
then,  at the sole option of the  Holder,  the Fixed  Conversion  Price shall be
reduced on the date of such issuance to a price (calculated to the nearest cent)
determined by multiplying the Fixed Conversion Price in effect immediately prior
to such issuance by a fraction,  the numerator of which shall be an amount equal
to the sum of (A) the number of shares of Common Stock  outstanding  immediately
prior  to  such  issuance  plus  (B)  the  quotient  obtained  by  dividing  the
consideration received by the Company upon such issuance by the Fixed Conversion
Price,  and the  denominator  of which  shall be the  total  number of shares of
Common Stock outstanding immediately after such issuance.. Such adjustment shall
be made whenever such Common Stock or Common Stock  Equivalents are issued.  The
Company  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 3(c)(iv),  indicating therein the applicable  issuance price, or of
applicable  reset price,  exchange  price,  conversion  price and other  pricing
terms.  No adjustment  under this Section  3(c)(iv) shall be made as a result of
issuances and exercises of options to purchase shares of Common Stock issued for
compensatory  purposes  pursuant to a bona fide employee stock incentive plan of
the Company.

          (v) If the Company,  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,  other than as  contemplated  in Section  3(c)(iii) or
(iv), then in each such case the Fixed  Conversion Price at which this Debenture
shall  thereafter be convertible  shall be determined by  multiplying  the Fixed
Conversion  Price in  effect  immediately  prior to the  record  date  fixed for
determination  of  stockholders  entitled  to  receive  such  distribution  by a
fraction of which the denominator  shall be the Closing Bid Price  determined as
of the record date  mentioned  above,  and of which the numerator  shall be such
Closing Bid Price on such  record  date less the then fair market  value at such
record  date of the  portion  of such  assets or  evidence  of  indebtedness  so
distributed  applicable  to  one  outstanding  share  of  the  Common  Stock  as

                                       7
<PAGE>
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 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  Company  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.

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

          (viii) All  calculations  under this  SECTION 3 shall be rounded up to
the nearest $0.001 or whole share, as applicable.

          (ix) Whenever the Conversion  Price is adjusted  pursuant to SECTION 3
hereof, the Company 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  Company  shall  declare  a  dividend  (or  any  other
distribution)  on the Common  Stock;  (B) the  Company  shall  declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock;  (C) the
Company  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 Company
shall be required in connection with any  reclassification  of the Common Stock,
any  consolidation  or  merger  to which  the  Company  is a party,  any sale or
transfer  of all or  substantially  all of the  assets  of the  Company,  of any
compulsory  share  exchange  whereby the Common  Stock is  converted  into other
securities,  cash or property;  or (E) the Company shall authorize the voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Company;  then, in each case, the Company 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  Company,  at least  twenty (20)  calendar  days prior to the

                                       8
<PAGE>
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)  consolidation  of the  Company  with  another
Person or merger of the  Company  in which it does not  survive  and a change in
control of the Company that would be required to be reported on Form 8-K, or (2)
sale by the Company or any subsidiary of the Company of all or substantially all
of the  assets of the  Company  in one or a series of  related  transactions,  a
Holder  shall  have the  right  to (A)  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 (B)  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 (B), 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) OTHER PROVISIONS.

          (i) The Company  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  Company as to  reservation  of such shares set

                                       9
<PAGE>
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
Company  covenants  that all shares of Common  Stock  that shall be so  issuable
shall,  upon  issue,  be duly and  validly  authorized,  issued and fully  paid,
nonassessable  and, if the  Underlying  Shares  Registration  Statement has been
declared  effective  under the  Securities  Act,  registered  for public sale in
accordance with such Underlying Shares Registration Statement.

          (ii) Upon a conversion  hereunder the Company 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 Company
elects  not,  or is unable,  to make such a cash  payment,  the Holder  shall be
entitled to receive,  in lieu of the final fraction of a share,  one whole share
of Common Stock.

          (iii) The issuance of  certificates  for shares of the Common Stock on
conversion of this Debenture  shall be made without charge to the Holder thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such  certificate,  provided  that the Company 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 Company
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 Company
the  amount of such tax or shall have  established  to the  satisfaction  of the
Company that such tax has been paid.

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

          (v) In addition to any other rights  available  to the Holder,  if the
Company fails to deliver to the Holder such certificate or certificates pursuant
to SECTION 3(A)(I) by the fifth (5th) Trading Day after the Conversion Date, and
if after such fifth (5th)  Trading Day the Holder  purchases  (in an open market
transaction or otherwise)  Common Stock to deliver in  satisfaction of a sale by
such Holder of the  Underlying  Shares which the Holder was entitled to, but did
not, receive upon a conversion  pursuant to Section 3(a)(i) herein (a "BUY-IN"),
then the Company shall pay in cash to the Holder (without  limiting any remedies
available to or elected by the Holder) any amount assessed against the Holder on
account of any broker trade  (including any costs incurred in purchasing  shares
rather than  delivering  shares the Holder was due to receive from the Company),
plus any amount of the Holder's transaction costs in respect thereof.

     SECTION 4. NOTICES. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when

                                       10
<PAGE>
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) ten (10) business  days after being sent by U.S.  certified  mail,  return
receipt requested, or (iv) two (2) business days after deposit with a nationally
recognized overnight delivery service or worldwide courier 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:     City Network, Inc.
                           6F-3, No.16, Jian Ba Road
                           Jhonghe City, Taipei County, 235
                           Taiwan, ROC F5 235
                           Attention: Mr Tiao-Tsan Lai
                           Telephone: 886-2-8226-5566
                           Facsimile: 886-2-8226-8585

With a copy to:            Loeb & Loeb LLP
                           345 Park Avenue
                           New York, NY 10154-0037
                           Attention: Mitchell Nussbaum, Esq.
                           Telephone: (212) 407-4159
                           Facsimile: (212) 407.4990

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

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

Each party shall provide five (5) days' prior written  notice to the other party
of any change in address or facsimile number.

     SECTION 5. DEFINITIONS.  For the purposes hereof, the following terms shall
have the following meanings:

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

                                       11
<PAGE>
     "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 Company,
by contract or  otherwise)  of in excess of fifty  percent  (50%) or more of the
voting  securities  of the  Company  (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 Company  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 all or
substantially  all of the assets of the Company or any subsidiary of the Company
in one or a series of related  transactions  with or into another entity, or (d)
the  execution by the Company of an agreement to which the Company 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,  par value $.001, of the Company and
stock of any other  class  into which such  shares may  hereafter  be changed or
reclassified.

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

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

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

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

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

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

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

     "TRANSACTION  DOCUMENTS"  means  the  Securities  Purchase  Agreement;  the
Registration  Rights Agreement;  the Pledge and Escrow  Agreement,  the Security

                                       12
<PAGE>
Agreements;   the  Irrevocable  Transfer  Agent  Instructions  and  any  related
agreements contemplated by the Securities Purchase Agreement.

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

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

     SECTION 6.  Except as  expressly  provided  herein,  no  provision  of this
Debenture  shall  alter or impair  the  obligations  of the  Company,  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
Company.  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 Company 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.

     SECTION 7. This Debenture shall not entitle the Holder to any of the rights
of a stockholder  of the Company,  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 Company,
unless and to the extent  converted  into shares of Common  Stock in  accordance
with the terms hereof.

     SECTION 8. If this Debenture is mutilated,  lost, stolen or destroyed,  the
Company 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 Company.

     SECTION 9. No  indebtedness  of the Company 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 Company 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 Company under this Debenture.

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

                                       13
<PAGE>
U.S. District Court for the District of New Jersey sitting in Newark, New Jersey
in connection  with any dispute  arising under this Debenture and hereby waives,
to the maximum extent  permitted by law, any objection,  including any objection
based on FORUM NON  CONVENIENS  to the bringing of any such  proceeding  in such
jurisdictions.

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

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

     SECTION 13. If any  provision  of this  Debenture  is  invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any interest or other amount deemed  interest due  hereunder  shall violate
applicable laws governing  usury,  the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The Company  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  Company  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 Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

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

     SECTION 15. THE PARTIES HEREBY  KNOWINGLY,  VOLUNTARILY  AND  INTENTIONALLY
WAIVE  THE  RIGHT  ANY OF THEM  MAY HAVE TO A TRIAL  BY JURY IN  RESPECT  OF ANY
LITIGATION  BASED  HEREON OR ARISING OUT OF,  UNDER OR IN  CONNECTION  WITH THIS

                                       14
<PAGE>
AGREEMENT  OR ANY  TRANSACTION  DOCUMENT  OR ANY  COURSE OF  CONDUCT,  COURSE OF
DEALING,  STATEMENTS  (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS
PROVISION  IS  A  MATERIAL  INDUCEMENT  FOR  THE  PARTIES'  ACCEPTANCE  OF  THIS
AGREEMENT.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>
     IN WITNESS  WHEREOF,  the  Company  has  caused  this  Secured  Convertible
Debenture to be duly  executed by a duly  authorized  officer as of the date set
forth above.

                               CITY NETWORK, INC.

                               By: /s/ Alice Chen
                                  -------------------------------------------
                               Name:  Alice Chen
                               Title: Chairman, President and Chief Executive
                                      Officer

                                       16
<PAGE>
                                   EXHIBIT "A"

                              NOTICE OF CONVERSION

 (TO BE EXECUTED BY THE HOLDER IN ORDER TO CONVERT ANY OR ALL OF THE DEBENTURE)

TO:

City Network, Inc.
6F-3, No.16, Jian Ba Road
Jhonghe City, Taipei County, 235
Taiwan, ROC F5 235
Attention:  Mr. Tiao-Tsan Lai

     The undersigned hereby  irrevocably elects to convert  $___________________
of the principal  amount of the above  Debenture  into Shares of Common Stock of
City  Network,  Inc.,  according to the  conditions  stated  therein,  as of the
Conversion Date written below.

Conversion Date:                        ________________________________________

Applicable Conversion Price:            ________________________________________

Signature:                              ________________________________________

Name:                                   ________________________________________

Address:                                ________________________________________

Amount to be converted:                 $_______________________________________

Amount of Debenture unconverted:        $_______________________________________

Conversion Price per share:             $_______________________________________

Number of shares of Common Stock
to be issued:                           ________________________________________

Please issue the shares of
Common Stock in the following
name and to the following address:      ________________________________________

Issue to:                               ________________________________________

Authorized Signature:                   ________________________________________

Name:                                   ________________________________________

Title:                                  ________________________________________

Phone Number:                           ________________________________________

Broker DTC Participant Code:            ________________________________________

Account Number:                         ________________________________________

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