Document:

EXHIBIT 10.22

                            MEMORANDUM OF AGREEMENT

                                      AMONG

                            AURORA METALS(BVI)LIMITED
                       GOLDEN PHOENIX RESOURCES ASIA LTD.
                      PENGLAI CITY HEXI GOLD MINE CO., LTD.

                                      AND

                               MR. WANG ZHI QIANG

                                FEBRUARY 20, 2006

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MEMORANDUM OF AGREEMENT made February 20, 2006 among AURORA METALS(BVI) LIMITED,
a  corporation  ("AM"),  GOLDEN  PHOENIX  RESOURCES  ASIA LTD., a British Virgin
Islands  company  ("GPA"),  PENGLAI  CITY HEXI GOLD MINE CO., LTD, a PRC company
("Hexi"),  and MR. WANG ZHI QIANG of Peng Lai City, Shandong Province  Province,
People's  Republic  of  China  ("Wang"),  collectively  the  "Parties".

RECITALS

Hexi  is  owned  as  to  90% by Wang and as to 10% by Li Shou Hong.  Hexi owns a
56.5297 square kilometre property and a pledge of one license held by Yantai Jin
Mao  Investment  Ltd.  in  Penglai City, Shandong Province, People's Republic of
China, for which it holds rights to explore for and produce gold and on which it
operates  an  underground gold mine which currently produces about 30,000 ounces
of  gold  a year.  AM and Wang wish to develop the property owned by Hexi by (a)
performing  such  technical  and  other work as shall be necessary to support an
initial  public  offering  of the shares of a company to be called Peng Lai Gold
Ltd.,  (b)  making  a public offering of Peng Lai Gold's shares, (c) listing the
shares  of  Peng Lai Gold on the Toronto stock exchange, and (d) entering into a
joint  venture agreement with respect to the ownership and operation of the gold
mining  assets  owned  and  to  be  acquired  by  Hexi. GPA will perform certain
services  in  relation to these activities for which it will receive an interest
in  Peng  Lai  Gold  Ltd.   The  parties  are  entering  into this Memorandum of
Agreement  to  provide  for  the terms on which these activities will be carried
out.

WITNESSETH that the parties have agreed as follows:

1.   DEFINITIONS

     As used in this agreement:

     "ADDITIONAL  ASSETS"  means  leases  and  other  interests  in  gold mining
     properties  in  Penglai  City, Shandong Province which are acquired by Hexi
     after  the  date  of  this  Agreement  and  prior  to  the  Public Listing.

     "AM  SUB"  means  a  corporation  which is a wholly-owned subsidiary of AM,
     which  will  be  a  90%  shareholder  in  JVCO.

     "PRC  REQUIREMENTS"  means  all  approvals  and  consents  of  governmental
     authorities  in  the  PRC  and  registration  requirements required for the
     purpose  of  completing  the transactions provided for in this Agreement as
     set  out  in  Schedule  A.

     "EFFECTIVE  DATE"  means the date as of which (a) this Agreement shall have
     been  executed,  and  (b) all PRC Requirements shall have been satisfied as
     evidenced  by  an  Opinion  of  Counsel.

     "EXCHANGE" means the TSX-Venture Exchange.

     "EXPLORATION  PROGRAM"  means  an exploration program conducted on the Hexi
     Assets,  at  a  cost  of  US $1.5 million, or as otherwise agreed to by the
     Parties  over  a  period  of

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     approximately  18  months,  with  the  objective  of  proving up sufficient
     mineral  resources  to  justify  the  Public  Listing.

     "43.101  REPORT" means a report complying with the requirements of Canada's
     National  Instrument  No.  43.101  and  being  otherwise acceptable for the
     purpose  of  a  Public  Listing.

     "HEXI ASSETS" means the gold mining plant(s), equipment and leases owned by
     Hexi plus the Additional Assets.

     "JVA" means a joint venture agreement to be entered into governing the
     ownership and operation of JVCO.

     "JVCO" means either Hexi, on the basis that its shareholders will be AM Sub
     as to 90% and Wangco PRC as to 10%, or a newly incorporated entity of which
     the owners will be AM Sub as to 90% and Wangco PRC as to 10%.

     "OPINION OF COUNSEL" means an opinion of legal counsel to the effect that
     all Chinese Requirements have been satisfied and that this Agreement is a
     binding obligation of Hexi and Wang enforceable in accordance with its
     terms.

     "PG" means Peng Lai Gold Limited, being AM renamed and continued from its
     present jurisdiction of incorporation to incorporation under the laws of
     the Province of Ontario where it shall have its shares listed on the
     Exchange.

     "PRC" means the People's Republic of China.

     "PUBLIC LISTING" means a listing of PG shares on the Exchange.

     "VALUATION" means a valuation complying with the requirements of Schedule
     B.

     "WANGCO BVI" means a British Virgin Islands company to be owned
     beneficially as to 100% by Wang.

     "WANGCO PRC" means a PRC company to be owned beneficially as to 100% by
     Wang.

2.   TRANSACTIONS

     For the purposes of implementing the transaction:

     (a)  AM will finance and conduct the Exploration Program.

     (b)  AM  and  GPA  will  be  entitled at any time during the conduct of the
          Exploration  Program  to  terminate  this  Agreement on the basis that
          either  (i)  the  progress  being  achieved is not acceptable in their
          judgment  having regard to the requirements for the Public Listing, or
          (ii)  the  results  achieved  are  not acceptable having regard to the
          requirements for the Public Listing, following which the parties shall
          have  no further obligations to each other with respect to the subject
          matter  of  this  Agreement.

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     (c)  Following  completion  of the Exploration Program, the Valuation shall
          be  performed as the basis for determining the respective interests of
          AM,  GPA  and Wang in JVCO and issuing shares in AM in accordance with
          the  following  requirements:

          (i)  Wang's  interest  shall be represented by a combination of shares
               in  JVCO and AM shares such that he will beneficially own through
               Wangco  PRC  not  less  than  10%  of JVCO in accordance with PRC
               requirements  for  gold  mining entities, with the balance of his
               interest  being  held through AM shares issued to Wangco BVI; and

          (ii) For  its  services,  GPA  shall be entitled to AM shares having a
               value  equal  to 20% of Wang's total entitlement as determined in
               accordance  with  Schedule  B.

     (d)  Wang will cause Hexi to contribute to JVCO the Additional Assets whose
          value  will  be  included  for  Valuation  purposes.

     (e)  Following  the  issue  of  AM shares in accordance with clause (c), AM
          will  begin  taking  all required steps to achieve the Public Listing,
          including  the  preparation  of  the  43-101  Report.

     (f)  The  parties  agree  that,  with  effect from completion of the Public
          Listing:

          (i)  AM  will  have  a  board  of  six directors, of whom two shall be
               nominees  of Wangco BVI, three shall be independent directors and
               one  shall  be  the  President  and  CEO;  and

          (ii) AM  will  be the managing partner of JVCO, with the sole right to
               make  all  decisions  except those which, as a matter of PRC law,
               require  unanimity  and,  for  this  purpose, Wangco PRC will not
               unreasonably  withhold  its  consent  on  any  matter  requiring
               unanimity.

     (g)  Wang will cause Hexi to provide unrestricted access to the Hexi Assets
          and  the  Additional Assets and, when so required, to take at its sole
          expense  all  actions  and required remedial assurances to upgrade the
          Hexi  Assets  to  ensure  safe  access  at  all  times.

     (h)  Immediately  following the Effective Date, AM will initiate, supervise
          and  pay  for  the  technical  and other work required to enable PG to
          complete  the  Public  Offering.

     (i)  AM  will  take  all  required  steps to be continued under the laws of
          Ontario,  to  change  its  name  and  otherwise  to satisfy the Public
          Listing  requirements.

3.   PUBLIC LISTING

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     Following  completion  of  the  43-101  Report, the parties shall determine
     whether or not to proceed with the Public Offering. If the determination is
     to  proceed,  the  parties  will select financial, legal and other advisors
     and,  with  their help, shall begin preparation of the prospectus and other
     required documents, including an underwriting agreement with the investment
     bankers  who  will  purchase  the  shares  to be offered by the prospectus.

4.   WANG AND HEXI REPRESENTATION

     To  induce  AM  and GPA to enter into this Agreement and to make the Option
     Payment,  Wang  and  Hexi  represent  and  warrant  to  GPA  that:

     (a)  Wang  owns  90%  of  the  shares  of  Hexi  and  Li Shou Hong owns the
          remaining  10%  of  the  shares  of Hexi, in each case with a good and
          marketable  title  free  of  encumbrances;

     (b)  Hexi  is  a  validly  subsisting  enterprise under PRC law and has all
          requisite  power and authority to produce, process and sell gold as it
          is  currently doing and to execute, deliver and perform this Agreement
          and  any  documents  to  which  it  is  or  is  to  be  a  party;

     (c)  the  execution, delivery and performance by Hexi of this Agreement has
          been  duly  authorized  by all necessary corporate action and does not
          require  any consents or approvals other than those which have already
          been  obtained;

     (d)  this  Agreement  has been duly executed and delivered by Hexi and Wang
          and constitutes their legal, valid and binding obligation, enforceable
          against  both  of  them  in  accordance  with  its  terms;

     (e)  the  execution and delivery by Hexi and Wang of this Agreement and the
          performance  by  both  of  them of their obligations hereunder do not,
          except  for  PRC Requirements, require any authorization under any PRC
          law  or  approvals,  consents  or waivers of third parties and are not
          inconsistent with and do not contravene any provision of or constitute
          a  default  under:

          (i)  their constituent documents or by-laws, as applicable;

          (ii) any judgment, injunction, decree or order applicable to it or any
               of  their  properties;

         (iii) any  PRC  law  or  authorization  applicable to it or  any of its
               properties;  or

          (iv) any indenture, mortgage, contract or other instrument to which it
               is a party or by which it may be bound or affected;

     (f)  there  is no action, suit, investigation or proceeding pending (or, to
          their  knowledge,  threatened)  against  Hexi  or  Wang  before  any
          governmental  authority  which,  individually  or in the aggregate, if
          determined  adversely  to  their  interests,

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          could  reasonably  be expected to adversely affect the consummation of
          the  transactions  contemplated  hereby;

     (g)  no  person  has  any  agreement  or  option  or any right or privilege
          capable  of  becoming  an  agreement or option for the purchase of any
          Hexi  shares;  and

     (h)  until completion of the transactions provided for in this Agreement or
          termination as provided in Section 9, Wang will cause Hexi to continue
          to  carry  on  its  gold mining business in the same manner as that in
          which  it  is  being  carried  on.

5.   AM AND GPA REPRESENTATIONS

     To  induce  Hexi  and  Wang  to  enter into this Agreement and to grant the
     Option, AM and GPA represent and warrant to Hexi and Wang as follows:

     (a)  each of them is a validly subsisting corporation under the laws of its
          jurisdiction  of  incorporation  and  has  all  requisite  power  and
          authority  to  execute,  deliver  and  perform  this Agreement and any
          documents  to  which  it  is  or  is  to  be  a  party;

     (b)  the  execution,  delivery  and  performance  by  each  of them of this
          Agreement  has  been duly authorized by all necessary corporate action
          and  does not require any consents or approvals other than those which
          have  already  been  obtained;

     (c)  this  Agreement  has  been duly executed and delivered by each of them
          and constitutes their legal, valid and binding obligation, enforceable
          against  it  in  accordance  with  its  terms;

     (d)  the  execution  and delivery by each of them of this Agreement and the
          performance  by them of their obligations hereunder do not require any
          authorization  under any Chinese law or approvals, consents or waivers
          of  third  parties and are not inconsistent with and do not contravene
          any  provision  of  or  constitute  a  default  under:

          (i)  its  constituent  documents  or  by-laws,  as  applicable;

          (ii) any judgment, injunction, decree or order applicable to it or any
               of  its  properties;

         (iii) any  law  or  authorization  applicable  to  it  or  any  of  its
               properties;  or,

          (iv) any indenture, mortgage, contract or other instrument to which it
               is  a  party  or  by  which  it  may  be  bound or affected; and,

     (e)  there  is  no action, suit, investigation or proceeding pending (or to
          its  knowledge,  threatened) against AM or GPA before any governmental
          authority  which,  individually  or  in  the  aggregate, if determined
          adversely  to its interests, could reasonably be expected to adversely
          affect  the  consummation  of  the  transactions  contemplated hereby.

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6.   TERMINATION

     (a)  If AM or GPA:

          (i)  is in material breach of its obligations under this Agreement and
               such  breach  continues  for  30  days after notice to AM and GPA
               requiring  it  or  them  to  cease  such  breach;

          (ii) becomes  bankrupt  or  insolvent  or takes the benefit of any law
               providing  for  protection  against  creditors.

     Hexi  and Wang shall be entitled to terminate this Agreement. Following any
     such  termination,  AM  and  GPA  shall  have  no  further  rights  in this
     Agreement.

     (b)  AM and GPA shall be entitled jointly to terminate this Agreement:

          (i)  if  Hexi  or  Wang is in material breach of its obligations under
               this  Agreement  (and  for  this  purpose  failure to provide all
               required  access  to  the  Property  and  information required to
               perform  the Valuation shall constitute material breach) and such
               breach  continues  for  30  days  after  notice  to Hexi and Wang
               requiring  them  to  cease  such  breach.

          (ii) Hexi  or  Wang becomes bankrupt or insolvent or takes the benefit
               of  any  law  providing  for  protection  against  creditors.

     Following  any such termination, Hexi and Wang shall have no further rights
     under  this  Agreement.

     (c)  In the event that:

          (i)  the Effective Date shall not have occurred by 07 May,2006; or

          (ii) filing  of the Prospectus for the Public Offering as provided for
               in  Section  6  shall  not  have  occurred  by  31  August,2007;

     either  AM  and  GPA  or  Wang and Hexi shall be entitled to terminate this
     Agreement by notice to the other, following which none of the parties shall
     have  any  further  obligations  to  the others with respect to the subject
     matter  of  this  Agreement.

7.   REGISTRATION

     Following  its execution by the parties, this Agreement shall be registered
     in  accordance  with  the  requirements  set  out  in  Schedule  A.

8.   NOTICES

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     (a)  All  notices,  consents,  requests,  and  other  communications
          (collectively  "Notices")  authorized or required to be giving or made
          pursuant  to  this  Agreement  by  a  Party, shall be given or made in
          writing  signed  by  an  authorized  representative  of  such  Party,
          delivered  or  mailed by registered or certified mail or sent by telex
          or  facsimile  transmission  addressed  as  follows:

                For AM:            P.O. Box 27494
                                   Denver, Colorado 8022, USA
                                   Phone: (+1) 303-727-8609
                                   Facsimile: (+1) 303-936-0333
                                   E-mail:  jaajames@comcast.net
                                            --------------------

                For GPA:           No.l8, 1299 Gilpin Street
                                   Denver Colorado 80218 USA.
                                   Phone: (+1) 303 601 6064
                                   Facsimile: (+1) 303 321 8776
                                   E-mail:  mareelaffan@bigpond.com
                                            -----------------------

                For Hexi or Wang   Huluxian Village, Daliuhang Town,
                                   Peng Lai City, Shandong Province, China
                                   P.C.  265621
                                   Phone: (+86) 535-5851155
                                   Facsimile: (+86) 535-5851281
                                   E-mail:  wangzhiqiang@hexigold.cn
                                            ------------------------

     and  any  such  notice  shall  be  deemed  to have been properly served and
     received  by  the  intended  recipient:

          (i)  in  the  case  of  service by delivery or registered or certified
               mail  -  upon  delivery;

          (ii) in  the  case of service by telex - upon the sender receiving the
               intended  recipient's  answerback  code;

         (iii) in  the  case  of  service by  facsimile  transmission - upon the
               sender  receiving  from the intended recipient acknowledgement of
               legible  receipt.

     (b)  Any  Party  may  change  its address for the receipt of Notices at any
          time  by  giving written notice of such change to all other Parties to
          this  Agreement  in  accordance with the provisions of this Article 9.

9.   MISCELLANEOUS

     (a)  The  failure  of  a  Party  to  insist  on  strict  performance of any
          provisions of this Agreement or to exercise any right, power or remedy
          upon  a  breach  hereof  shall

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                                  Page 9 of 12

          not  constitute  a  waiver of any provision of this Agreement or limit
          the  Parties'  rights  thereafter to enforce any provision or exercise
          any  right,  power  or  remedy;

     (b)  No  amendments  to this Agreement shall be valid unless such amendment
          is in writing, duly executed by the Parties, and shall not take effect
          until  it  has  been  approved  and  consented  to  by the appropriate
          authorities;

     (c)  This  Agreement  has  been  prepared  in  both the Chinese and English
          language  and  both  texts shall be equally authentic provided that if
          there  is  a  dispute  and  the documents are inconsistent the English
          version  shall  be  used  for  interpretation;

     (d)  This  Agreement  contains  the entire understanding of the Parties and
          supersedes all prior agreements and understandings between the Parties
          relating  to  the  subject  matter  thereof;

     (e)  This  Agreement shall be governed and construed in accordance with the
          laws  of  the  Province  of  Ontario and of Canada applicable therein;

     (f)  Nothing  contained  in  this  Agreement  shall be deemed to constitute
          either  Party  the  partner  of  any  other,  or,  except as expressly
          provided, to constitute either Party the agent or legal representative
          of  any  other;

     (g)  This  Agreement  shall  be  binding  upon the successors and permitted
          assignees  of  the  Parties;

     (h)  This Contract is made in eight (8) copies each in English and Chinese.
          Each  Party  keeps  four  (4)  copies  of  equal  value;  and,

     (i)  The  Parties must each take their own responsibility to pay applicable
          taxes  which may be payable to any appropriate authority or determined
          to  be payable in connection with the execution, delivery, performance
          or  enforcement  of  this Agreement under Chinese law. Each Party will
          indemnify  and  keep  indemnified  the other Party against any loss or
          liability  incurred  or  suffered  by  it  as a result of the delay or
          failure  by  the  other  party  to  pay  such  taxes.

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10.  EXECUTION

     Executed as a deed on February 20, 2006

Signed for and on behalf of:

AURORA METALS (BVI) LIMITED
J.A.A. James
-------------------------------------
Director

-------------------------------------
(Witness)
                                           /s/ J.A.A. James
                                           -------------------------------------

Signed for and on behalf of:

GOLDEN PHOENIX RESOURCES ASIA LTD.

-------------------------------------
Director

-------------------------------------
(Witness)

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

Signed for and on behalf of:

HEXI GOLD MINE CO., LTD.
Name (print)

                                           /s/ Wang Zhi Qiang

-------------------------------------      -------------------------------------
(Witness)

                                           -------------------------------------
                                           WANG ZHI QIANG

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

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                                   SCHEDULE A

                                PRC REQUIREMENTS

             [TO BE COMPLETED AS PER JUN HE LAW OFFICES MEMORANDUM]

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                                  Page 12 of 12

                                   SCHEDULE B

                                    VALUATION

1.   The  gold resources identified by the exploration program will be valued at
     US  $20  per  ounce.

2.   The  physical  assets,  including plant and equipment, will be valued by an
     independent  third  party  selected by AM/GPA and acceptable to Wang acting
     reasonably.  From this amount there will be deducted the estimated costs of
     upgrading  plant  and  installations  to  meet  internationally  accepted
     structural, environmental and operating standards. AM's costs of performing
     the  work,  including  the  fees and expenses of the valuator, will also be
     deducted  in  arriving  at  the  net  value.

3.   Wang's interest will be the sum of the amounts determined under 1 and 2.NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE 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 COMPLIANCE WITH APPLICABLE STATE
      SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE
      SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES
      MAY
      BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
      FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

    

    $______

    

    

    AMERICAN
      UNITED GLOBAL, INC.

    AMENDED
      AND RESTATED CONVERTIBLE NOTE DUE 

    March
      20, 2007

    

    THIS
      NOTE
      is one of a series of duly authorized and issued Notes of American United
      Global, Inc., a Delaware corporation (the “Company”),
      designated as its Convertible Notes due upon the earlier of March 16, 2009
      or
      the Company closing a financing in the aggregate amount of $12,000,000, in
      the
      aggregate principal amount of $1,250,000 (the “Notes”).

    

    FOR
      VALUE
      RECEIVED, the Company promises to pay to the order of ____________ or its
      registered assigns (the “Holder”),
      the
      principal sum of _________________ ($_____), on the earlier of March 16, 2009
      or
      the Company closing a financing in the aggregate amount of $12,000,000 (the
      “Maturity
      Date”),
      or
      such earlier date as the Notes are required or permitted to be repaid as
      provided hereunder. Notwithstanding the foregoing, the Company hereby
      unconditionally promises to pay to the order of the Holder interest on any
      principal payable hereunder that shall not be paid in full when due, whether
      at
      the time of any stated maturity or by prepayment, acceleration or declaration
      or
      otherwise, for the period from and including the due date of such payment to
      but
      excluding the date the same is paid in full, at a rate of 12% per annum (but
      in
      no event in excess of the maximum rate permitted under applicable law). No
      interest shall accrue prior to the Maturity Date.

    

    Interest
      payable under this Note shall be computed on the basis of a year of 360 days
      and
      actual days elapsed (including the first day but excluding the last day)
      occurring in the period for which interest is payable. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Payments
      of principal and interest shall be made in lawful money of the United States
      of
      America to the Holder at its address as provided in Section 14
      or by
      wire transfer to such account specified from time to time by the Holder hereof
      for such purpose as provided in Section 14.

    

    The
      Holder of this Note is entitled to the benefits of the Security
      Agreement.

    

    1. 
Definitions.
      In
      addition to the terms defined elsewhere in this Note, (a) capitalized terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Securities Purchase Agreement, dated as of September 21, 2005, among the
      Company and the Purchasers identified therein (the “Purchase
      Agreement”),
      and
      (b) the following terms have the meanings indicated:

    

    “Conversion
      Date”
means
      the date a Conversion Notice is delivered to the Company together with the
      Conversion Schedule pursuant to Section
      6(a).

    

    “Conversion
      Notice”
means
      a
      written notice in the form attached hereto as Schedule 1. 

    

    “Conversion
      Price”
      means
      $1.00.

    

    “Equity
      Conditions”
means,
      with respect to a specified issuance of Common Stock, that each of the following
      conditions is satisfied: (i) the number of authorized but unissued and otherwise
      unreserved shares of Common Stock is sufficient for such issuance; (ii) such
      shares of Common Stock are registered for resale by the Holder and may be sold
      by the Holder pursuant to an effective Registration Statement covering the
      Underlying Shares or all such shares may be sold without volume restrictions
      pursuant to Rule 144(k) under the Securities Act; (iii) the Common Stock is
      listed or quoted (and is not suspended from trading) on an Eligible Market
      and
      such shares of Common Stock are approved for listing upon issuance; (iv) such
      issuance would be permitted in full without violating Section
      6(b)
      hereof
      or the rules or regulations of any Trading Market; (v) no Bankruptcy Event
      has
      occurred; (vi) the Company is not in default with respect to any material
      obligation hereunder or under any other Transaction Document; and
      (vii) no
      public announcement of a pending or proposed Change of Control transaction
      has
      occurred that has not been consummated.

    

    “Event
      Equity Value”
      means
      115% of the average of the Closing Prices for the five Trading Days preceding
      the date of delivery of the notice requiring payment of the Event Equity Value,
      provided
      that if
      the Company does not make such required payment (together with any other
      payments, expenses and liquidated damages then due and payable under the
      Transaction Documents) when due or, in the event the Company disputes in good
      faith the occurrence of the Triggering Event pursuant to which such notice
      relates, does not instead deposit such required payment (together with such
      other payments, expenses and liquidated damages then due) in escrow with an
      independent third-party escrow agent within five Trading Days of the date such
      required payment is due, then the Event Equity Value shall be 115% of the
      greater of (a) the average of the Closing Prices for the five Trading Days
      preceding the date of delivery of the notice requiring payment of the Event
      Equity Value and (b) the average of the Closing Prices for the five Trading
      Days
      preceding the date on which such required payment (together with such other
      payments, expenses and liquidated damages) is paid in full.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Original
      Issue Date”
means
      the date of the first issuance of any Notes, regardless of the number of
      transfers of any particular Note.

    

    “Triggering
      Event”
means
      any of the following events: (a) the Common Stock is not listed or quoted,
      or is
      suspended from trading, on an Eligible Market for a period of five or more
      Trading Days (which need not be consecutive Trading Days); (b) the Company
      fails
      for any reason to deliver a certificate evidencing any Securities to a Purchaser
      within five Trading Days after delivery of such certificate is required pursuant
      to any Transaction Document or the exercise or conversion rights of the Holders
      pursuant to any Transaction Document are otherwise suspended for any reason;
      (c)
      the Company fails to have available a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock available to issue
      Underlying Shares upon any exercise of the Note; (d) at any time after the
      Closing Date, any Common Stock issuable pursuant to the Transaction Documents
      is
      not listed on an Eligible Market; (e) the Company effects or publicly announces
      its intention to effect any exchange, recapitalization or other transaction
      that
      effectively requires or rewards physical delivery of certificates evidencing
      the
      Common Stock; (f) the
      effectiveness of the Registration Statement lapses for any reason or the Holder
      shall not be permitted to resell any Underlying Shares under the Registration
      Statement, in either case, for five or more Trading Days (which need not be
      consecutive Trading Days); (g) the
      Company fails to make any cash payment required under the Transaction Documents
      and such failure is not cured within five days after notice of such default
      is
      first given to the Company by a Purchaser; (h) the Company defaults in the
      timely performance of any obligation under the Transaction Documents and such
      default continues uncured for a period of 20 days after the date on which notice
      of such default is first given to the Company by a Purchaser (it being
      understood that no prior notice need be given in the case of a default that
      cannot reasonably be cured within 20 days); or (i) the Company materially
      breaches any of its representations or warranties under the Transaction
      Documents.

    

    2. 
Principal
      Payment upon Maturity.

    

    (a)
       Subject
      to the conditions and limitations set forth below and at the option of the
      Purchasers, the Company may pay principal on this Note in (i) cash or (ii)
      shares of Common Stock. The Company must deliver written notice to the Holder
      indicating the manner in which it intends to pay principal at least 30 Trading
      Days prior to the Maturity Date. Failure to timely provide such written notice
      shall be deemed an election by the Company to pay the amount of principal in
      cash. 

    

    (b)
       Notwithstanding
      the foregoing, the Company may not pay principal by issuing shares of Common
      Stock unless all of the Equity Conditions are then satisfied with respect to
      all
      shares of Common Stock then issuable upon conversion of all outstanding
      Notes.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)
       In
      the
      event that the Company pays principal in shares of Common Stock, the number
      of
      shares of Common Stock to be issued to each Holder as such principal shall
      be
      (i) determined by dividing the total principal then payable to such Holder
      by
      the Conversion Price (as adjusted in accordance herewith) and (ii) paid to
      such
      Holder in accordance with Section 2(d) below. 

    

    (d)
       In
      the
      event that any principal is paid in Common Stock, the Company shall within
      three
      days following the date on which such amount was due (i) issue and deliver
      to
      such Holder a certificate, free of restrictive legends, registered in the name
      of the Holder or its designee, for the number of shares of Common Stock to
      which
      the Holder shall be entitled, or (ii) at all times after the Holder has notified
      the Company that this clause (ii) shall apply, credit the number of shares
      of
      Common Stock to which the Holder shall be entitled to the Holder’s or its
      designee’s balance account with The Depository Trust Company through its Deposit
      Withdrawal Agent Commission System.

    

    3.              
      Put
      Option.
      Notwithstanding anything to the contrary contained in this Section 3, after
      the
      expiration of eighteen (18) months from the Original Issue Date, in the event
      that the Company has raised funding in the aggregate amount of $9,000,000
      commencing on the Original Issue Date and the closing bid price of the Company’s
      stock is in excess of $2.00 per share for a period of five (5) consecutive
      trading days, the Holder shall have the right, exercisable on not less than
      thirty (30) calendar days prior written notice to the Company, to require the
      Company to prepay the Notes in accordance with this section. Any notice of
      prepayment hereunder (an “Optional
      Prepayment”)
      shall
      be delivered to the Company at its registered address and shall state (1) that
      the Holder is exercising its right to require the Company to prepay the Note
      and
      (2) the date of prepayment (the “Optional
      Prepayment Notice”).
      On
      the date fixed for prepayment (the “Optional
      Prepayment Date”),
      if
      all terms have been satisfied, the Company shall make payment of the Optional
      Prepayment Amount (as defined below) to or upon the order of the Holder as
      specified by the Holder in writing to the Company at least five (5) business
      day
      prior to the Optional Prepayment Date. If the Holder exercises its right to
      have
      the Note prepaid, the Company shall make payment to the holders of an amount
      in
      cash (the “Optional
      Prepayment Amount”)
      equal
      to the principal amount of the Note. 

    

    4.  Registration
      of Notes.
      The
      Company shall register the Notes upon records to be maintained by the Company
      for that purpose (the “Note
      Register”)
      in the
      name of each record holder thereof from time to time. The Company may deem
      and
      treat the registered Holder of this Note as the absolute owner hereof for the
      purpose of any conversion hereof or any payment of principal hereon, and for
      all
      other purposes, absent actual notice to the contrary.

    

    5. 
Registration
      of Transfers and Exchanges.
      The
      Company shall register the transfer of any portion of this Note in the Note
      Register upon surrender of this Note to the Company at its address for notice
      set forth herein. Upon any such registration or transfer, a new Note, in
      substantially the form of this Note (any such new Note, a “New
      Note”),
      evidencing the portion of this Note so transferred shall be issued to the
      transferee and a New Note evidencing the remaining portion of this Note not
      so
      transferred, if any, shall be issued to the transferring Holder. The acceptance
      of the New Note by the transferee thereof shall be deemed the acceptance by
      such
      transferee of all of the rights and obligations of a holder of a Note. This
      Note
      is exchangeable for an equal aggregate principal amount of Notes of different
      authorized denominations, as requested by the Holder surrendering the same.
      No
      service charge or other fee will be imposed in connection with any such
      registration of transfer or exchange.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6. 
Conversion.

    

    (a)
       At
      the
      Option of the Holder.
      All or
      any portion of this Note shall be convertible into shares of Common Stock
      (subject to the limitations set forth in Section
      6(b)),
      at the
      option of the Holder, at any time and from time to time from and after the
      Original Issue Date. The
      number of shares of Common Stock issuable upon any conversion hereunder shall
      equal the outstanding principal amount of this Note to be converted divided
      by
      the Conversion Price on the Conversion Date. The
      Holder shall effect conversions under this Section
      6(a)
      by
      delivering to the Company a Conversion Notice together with a schedule in the
      form of Schedule
      2
      attached
      hereto (the “Conversion
      Schedule”).
      If
      the Holder is converting less than all of the principal amount of this Note,
      or
      if a conversion hereunder may not be effected in full due to the application
      of
Section
      6(b),
      the
      Company shall honor such conversion to the extent permissible hereunder and
      shall promptly deliver to the Holder a Conversion Schedule indicating the
      principal amount which has not been converted. 

    

    

    (b)
       Certain
      Conversion Restrictions.
      

    

    (i)
      Relating
      to the Number of Shares.

    

    (A)
      Subject to Section 6(b)(i)(B), the number of shares of Common Stock that
      may be acquired by a Holder upon any conversion of Notes (or otherwise in
      respect hereof) shall be limited to the extent necessary to insure that,
      following such conversion (or other issuance), the total number of shares of
      Common Stock then beneficially owned by such Holder and its Affiliates and
      any
      other Persons whose beneficial ownership of Common Stock would be aggregated
      with such Holder’s for purposes of Section 13(d) of the Exchange Act, does not
      exceed 4.999% (the “Threshold
      Percentage”)
      or
      9.999% (the “Maximum
      Percentage”)
      of the
      total number of issued and outstanding shares of Common Stock (including for
      such purpose the shares of Common Stock issuable upon such conversion). For
      such
      purposes, beneficial ownership shall be determined in accordance with Section
      13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
      Each delivery of a Conversion Notice hereunder will constitute a representation
      by the applicable Holder that it has evaluated the limitations set forth in
      this
Section 6(b)(i)(A)
      and has
      determined that issuance of the full number of Underlying Shares issuable in
      respect of such Conversion Notice does not violate the restrictions contained
      in
      this Section
      6(b)(i)(A).

    

    (B)
      Notwithstanding the provisions of Section 6(b)(i)(A), by written notice to
      the Company, the Holder shall
      have the right (x) at any time and from time to time to reduce its Maximum
      Percentage immediately upon notice to the Company in the event and only to
      the
      extent that Section 16 of the Exchange Act or the rules promulgated thereunder
      (or any successor statute or rules) is changed to reduce the beneficial
      ownership percentage threshold thereunder to a percentage less than 9.999%
      and
      (y) at any time and from time to time, to
      waive
      the provisions of this Section insofar as they relate to the Threshold
      Percentage or to
      increase its Threshold Percentage (but
      not
      in excess of the Maximum Percentage) unless
      the Holder shall have, by written instrument delivered to the Company,
      irrevocably waived its rights to so increase its Threshold
      Percentage,
      but (i)
      any such waiver or increase will not be effective until the 61st day after
      such
      notice is delivered to the Company, and (ii) any such waiver or increase or
      decrease will apply only to the Holder and not to any other holder of Notes.
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (C)
      If
      the
      Company has not previously obtained Shareholder Approval (as defined below),
      then the Company may not issue in excess of the Issuable Maximum upon
      conversions of the Notes. The "Issuable
      Maximum"
      means a
      number of shares equal to 19.99% of the of the Company's outstanding shares
      on
      the Closing Date. Each Holder shall be entitled to a portion of the Issuable
      Maximum equal to the quotient obtained by dividing: (x) the principal amount
      of
      Notes issued and sold to such Holder on the Original Issue Date by (y) the
      aggregate principal amount of Notes issued and sold by the Company on the
      Original Issue Date. If any Holder shall no longer hold Notes, then such
      Holder's remaining portion of the Issuable Maximum shall be allocated pro-rata
      among the remaining Holders. If on any Conversion Date: (A) the aggregate number
      of shares of Common Stock that would then be issuable upon conversion in full
      of
      all then outstanding principal amount of Notes would exceed the Issuable
      Maximum, and (B) the Company shall not have previously obtained the vote of
      shareholders, as may be required by the applicable rules and regulations of
      its
      Trading Market (or any successor entity) applicable to approve the issuance
      of
      shares of Common Stock in excess of the Issuable Maximum pursuant to the terms
      hereof (the "Shareholder
      Approval"),
      then,
      the Company shall issue to the converting Holder a number of shares of Common
      Stock equal to such Holder's pro-rata portion (which shall be calculated
      pursuant to the terms hereof) of the Issuable Maximum and, with respect to
      the
      remainder of the principal amount of Notes then held by such Holder for which
      a
      conversion would result in an issuance of shares of Common Stock in excess
      of
      such Holder's pro-rata portion (which shall be calculated pursuant to the terms
      hereof) of the Issuable Maximum (the "Excess
      Principal Amount"),
      the
      applicable Holder shall have the right to require the Company to obtain the
      Shareholder Approval applicable to such issuance as soon as is possible.

    

    7. 
Mechanics
      of Conversion.

    

    (a)
       Upon
      conversion of this Note, the Company shall promptly (but in no event later
      than
      three Trading Days after the Conversion Date) issue or cause to be issued and
      cause to be delivered to or upon the written order of the Holder and in such
      name or names as the Holder may designate a certificate for the Underlying
      Shares issuable upon such conversion, free of restrictive legends unless a
      registration statement covering the resale of the Underlying Shares and naming
      the Holder as a selling stockholder thereunder is not then effective and such
      Underlying Shares are not then freely transferable without volume restrictions
      pursuant to Rule 144 under the Securities Act. The Holder, or any Person so
      designated by the Holder to receive Underlying Shares, shall be deemed to have
      become holder of record of such Underlying Shares as of the Conversion Date.
      The
      Company shall, upon request of the Holder, use its best efforts to deliver
      Underlying Shares hereunder electronically through the Depository Trust
      Corporation or another established clearing corporation performing similar
      functions. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)
       The
      Holder shall not be required to deliver the original Note in order to effect
      a
      conversion hereunder. Execution and delivery of the Conversion Notice shall
      have
      the same effect as cancellation of the original Note and issuance of a New
      Note
      representing the remaining outstanding principal amount. Upon surrender of
      this
      Note following one or more partial conversions, the Company shall promptly
      deliver to the Holder a New Note representing the remaining outstanding
      principal amount.

    

    (c)
       The
      Company’s obligations to issue and deliver Underlying Shares upon conversion of
      this Note in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any set-off,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other Person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance of
      such
      Underlying Shares.

    

    (d)
       If
      by the
      third Trading Day after a Conversion Date the Company fails to deliver to the
      Holder such Underlying Shares in such amounts and in the manner required
      pursuant to Section
      7(a),
      then
      the Holder will have the right to rescind such conversion.

    

    (e)
       If
      by the
      third Trading Day after a Conversion Date the Company fails to deliver to the
      Holder such Underlying Shares in such amounts and in the manner required
      pursuant to Section
      7(a),
      and if
      after such third Trading Day the Holder purchases (in an open market transaction
      or otherwise) shares of 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 Company shall either
      (i) pay cash to such Purchaser in an amount equal to such Purchaser's total
      purchase price (including brokerage commissions, if any) for the shares of
      Common Stock so purchased (the “Buy-In
      Price”),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to such Purchaser a certificate or certificates representing such Common
      Stock and pay cash to such Purchaser in an amount equal to the excess (if any)
      of the Buy-In Price over the product of (A) such number of shares of Common
      Stock, times (B) the Closing Price on the date of the event giving rise to
      the
      Company's obligation to deliver such certificate. 

    

    8. 
Events
      of Default.

    

    (a)
       “Event
      of Default”
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 (free of any claim of subordination) of principal or
      liquidated damages in respect of any Notes, as and when the same becomes due
      and
      payable (whether on the date on which the obligations under the Note mature
      or
      by acceleration, redemption, prepayment or otherwise);

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) the
      Company or any Subsidiary defaults in any of its obligations under any other
      note 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 in an amount exceeding $500,000, whether such indebtedness now
      exists or is hereafter created, and such default results in such indebtedness
      becoming or being declared due and payable prior to the date on which it would
      otherwise become due and payable;

    

    (iii) the
      occurrence of a Triggering Event; or

    

    (iv) the
      occurrence of a Bankruptcy Event.

    

    (b)
       At
      any
      time or times following the occurrence of an Event of Default, the Holder shall
      have the option to elect, by notice to the Company (an “Event
      Notice”),
      to
      require the Company to repurchase all or any portion of (i) the outstanding
      principal amount of this Note, at a repurchase price equal to the greater of
      (A)
      115% of such outstanding principal amount, or (B) the Event Equity Value of
      the
      Underlying Shares issuable upon conversion of such principal amount, and (ii)
      any Underlying Shares issued to such Holder upon conversion of Notes and then
      owned by the Holder, at a price per share equal to the Event Equity Value of
      such issuable and issued Underlying Shares. The aggregate amount payable
      pursuant to the preceding sentence is referred to as the “Event
      Price.”
The
      Company shall pay the Event Price to the Holder no later than the third Trading
      Day following the date of delivery of the Event Notice, and upon receipt thereof
      the Holder shall deliver this Note and certificates evidencing any Underlying
      Shares so repurchased to the Company (to the extent such certificates have
      been
      delivered to the Holder). 

    

    (c)
       Upon
      the
      occurrence of any Bankruptcy Event, all amounts pursuant to Section
      10(b)
      shall
      immediately become due and payable in full in cash, without any further action
      by the Holder.

    

    (d)
       In
      connection with any Event of Default, 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. Any such declaration may be rescinded
      and
      annulled by the 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 thereto.

    

    9. 
Charges,
      Taxes and Expenses.
      Issuance of certificates for Underlying Shares upon conversion of (or otherwise
      in respect of) this Note shall be made without charge to the Holder for any
      issue or transfer tax, withholding tax, transfer agent fee or other incidental
      tax or expense in respect of the issuance of such certificate, all of which
      taxes and expenses shall be paid by the Company; provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the registration of any certificates for Underlying
      Shares or Notes in a name other than that of the Holder. The Holder shall be
      responsible for all other tax liability that may arise as a result of holding
      or
      transferring this Note or receiving Underlying Shares in respect
      hereof.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10. 
Certain
      Adjustments.
      The
      Conversion Price is subject to adjustment from time to time as set forth in
      this
Section
      10.

    

    (a)
       Stock
      Dividends and Splits.
      If the
      Company, at any time while this Note is outstanding, (i) pays a stock dividend
      on its Common Stock or otherwise makes a distribution on any class of capital
      stock that is payable in shares of Common Stock, (ii) subdivides outstanding
      shares of Common Stock into a larger number of shares, or (iii) combines
      outstanding shares of Common Stock into a smaller number of shares, then in
      each
      such case the Conversion Price shall be multiplied by a fraction of which the
      numerator shall be the number of shares of Common Stock outstanding immediately
      before such event and of which the denominator shall be the number of shares
      of
      Common Stock outstanding immediately after such event. Any adjustment made
      pursuant to clause (i) of this Section
      10(a)
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution, and any
      adjustment pursuant to clause (ii) or (iii) of this Section
      10(a)
      shall
      become effective immediately after the effective date of such subdivision or
      combination. However,
      prior to
      December 31, 2006, in
      the
      event that the Company shall complete or effect a consolidation or reverse
      split
      of its outstanding shares of common stock into a greater or lesser number of
      shares of Common Stock, then in each such case the
      Conversion Price
      shall
      not be impacted.
      

    

    (b)
       Pro
      Rata Distributions.
      If the
      Company, at any time while this Note is outstanding, distributes to holders
      of
      Common Stock (i) evidences of its indebtedness, (ii) any security (other than
      a
      distribution of Common Stock covered by the preceding paragraph),
      (iii) rights or warrants to subscribe for or purchase any security, or (iv)
      any other asset (in each case, “Distributed
      Property”),
      then
      in each such case the Conversion Price in effect immediately prior to the record
      date fixed for determination of stockholders entitled to receive such
      distribution shall be adjusted (effective on such record date) to equal the
      product of such Conversion Price times a fraction of which the denominator
      shall
      be the average of the Closing Prices for the five Trading Days immediately
      prior
      to (but not including) such record date and of which the numerator shall be
      such
      average less the then fair market value of the Distributed Property distributed
      in respect of one outstanding share of Common Stock, as determined by the
      Company’s independent certified public accountants that regularly examine the
      financial statements of the Company (an “Appraiser”).
      In
      such event, the Holder, after receipt of the determination by the Appraiser,
      shall have the right to select an additional appraiser (which shall be a
      nationally recognized accounting firm), in which case such fair market value
      shall be deemed to equal the average of the values determined by each of the
      Appraiser and such appraiser. As an alternative to the foregoing adjustment
      to
      the Conversion Price, at the request of the Holder delivered before the 90th
      day
      after such record date, the Company will deliver to such Holder, within five
      Trading Days after such request (or, if later, on the effective date of such
      distribution), the Distributed Property that such Holder would have been
      entitled to receive in respect of the Underlying Shares for which this Note
      could have been converted immediately prior to such record date. If such
      Distributed Property is not delivered to a Holder pursuant to the preceding
      sentence, then upon expiration of or any conversion of the Note that occurs
      after such record date, such Holder shall remain entitled to receive, in
      addition to the Underlying Shares otherwise issuable upon such conversion (if
      applicable), such Distributed Property. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)
       Fundamental
      Changes.
      If, at
      any time while this Note is outstanding, (i) the Company effects any merger
      or
      consolidation of the Company with or into another Person, (ii) the Company
      effects any sale of all or substantially all of its assets in one or more
      transactions, (iii) any tender offer or exchange offer (whether by the Company
      or another Person) is completed pursuant to which holders of Common Stock are
      permitted to tender or exchange their shares for other securities, cash or
      property, or (iv) the Company effects any reclassification of the Common Stock
      or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (other than as a result of a subdivision or combination of shares of Common
      Stock described in Section
      10(a))
      (in any
      such case, a “Fundamental
      Change”),
      then
      upon any subsequent conversion of this Note, the Holder shall have the right
      to
      receive, for each Underlying Share that would have been issuable upon such
      conversion absent such Fundamental Change, the same kind and amount of
      securities, cash or property as it would have been entitled to receive upon
      the
      occurrence of such Fundamental Change if it had been, immediately prior to
      such
      Fundamental Change, the holder of one share of Common Stock (the “Alternate
      Consideration”).
      If
      holders of Common Stock are given any choice as to the securities, cash or
      property to be received in a Fundamental Change, then the Holder shall be given
      the same choice as to the Alternate Consideration it receives upon any
      conversion of this Note following such Fundamental Change. In the event of
      a
      Fundamental Change, the Company or the successor or purchasing Person, as the
      case may be, shall execute with the Holder a written agreement providing
      that:

    

    (x)
       this
      Note
      shall thereafter entitle the Holder to purchase the Alternate
      Consideration,

    

    (y) in
      the
      case of any such successor or purchasing Person, upon such consolidation,
      merger, statutory exchange, combination, sale or conveyance such successor
      or
      purchasing Person shall be jointly and severally liable with the Company for
      the
      performance of all of the Company's obligations under this Note and the Purchase
      Agreement, and 

    

    (z) if
      registration or qualification is required under the Exchange Act or applicable
      state law for the public resale by the Holder of shares of stock and other
      securities so issuable upon conversion of this Note, such registration or
      qualification shall be completed prior to such reclassification, change,
      consolidation, merger, statutory exchange, combination or sale. 

    

    If,
      in
      the case of any Fundamental Change, the Alternate Consideration includes shares
      of stock, other securities, other property or assets of a Person other than
      the
      Company or any such successor or purchasing Person, as the case may be, in
      such
      Fundamental Change, then such written agreement shall also be executed by such
      other Person and shall contain such additional provisions to protect the
      interests of the Holder as the Board of Directors of the Company shall
      reasonably consider necessary by reason of the foregoing. At the Holder’s
      request, any successor to the Company or surviving Person in such Fundamental
      Change shall issue to the Holder a new Note consistent with the foregoing
      provisions and evidencing the Holder’s right to convert such Note into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental Change
      is effected shall include terms requiring any such successor or surviving Person
      to comply with the provisions of this Section
      10(c)
      and
      insuring that this Note (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental Change.
      If
      any Fundamental Change constitutes or results in a Change of Control, then
      at
      the request of the Holder delivered before the 90th day after such Fundamental
      Change, the Company (or any such successor or surviving entity) will purchase
      this Note from the Holder for a purchase price, payable in cash within five
      Trading Days after such request (or, if later, on the effective date of the
      Fundamental Transaction), equal to the Black Scholes value of the remaining
      unconverted portion of this Note on the date of such request. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)
       Subsequent
      Equity Sales.

    

    (i) If,
      at
      any time while this Note is outstanding, the Company or any Subsidiary issues
      additional shares of Common Stock or rights, warrants, options or other
      securities or debt convertible, exercisable or exchangeable for shares of Common
      Stock or otherwise entitling any Person to acquire shares of Common Stock
      (collectively, “Common
      Stock Equivalents”)
      at an
      effective net price to the Company per share of Common Stock (the “Effective
      Price”)
      less
      than the Floor Price (as adjusted hereunder to such date), then the Conversion
      Price shall be reduced to equal the Effective Price. If, at any time while
      this
      Note is outstanding, the Company or any Subsidiary issues Common Stock or Common
      Stock Equivalents at an Effective Price greater than the Conversion Price (as
      adjusted hereunder to such date) but less than the average Closing Price over
      the five Trading Days prior to such issuance (the “Adjustment
      Price”),
      then
      the Conversion Price shall be reduced to equal the product of (A) the Conversion
      Price in effect immediately prior to such issuance of Common Stock or Common
      Stock Equivalents times (B) a fraction, the numerator of which is the sum of
      (1)
      the number of shares of Common Stock outstanding immediately prior to such
      issuance, plus (2) the number of shares of Common Stock which the aggregate
      Effective Price of the Common Stock issued (or deemed to be issued) would
      purchase at the Adjustment Price, and the denominator of which is the aggregate
      number of shares of Common Stock outstanding or deemed to be outstanding
      immediately after such issuance. For purposes of this paragraph, in connection
      with any issuance of any Common Stock Equivalents, (A) the maximum number of
      shares of Common Stock potentially issuable at any time upon conversion,
      exercise or exchange of such Common Stock Equivalents (the “Deemed
      Number”)
      shall
      be deemed to be outstanding upon issuance of such Common Stock Equivalents,
      (B)
      the Effective Price applicable to such Common Stock shall equal the minimum
      dollar value of consideration payable to the Company to purchase such Common
      Stock Equivalents and to convert, exercise or exchange them into Common Stock
      (net of any discounts, fees, commissions and other expenses), divided by the
      Deemed Number, and (C) no further adjustment shall be made to the Conversion
      Price upon the actual issuance of Common Stock upon conversion, exercise or
      exchange of such Common Stock Equivalents.

    

    (ii) If,
      at
      any time while this Note is outstanding, the Company or any Subsidiary issues
      Common Stock Equivalents with an Effective Price or a number of underlying
      shares that floats or resets or otherwise varies or is subject to adjustment
      based (directly or indirectly) on market prices of the Common Stock (a
“Floating
      Price Security”),
      then
      for purposes of applying the preceding paragraph in connection with any
      subsequent conversion, the Effective Price will be determined separately on
      each
      Conversion Date and will be deemed to equal the lowest Effective Price at which
      any holder of such Floating Price Security is entitled to acquire Common Stock
      on such Conversion Date (regardless of whether any such holder actually acquires
      any shares on such date).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iii) Notwithstanding
      the foregoing, no adjustment will be made under this paragraph (d) in respect
      of
      (A) the issuance of Common Stock upon exercise or conversion of any Common
      Stock
      Equivalents described in Schedule
      3.1(g)
      to the
      Purchase Agreement (provided that such exercise or conversion occurs in
      accordance with the terms thereof, without amendment or modification, and that
      the applicable exercise or conversion price or ratio is described in such
      schedule); (B) to officers, directors or employees of, or advisers, consultants
      or independent contractors acting in a similar capacity to, the Company pursuant
      to restricted stock issuances, stock grants, stock options or similar employee
      stock incentives, in each case approved by the Board of Directors of the
      Company; or (C) the issuance of securities in connection with a bona fide joint
      venture or development agreement or strategic partnership or similar agreement
      approved by the Company’s board of directors, the primary purpose of which is
      not to raise equity capital.

    

    (e)
       Calculations.
      All
      calculations under this Section
      10
      shall be
      made to the nearest cent or the nearest 1/100th of a share, as applicable.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company, and the disposition
      of any such shares shall be considered an issue or sale of Common
      Stock.

    

    (f)
       Notice
      of Adjustments.
      Upon
      the occurrence of each adjustment pursuant to this Section
      10,
      the
      Company at its expense will promptly compute such adjustment in accordance
      with
      the terms hereof and prepare and deliver to the Holder a certificate describing
      in reasonable detail such adjustment and the transactions giving rise thereto,
      including all facts upon which such adjustment is based.

    

    (g)
       Notice
      of Corporate Events.
      If the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including without limitation
      any
      granting of rights or warrants to subscribe for or purchase any capital stock
      of
      the Company or any Subsidiary, (ii) authorizes or approves, enters into any
      agreement contemplating or solicits stockholder approval for any Fundamental
      Change or (iii) authorizes the voluntary dissolution, liquidation or winding
      up
      of the affairs of the Company, then the Company shall deliver to the Holder
      a
      notice describing the material terms and conditions of such transaction, at
      least 20 Trading Days prior to the applicable record or effective date on which
      a Person would need to hold Common Stock in order to participate in or vote
      with
      respect to such transaction, and the Company will take all steps reasonably
      necessary in order to insure that the Holder is given the practical opportunity
      to convert this Note prior to such time so as to participate in or vote with
      respect to such transaction; provided, however, that the failure to deliver
      such
      notice or any defect therein shall not affect the validity of the corporate
      action required to be described in such notice. 

    

    11. 
No
      Fractional Shares.
      The
      Company shall not issue or cause to be issued fractional Underlying Shares
      on
      conversion of this Note. If any fraction of an Underlying Share would, except
      for the provisions of this Section
      11,
      be
      issuable upon conversion of this Note, the number of Underlying Shares to be
      issued will be rounded up to the nearest whole share.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12. 
Notices.
      Any and
      all notices or other communications or deliveries hereunder (including any
      Conversion Notice) shall be in writing and shall be deemed given and effective
      on the earliest of (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this
Section 12
      prior
      to
      6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day
      after
      the date of transmission, if such notice or communication is delivered via
      facsimile at the facsimile number specified in this Section
      12
      on a day
      that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
      Trading Day, (iii) the Trading Day following the date of mailing, if sent by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given. The addresses for such
      communications shall be: (i) if to the Company, to 108 Village Square - #327,
      Somers, NY 10589, facsimile: 631-254-2136, attention Robert Rubin, CEO, or
      (ii)
      if to the Holder, to the address or facsimile number appearing on the Company’s
      Noteholder records or such other address or facsimile number as the Holder
      may
      provide to the Company in accordance with this Section 12.

    

    13. Miscellaneous.

    

    (a)
       This
      Note
      shall be binding on and inure to the benefit of the parties hereto and their
      respective successors and permitted assigns. The Company shall not be permitted
      to assign this Note.

    

    (b)
       Subject
      to Section
      13(a),
      nothing
      in this Note shall be construed to give to any person or corporation other
      than
      the Company and the Holder any legal or equitable right, remedy or cause under
      this Note.

    

    (c)
       Governing
      Law; Venue; Waiver Of Jury Trial.
      all
      questions concerning the construction, validity, enforcement and interpretation
      of this Note shall be governed by and construed and enforced in accordance
      with
      the internal laws of the state of new york, without regard to the principles
      of
      conflicts of law thereof. each party hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the city of new york,
      borough of manhattan, for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or discussed
      herein (including with respect to the enforcement of any of the transaction
      documents), and hereby irrevocably waives, and agrees not to assert in any
      suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is
      improper. each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. the company hereby waives all rights to a trial by
      jury.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)
       The
      headings herein are for convenience only, do not constitute a part of this
      Note
      and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (e)
       In
      case
      any one or more of the provisions of this Note shall be invalid or unenforceable
      in any respect, the validity and enforceability of the remaining terms and
      provisions of this Note shall not in any way be affected or impaired thereby
      and
      the parties will attempt in good faith to agree upon a valid and enforceable
      provision which shall be a commercially reasonable substitute therefor, and
      upon
      so agreeing, shall incorporate such substitute provision in this
      Note.

    

    (f)
       In
      the
      event of any stock split, subdivision, dividend or distribution payable in
      shares of Common Stock (or other securities or rights convertible into, or
      entitling the holder thereof to receive directly or indirectly shares of Common
      Stock), combination or other similar recapitalization or event occurring after
      the date hereof, each reference in this Note to a price shall be amended to
      appropriately account for such event.

    

    (g)
       No
      provision of this Note may be waived or amended except in a written instrument
      signed, in the case of an amendment, by the Company and the Holder or, or,
      in
      the case of a waiver, by the Holder. No waiver of any default with respect
      to
      any provision, condition or requirement of this Note shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. 

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOLLOWS]

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
      duly
      authorized officer as of the date first above indicated.

     

    
      	 	 
	 	
              AMERICAN
                UNITED GLOBAL, INC.

            
	 	 
	 	 
	 	
              By
                _____________________________________

            
	 	
              Name:
                

            
	 	
              Title:
                

            

    

    

     

    

 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Schedule
      1

    

    FORM
      OF CONVERSION NOTICE

    

    (To
      be
      executed by the registered Holder

    in
      order
      to convert Note)

    

    The
      undersigned hereby elects to convert the specified principal amount of
      Convertible Notes (the “Notes”)
      into
      shares of common stock, no par value (the “Common
      Stock”),
      of
      American United Global, Inc., a Delaware corporation, according to the
      conditions hereof, as of the date written below.

     

    
      	 	 
	 	____________________________________________________
	 	
              Date
                to Effect Conversion

            
	 	 
	 	____________________________________________________
	 	
              Principal
                amount of Notes owned prior to conversion

            
	 	 
	 	____________________________________________________
	 	
              Principal
                amount of Notes to be converted

            
	 	 
	 	____________________________________________________
	 	
              Number
                of shares of Common Stock to be Issued

            
	 	 
	 	____________________________________________________
	 	
              Applicable
                Conversion Price 

            
	 	 
	 	____________________________________________________
	 	
              Principal
                amount of Notes owned subsequent to Conversion

            
	 	 
	 	____________________________________________________
	 	
              Name
                of Holder

            
	 	 
	 	
              By
                __________________________________________________

            
	 	
              Name:

            
	 	
              Title:
                

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      2

    

    CONVERSION
      SCHEDULE

    

    This
      Conversion Schedule reflects conversions of the Convertible Notes issued by
      American United Global, Inc.

     

    
      	
               

              Date
                of Conversion

            	
              Amount
                of Conversion

            	
              Aggregate
                Principal Amount 

              Remaining
                Subsequent to Conversion

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