

EXHIBIT 10.5


Nesco Industries, Inc.
305 Madison Avenue, Suite 4510
New York, New York 10165


February ___, 2007




[NAME AND ADDRESS OF NOTEHOLDER]


Re:
[NOTE OR NOTES] (the “Notes”) made by Nesco Industries, Inc. (the “Company”) in
favor of [NOTEHOLDER] (the “Lender”)



[NOTEHOLDER SALUTATION]:


This letter agreement is to memorialize our agreement concerning the conversion
of all amounts outstanding under the Notes into shares of the common stock
(“Nesco Common Stock”) of the Company.


The Lender acknowledges that the Company has a strong need to raise capital that
will enable it to restructure its balance sheet and provide working capital for
the recent asset acquisitions by the Company. The Lender further acknowledges
that the Company is currently negotiating a financing arrangement that will
provide it with the needed capital (the “Financing”). In order to induce the
proposed lender to provide the Financing and to reorganize the outstanding
indebtedness of the Company, the Company is proposing the conversion to Nesco
Common Stock of the amounts under the Notes. The Lender acknowledges that it is
in its best interest, as well as the best interest of the Company, that the
Company close the Financing. In consideration of the foregoing and the covenants
and agreements of the parties contained in this letter agreement, the Company
and the Lender are hereby entering into the following agreements.


Subject to and contingent on the closing of the Financing (the “Closing”), the
parties agree as follows:


1. The Notes shall cease to accrue interest as of January 31, 2007.
Notwithstanding anything to the contrary contained in the Notes, immediately
following the Common Stock Increase (as defined below), the full amount of the
principal outstanding under the Notes shall be converted into shares of Nesco
Common Stock, at $[Insert Conversion Rate] per share or [Insert Number] shares
of Nesco Common Stock for the [$Insert Amount] principal amount of Notes
outstanding and a warrant to purchase [Insert Number] shares of Nesco Common
Stock (the “Warrant”) at an initial exercise price equal to the initial exercise
price for the warrants to be issued in the Financing. Accordingly, promptly
following the Common Stock Increase, the Company will issue [Insert Number] of
Nesco Common Stock to the Lender (the “Conversion Shares”) and the Warrant. For
purposes of this letter agreement, the “Common Stock Increase” shall mean such
time as the Company has obtained the approval of its shareholders at a special
or annual meeting to increase the Company’s authorized common stock in
accordance with the Financing and has filed with the Secretary of State of
Nevada the amendment to the Company’s Articles of Incorporation to so increase
the Company’s authorized common stock.



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2. In connection with the issuance of the Conversion Shares and the Warrant, the
Lender hereby makes the representations and warranties set forth on Schedule A
attached hereto. The Lender understands that the Company is relying on such
representations and warranties in connection with the issuance of the Conversion
Shares.


3. Upon receipt of the Conversion Shares and the Warrant, the Notes shall be
cancelled and Lender shall, automatically and without further action of the
parties, release the Company and its officers, directors, employees and agents,
and each of its successors and assigns from all causes of action, debts,
contracts, demands and claims of every kind and nature, whether known or unknown
and whether in law or in equity, that the Lender had, now have, or hereafter
can, shall or may have with respect to the Notes.


Each of the foregoing agreements set forth in paragraphs 1 through 3, inclusive,
of this letter agreement are expressly made subject to the Closing, and none of
such agreements shall be effective unless and until such time as the Closing
occurs. If the Closing has not occurred on or prior to February 28, 2007, this
letter agreement shall automatically terminate and shall be of no further force
and effect, and neither the Company nor the Lender shall have any obligations to
the other hereunder.


Nothing in this letter agreement shall be construed as an admission of any
liability by any of the parties or as a release of any claim or obligation other
than as specifically set forth above.


This letter agreement is binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. No persons
other than the Company and the Lender are intended to be benefited by this
letter agreement or to have rights hereunder as third-party beneficiaries or
otherwise.


This letter agreement shall be deemed to be a contract made under, and to be
construed in accordance with, the laws of the State of New York, without giving
effect to conflicts of law.


If any provision of this letter agreement is held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not
invalidate this letter agreement as a whole, but rather this letter agreement
shall be construed as though it did not contain the particular provision held to
be invalid, illegal or unenforceable and the rights and obligations of the
parties hereto shall be construed and enforced only to such extent as may be
permitted by applicable law.


This letter agreement may be executed by the parties in one or more
counterparts, each of which will be deemed an original but all of which will
constitute one and the same instrument.


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If the foregoing accurately memorializes our agreement to settle the matters
described above, please sign below.


Very truly yours,


Nesco Industries, Inc.




By________________________
Matthew Harriton
President and CEO






AGREED AND ACCEPTED:


[NOTEHOLDER]




By_______________________________
Its_______________________________




3

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Schedule A


Representations and Warranties


1.1.  Purchase Entirely for Own Account. Each Note purchased by Lender was, and
the Conversion Shares and the Warrant to be issued in connection therewith will
be, acquired for investment for Lender’s own account and not with a view to the
resale or distribution of any part thereof. Lender represents that it has full
power and authority to enter into this Agreement.
 
1.2.  Disclosure of Information. Lender acknowledges that it has received all
the information that it has requested relating to the Company and conversion of
the Notes. Lender further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the issuance of the Conversion Shares and the Warrant.
 
1.3.  Accredited Investor. Lender is an “accredited investor” within the meaning
of Rule 501 of Regulation D of the Securities and Exchange Commission as
presently in effect.
 
1.4.  Restricted Securities. Lender understands that the Conversion Shares, the
Warrant and the shares of Nesco Common Stock underlying the Warrant are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering, and that under such laws and applicable regulations
such securities may be resold without registration under the Act only in certain
limited circumstances.
 
 
 

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