Document:

EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT

            REGISTRATION RIGHTS AGREEMENT (this  "Agreement"),  dated as of June
14, 2006, by and among  American  United Global,  Inc., a Delaware  corporation,
with headquarters  located at 108 Village Square #327,  Somers,  New York 10589,
(the "Company"),  and the undersigned buyers (each, a "Buyer", and collectively,
the "Buyers").

            WHEREAS:

            A. In connection with the Securities Purchase Agreement, dated as of
June 14, 2006, by and among the Company and the Buyers (the "Securities Purchase
Agreement"),  the  Company  has  agreed,  upon  the  terms  and  subject  to the
conditions set forth in the Securities Purchase Agreement,  to issue and sell to
each Buyer (i) senior  secured  convertible  notes of the Company (the "Notes"),
which will,  among other  things,  be  convertible  into shares of the Company's
common stock,  $0.01 par value per share (the "Common Stock", as converted,  the
"Conversion  Shares")  in  accordance  with  the  terms  of the  Notes,  (ii) an
aggregate of 4,800,000  shares (the "Common  Shares") of Common Stock, and (iii)
warrants  (the  "Warrants"),  which will be  exercisable  to purchase  shares of
Common Stock (as exercised collectively, the "Warrant Shares").

            B.  In  accordance  with  the  terms  of  the  Securities   Purchase
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.

            NOW,  THEREFORE,  in  consideration  of the  premises and the mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the Company and each
of the Buyers hereby agree as follows:

            1.    Definitions.

                  Capitalized terms used herein and not otherwise defined herein
shall  have  the  respective  meanings  set  forth  in the  Securities  Purchase
Agreement.  As used in this  Agreement,  the  following  terms  shall  have  the
following meanings:

                  a. "Business Day" means any day other than Saturday, Sunday or
any other day on which  commercial  banks in The City of New York are authorized
or required by law to remain closed.

                  b.  "Closing  Date"  shall have the  meaning  set forth in the
Securities Purchase Agreement.

                  c. "Effective Date" means the date the Registration  Statement
has been declared effective by the SEC.

                  d. "Effectiveness Deadline" means the date which is (i) in the
event that the  Registration  Statement  is not  subject to a full review by the
SEC,  90  calendar  days  after the  Closing  Date or (ii) in the event that the
Registration Statement is subject to a full review by the SEC, 120 calendar days
after the Closing Date.

<PAGE>

                  e. "Filing  Deadline" means 30 calendar days after the Closing
Date.

                  f.  "Investor"  means a Buyer or any  transferee  or  assignee
thereof to whom a Buyer  assigns its rights under this  Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee  thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.

                  g. "Person" means an individual,  a limited liability company,
a  partnership,  a joint  venture,  a corporation,  a trust,  an  unincorporated
organization and a government or any department or agency thereof.

                  h. "register,"  "registered,"  and  "registration"  refer to a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) in compliance  with the 1933 Act and pursuant to
Rule 415 and the declaration or ordering of effectiveness  of such  Registration
Statement(s) by the SEC.

                  i.  "Registrable  Securities"  means (i) the Conversion Shares
issued or issuable upon conversion of the Notes,  (ii) the Common Shares,  (iii)
the Warrant Shares issued or issuable upon exercise of the Warrants and (iv) any
share capital of the Company  issued or issuable with respect to the  Conversion
Shares,  the Notes, the Common Shares,  the Warrant Shares, or the Warrants as a
result of any split,  dividend,  recapitalization,  exchange or similar event or
otherwise,  without  regard to any  limitations  on  conversions of the Notes or
exercises of the Warrants.

                  j. "Registration  Statement" means a registration statement or
registration  statements  of the Company  filed under the 1933 Act  covering the
Registrable Securities.

                  k. "Required Holders" means the holders of at least a majority
of the  Registrable  Securities;  provided,  however  that any such  holders  of
Registrable  Securities  must  include the  Collateral  Agent (as defined in the
Securities Purchase Agreement).

                  l. "Required Registration Amount" means the sum of (i) 130% of
the number of Conversion  Shares issued and issuable pursuant to the Notes as of
the trading day immediately preceding the applicable date of determination, (ii)
the number of Common  Shares,  and (iii)  130% of the  number of Warrant  Shares
issued and issuable  pursuant to the Warrants as of the trading day  immediately
preceding the  applicable  date of  determination,  all subject to adjustment as
provided in Section 2(e).

                  m.  "Rule  415"  means  Rule  415  under  the  1933 Act or any
successor  rule  providing  for offering  securities  on a continuous or delayed
basis.

                  n.  "SEC"  means the United  States  Securities  and  Exchange
Commission.

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<PAGE>

            2.    Registration.

                  a. Mandatory Registration.  The Company shall prepare, and, as
soon as practicable  but in no event later than the Filing  Deadline,  file with
the SEC the  Registration  Statement on Form SB-2  covering the resale of all of
the Registrable Securities.  In the event that Form SB-2 is unavailable for such
a registration, the Company shall use such other form as is available for such a
registration on another  appropriate form reasonably  acceptable to the Required
Holders,  subject to the provisions of Section 2(d). The Registration  Statement
prepared pursuant hereto shall register for resale at least the number of shares
of  Common  Stock  equal  to the  Required  Registration  Amount  as of date the
Registration  Statement  is  initially  filed  with  the SEC.  The  Registration
Statement shall contain (except if otherwise  directed by the Required  Holders)
the "Selling  Stockholders" and "Plan of Distribution" sections in substantially
the form attached hereto as Exhibit B. The Company shall use its best efforts to
have  the  Registration  Statement  declared  effective  by the  SEC as  soon as
practicable,  but in no event later than the Effectiveness  Deadline. By 9:30 am
on the date following the Effective Date, the Company shall file with the SEC in
accordance  with Rule 424 under the 1933 Act the final  prospectus to be used in
connection with sales pursuant to such Registration Statement.

                  b. Allocation of Registrable Securities. The initial number of
Registrable  Securities included in any Registration  Statement and any increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors  based on the number of Registrable  Securities held by
each  Investor at the time the  Registration  Statement  covering  such  initial
number of Registrable  Securities or increase  thereof is declared  effective by
the SEC. In the event that an Investor sells or otherwise  transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable  Securities included in such
Registration Statement for such transferor.  Any Shares of Common Stock included
in a  Registration  Statement  and which  remain  allocated  to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining  Investors,  pro rata based on the number of
Registrable  Securities  then held by such  Investors  which are covered by such
Registration  Statement.  In no event shall the Company  include any  securities
other than  Registrable  Securities on any  Registration  Statement  without the
prior written consent of the Required Holders.

                  c. Legal  Counsel.  Subject to Section 5 hereof,  the Required
Holders  shall have the right to select one legal  counsel to review and oversee
any registration  pursuant to this Section 2 ("Legal  Counsel"),  which shall be
Schulte Roth & Zabel LLP or such other counsel as  thereafter  designated by the
Required Holders.  The Company and Legal Counsel shall reasonably cooperate with
each other in performing the Company's obligations under this Agreement.

                  d.  Ineligibility  for Form S-3. In the event that Form S-3 is
not  available  for the  registration  of the resale of  Registrable  Securities
hereunder,  the  Company  shall  (i)  register  the  resale  of the  Registrable
Securities on another  appropriate  form  reasonably  acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3 as
soon as such form is available,  provided  that the Company  shall  maintain the
effectiveness of the Registration  Statement then in effect until such time as a
Registration  Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

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<PAGE>

                  e. Sufficient  Number of Shares  Registered.  In the event the
number of shares  available  under a  Registration  Statement  filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration  Statement or an Investor's allocated portion
of the Registrable  Securities pursuant to Section 2(b), the Company shall amend
the applicable  Registration Statement, or file a new Registration Statement (on
the short form available  therefor,  if applicable),  or both, so as to cover at
least  the  Required  Registration  Amount  as of the  trading  day  immediately
preceding  the  date  of the  filing  of  such  amendment  or  new  Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the necessity therefor arises. The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable  following the filing thereof.  For purposes of
the foregoing  provision,  the number of shares  available  under a Registration
Statement  shall  be  deemed  "insufficient  to  cover  all of  the  Registrable
Securities"  if at any time the number of shares of Common Stock  available  for
resale under the Registration  Statement is less than the product  determined by
multiplying (i) the Required  Registration  Amount as of such time by (ii) 0.90.
The calculation set forth in the foregoing sentence shall be made without regard
to any  limitations  on the  conversion  of the  Notes  or the  exercise  of the
Warrants and such  calculation  shall assume that the Notes are then convertible
into shares of Common Stock at the then  prevailing  Conversion Rate (as defined
in the Notes) and that the  Warrants are then  exercisable  for shares of Common
Stock at the then prevailing Exercise Price (as defined in the Warrants).

                  f.  Effect  of  Failure  to  File  and  Obtain  and   Maintain
Effectiveness  of  Registration  Statement.  If  (i)  a  Registration  Statement
covering all of the  Registrable  Securities  required to be covered thereby and
required to be filed by the Company  pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a "Filing Failure") or
(B) not declared effective by the SEC on or before the respective  Effectiveness
Deadline (an  "Effectiveness  Failure")  or (ii) on any day after the  Effective
Date sales of all of the Registrable  Securities required to be included on such
Registration  Statement  cannot be made (other than  during an  Allowable  Grace
Period (as defined in Section 3(r)) pursuant to such  Registration  Statement or
otherwise  (including,  without  limitation,  because  of a failure to keep such
Registration  Statement effective,  to disclose such information as is necessary
for sales to be made  pursuant  to such  Registration  Statement,  to register a
sufficient  number of shares of Common  Stock or to maintain  the listing of the
Common Stock) (a "Maintenance  Failure") then, as partial relief for the damages
to any holder by reason of any such delay in or reduction of its ability to sell
the  underlying  Shares of Common Stock (which  remedy shall not be exclusive of
any other remedies available at law or in equity), the Company shall pay to each
holder of  Registrable  Securities  relating to such  Registration  Statement an
amount in cash equal to two percent  (2.0%) of the aggregate  Purchase Price (as
such term is defined in the Securities  Purchase  Agreement) of such  Investor's
Notes  relating to the  Registrable  Securities  included  in such  Registration
Statement on each of the following dates: (i) the day of a Filing Failure;  (ii)
the day of an  Effectiveness  Failure;  (iii) the initial  day of a  Maintenance
Failure;  (iv) on every  thirtieth  day  after the day of a Filing  Failure  and
thereafter  (pro rated for periods  totaling  less than thirty  days) until such
Filing  Failure  is  cured;  (v) on  every  thirtieth  day  after  the day of an
Effectiveness  Failure and thereafter (pro rated for periods  totaling less than
thirty  days)  until  such  Effectiveness  Failure  is cured;  and (vi) on every
thirtieth day after the initial day of a Maintenance Failure and thereafter (pro
rated for periods totaling less than thirty days) until such Maintenance Failure
is cured.  The  payments to which a holder  shall be  entitled  pursuant to this
Section  2(g)  are  referred  to  herein  as   "Registration   Delay  Payments."
Registration  Delay  Payments  shall be paid on the earlier of (I) the dates set
forth above and (II) the third  Business  Day after the event or failure  giving
rise to the Registration Delay Payments is cured. Notwithstanding the foregoing,
Registration  Delay Payments  shall not accrue or be payable in connection  with
Warrant  Shares.  In the  event the  Company  fails to make  Registration  Delay
Payments  in a timely  manner,  such  Registration  Delay  Payments  shall  bear
interest  at the rate of two  percent  (2.0%) per month  (prorated  for  partial
months) until paid in full.

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<PAGE>

            3.    Related Obligations.

            At such time as the  Company  is  obligated  to file a  Registration
Statement with the SEC pursuant to Section 2(a),  2(d) or 2(e), the Company will
use its best efforts to effect the registration of the Registrable Securities in
accordance  with the  intended  method  of  disposition  thereof  and,  pursuant
thereto, the Company shall have the following obligations:

                  a.  The  Company  shall  submit  to the  SEC,  within  two (2)
Business  Days  after  the  Company  learns  that  no  review  of  a  particular
Registration  Statement  will be made by the  staff of the SEC or that the staff
has no further comments on a particular  Registration Statement, as the case may
be, a request for acceleration of effectiveness of such  Registration  Statement
to a time and date not later than 48 hours after the submission of such request.
The Company shall keep each Registration  Statement  effective  pursuant to Rule
415 at all times until the earlier of (i) the date as of which the Investors may
sell all of the Registrable  Securities  covered by such Registration  Statement
without  restriction   pursuant  to  Rule  144(k)  (or  any  successor  thereto)
promulgated  under  the 1933 Act or (ii) the date on which the  Investors  shall
have  sold  all of the  Registrable  Securities  covered  by  such  Registration
Statement  (the  "Registration  Period").  The  Company  shall  ensure that each
Registration  Statement  (including any  amendments or  supplements  thereto and
prospectuses  contained  therein)  shall not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements  therein (in the case of  prospectuses,  in the
light of the circumstances in which they were made) not misleading.

                  b.  The  Company  shall  prepare  and  file  with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company  filing a report on Form 10-Q,  Form
10-K or any  analogous  report under the  Securities  Exchange  Act of 1934,  as
amended (the "1934 Act"),  the Company  shall have  incorporated  such report by
reference into such Registration  Statement,  if applicable,  or shall file such
amendments  or  supplements  with the SEC on the same day on which  the 1934 Act
report is filed  which  created  the  requirement  for the  Company  to amend or
supplement such Registration Statement.

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<PAGE>

                  c. The Company  shall (A) permit  Legal  Counsel to review and
comment upon (i) a Registration  Statement at least five (5) Business Days prior
to its  filing  with the SEC and  (ii) all  amendments  and  supplements  to all
Registration  Statements (except for Annual Reports on Form 10-K, and Reports on
Form 10-Q and any similar or successor  reports)  within a reasonable  number of
days  prior to their  filing  with  the SEC,  and (B) not file any  Registration
Statement or amendment or  supplement  thereto in a form to which Legal  Counsel
reasonably  objects.  The Company shall not submit a request for acceleration of
the  effectiveness  of a  Registration  Statement or any amendment or supplement
thereto without the prior approval of Legal Counsel,  which consent shall not be
unreasonably  withheld.  The Company  shall  furnish to Legal  Counsel,  without
charge, (i) copies of any correspondence from the SEC or the staff of the SEC to
the Company or its representatives relating to any Registration Statement,  (ii)
promptly  after the same is  prepared  and filed  with the SEC,  one copy of any
Registration  Statement  and  any  amendment(s)  thereto,   including  financial
statements and schedules,  all documents  incorporated therein by reference,  if
requested by an Investor,  and all exhibits and (iii) upon the  effectiveness of
any  Registration  Statement,  one  copy  of the  prospectus  included  in  such
Registration  Statement and all amendments and supplements  thereto. The Company
shall  reasonably  cooperate  with Legal  Counsel in  performing  the  Company's
obligations pursuant to this Section 3.

                  d.  The  Company  shall   furnish  to  each   Investor   whose
Registrable  Securities  are  included in any  Registration  Statement,  without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto,  including
financial  statements  and  schedules,  all  documents  incorporated  therein by
reference,  if  requested by an  Investor,  all  exhibits  and each  preliminary
prospectus,  (ii) upon the effectiveness of any Registration Statement, ten (10)
copies  of the  prospectus  included  in  such  Registration  Statement  and all
amendments  and  supplements  thereto  (or such  other  number of copies as such
Investor  may  reasonably  request)  and (iii) such other  documents,  including
copies of any preliminary or final  prospectus,  as such Investor may reasonably
request  from  time  to time in  order  to  facilitate  the  disposition  of the
Registrable Securities owned by such Investor.

                  e. The Company  shall use its best efforts to (i) register and
qualify,  unless an exemption from registration and qualification  applies,  the
resale by  Investors of the  Registrable  Securities  covered by a  Registration
Statement  under such  other  securities  or "blue  sky" laws of all  applicable
jurisdictions   in  the  United   States,   (ii)   prepare  and  file  in  those
jurisdictions,   such  amendments  (including  post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (x)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(e),  (y) subject  itself
to general taxation in any such  jurisdiction,  or (z) file a general consent to
service of process in any such  jurisdiction.  The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable  Securities of the receipt
by the  Company  of any  notification  with  respect  to the  suspension  of the
registration  or  qualification  of any of the  Registrable  Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of notice of the  initiation or threatening of any proceeding for
such purpose.

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<PAGE>

                  f. The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware  of such  event,  as a  result  of  which  the  prospectus  included  in a
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements  therein,  in the light of the circumstances
under which they were made, not misleading (provided that in no event shall such
notice contain any material,  nonpublic  information),  and,  subject to Section
3(r), promptly prepare a supplement or amendment to such Registration  Statement
to correct such untrue  statement  or  omission,  and deliver ten (10) copies of
such  supplement  or amendment to Legal Counsel and each Investor (or such other
number of copies as Legal Counsel or such Investor may reasonably request).  The
Company  shall also  promptly  notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus  supplement or post-effective  amendment
has  been  filed,  and  when a  Registration  Statement  or  any  post-effective
amendment has become  effective  (notification  of such  effectiveness  shall be
delivered to Legal  Counsel and each Investor by facsimile or e-mail on the same
day of such effectiveness and by overnight mail), (ii) of any request by the SEC
for amendments or supplements to a Registration  Statement or related prospectus
or related information, and (iii) of the Company's reasonable determination that
a post-effective amendment to a Registration Statement would be appropriate.

                  g. The  Company  shall use its best  efforts  to  prevent  the
issuance  of  any  stop  order  or  other   suspension  of  effectiveness  of  a
Registration  Statement,  or the suspension of the  qualification  of any of the
Registrable  Securities  for sale in any  jurisdiction  and, if such an order or
suspension  is issued,  to obtain the  withdrawal of such order or suspension at
the earliest  possible  moment and to notify Legal Counsel and each Investor who
holds  Registrable  Securities  being sold of the issuance of such order and the
resolution  thereof or its receipt of notice of the  initiation or threat of any
proceeding for such purpose.

                  h. At the  reasonable  request of any  Investor,  the  Company
shall  furnish  to  such  Investor,  on the  date  of the  effectiveness  of the
Registration  Statement  and  thereafter  from time to time on such  dates as an
Investor  may  reasonably  request  (i) a  letter,  dated  such  date,  from the
Company's  independent  certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an  underwritten  public  offering,  addressed  to the  Investors,  and  (ii) an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration  Statement,  in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Investors.

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<PAGE>

                  i. The Company shall make  available for inspection by (i) any
Investor,  (ii) Legal Counsel and (iii) one firm of  accountants or other agents
retained  by the  Investors  (collectively,  the  "Inspectors"),  all  pertinent
financial and other records, and pertinent corporate documents and properties of
the  Company  (collectively,  the  "Records"),  as  shall be  reasonably  deemed
necessary by each  Inspector,  and cause the Company's  officers,  directors and
employees to supply all information which any Inspector may reasonably  request;
provided,  however, that each Inspector shall agree to hold in strict confidence
and shall not make any  disclosure  (except to an Investor) or use of any Record
or  other  information  which  the  Company  determines  in  good  faith  to  be
confidential,  and of which determination the Inspectors are so notified, unless
(a)  the  disclosure  of such  Records  is  necessary  to  avoid  or  correct  a
misstatement or omission in any Registration  Statement or is otherwise required
under the 1933 Act,  (b) the  release of such  Records is ordered  pursuant to a
final,  non-appealable  subpoena  or order  from a court or  government  body of
competent  jurisdiction,  or (c) the  information  in such Records has been made
generally  available to the public other than by disclosure in violation of this
Agreement.  Each Investor agrees that it shall, upon learning that disclosure of
such  Records  is  sought  in or by a court or  governmental  body of  competent
jurisdiction or through other means, give prompt notice to the Company and allow
the  Company,  at its  expense,  to  undertake  appropriate  action  to  prevent
disclosure  of,  or to  obtain  a  protective  order  for,  the  Records  deemed
confidential.  Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors' ability to
sell  Registrable  Securities  in a manner  which is otherwise  consistent  with
applicable laws and regulations.

                  j.  The  Company  shall  hold in  confidence  and not make any
disclosure of information  concerning an Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

                  k. The Company shall use its best efforts  either to (i) cause
all of the  Registrable  Securities  covered by a  Registration  Statement to be
listed on each  securities  exchange  on which  securities  of the same class or
series  issued by the  Company are then  listed,  if any, if the listing of such
Registrable  Securities  is then  permitted  under the rules of such exchange or
(ii) secure the inclusion for quotation of all of the Registrable  Securities on
the Nasdaq National Market or (iii) if, despite the Company's best efforts,  the
Company is  unsuccessful  in satisfying  the preceding  clauses (i) and (ii), to
secure the  inclusion  for  quotation of all of the  Registrable  Securities  on
Nasdaq Capital Market for such Registrable  Securities and, without limiting the
generality of the foregoing, to use its best efforts to arrange for at least two
market makers to register with the National  Association of Securities  Dealers,
Inc.  ("NASD") as such with respect to such  Registrable  Securities or (iv) if,
despite the Company's best efforts,  the Company is  unsuccessful  in satisfying
the preceding clauses (i)-(iii), to secure the inclusion for quotation of all of
the  Registrable  Securities  on the NASD's OTC  Bulletin  Board or the American
Stock  Exchange.  The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).

                                       8
<PAGE>

                  l. The Company  shall  cooperate  with the  Investors who hold
Registrable  Securities being offered and, to the extent applicable,  facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend)  representing  the  Registrable  Securities to be offered  pursuant to a
Registration  Statement and enable such certificates to be in such denominations
or amounts,  as the case may be, as the  Investors  may  reasonably  request and
registered in such names as the Investors may request.

                  m. If requested by an Investor,  the Company shall (i) as soon
as  practicable   incorporate  in  a  prospectus  supplement  or  post-effective
amendment  such  information as an Investor  reasonably  requests to be included
therein  relating  to the  sale  and  distribution  of  Registrable  Securities,
including,  without  limitation,  information  with  respect  to the  number  of
Registrable  Securities  being  offered or sold,  the purchase  price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering;  (ii) as soon as practicable make all required filings of
such prospectus  supplement or post-effective  amendment after being notified of
the matters to be incorporated in such prospectus  supplement or  post-effective
amendment;  and (iii) as soon as  practicable,  supplement or make amendments to
any  Registration  Statement if reasonably  requested by an Investor holding any
Registrable Securities.

                  n. The  Company  shall  use its  best  efforts  to  cause  the
Registrable Securities covered by a Registration Statement to be registered with
or  approved  by such  other  governmental  agencies  or  authorities  as may be
necessary to consummate the disposition of such Registrable Securities.

                  o. The Company shall make generally  available to its security
holders  as soon as  practical,  but not later than  ninety  (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with,  and in the manner  provided by, the provisions of Rule 158 under the 1933
Act) covering a  twelve-month  period  beginning not later than the first day of
the Company's fiscal quarter next following the effective date of a Registration
Statement.

                  p. The Company shall  otherwise use its best efforts to comply
with all  applicable  rules and  regulations  of the SEC in connection  with any
registration hereunder.

                  q. Within two (2) Business Days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver,  and shall cause legal counsel for the Company to deliver, to the
transfer  agent for such  Registrable  Securities  (with copies to the Investors
whose  Registrable  Securities  are  included  in such  Registration  Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

                  r.  Notwithstanding  anything to the contrary  herein,  at any
time after the Effective Date, the Company may delay the disclosure of material,
non-public  information  concerning  the Company the  disclosure of which at the
time is not, in the good faith  opinion of the Board of Directors of the Company
and its  counsel,  in the best  interest of the  Company  and, in the opinion of
counsel to the Company otherwise required (a "Grace Period"); provided, that the
Company  shall  promptly (i) notify the Investors in writing of the existence of
material, non-public information giving rise to a Grace Period (provided that in
each  notice  the  Company  will not  disclose  the  content  of such  material,
non-public  information to the Investors) and the date on which the Grace Period
will begin,  and (ii) notify the  Investors  in writing of the date on which the
Grace Period ends; and, provided further, that no Grace Period shall exceed five
(5)  consecutive  days and during any three  hundred sixty five (365) day period
such Grace  Periods  shall not exceed an  aggregate  of twenty (20) days and the
first day of any Grace  Period must be at least two (2)  trading  days after the
last day of any prior Grace Period (each,  an  "Allowable  Grace  Period").  For
purposes of  determining  the length of a Grace Period  above,  the Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) and shall end on and include  the later of the date the  Investors
receive the notice  referred to in clause (ii) and the date  referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during the
period of any Allowable Grace Period.  Upon expiration of the Grace Period,  the
Company shall again be bound by the first  sentence of Section 3(f) with respect
to  the  information  giving  rise  thereto  unless  such  material,  non-public
information is no longer applicable.  Notwithstanding  anything to the contrary,
the  Company  shall cause its  transfer  agent to deliver  unlegended  shares of
Common Stock to a transferee of an Investor in accordance  with the terms of the
Securities  Purchase  Agreement  in  connection  with  any  sale of  Registrable
Securities  with  respect to which an Investor  has entered  into a contract for
sale prior to the  Investor's  receipt  of the notice of a Grace  Period and for
which the Investor has not yet settled.

                                       9
<PAGE>

            4.    Obligations of the Investors.

                  a.  At  least  five  (5)  Business  Days  prior  to the  first
anticipated  filing date of a Registration  Statement,  the Company shall notify
each Investor in writing of the information the Company  requires from each such
Investor  if such  Investor  elects to have any of such  Investor's  Registrable
Securities  included  in such  Registration  Statement.  It shall be a condition
precedent  to the  obligations  of the  Company  to  complete  the  registration
pursuant to this  Agreement  with  respect to the  Registrable  Securities  of a
particular  Investor  that such  Investor  shall  furnish  to the  Company  such
information  regarding  itself,  the  Registrable  Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably  required to effect the  effectiveness of the registration of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

                  b.  Each  Investor,  by  such  Investor's  acceptance  of  the
Registrable  Securities,  agrees to  cooperate  with the  Company as  reasonably
requested by the Company in connection  with the  preparation  and filing of any
Registration Statement hereunder,  unless such Investor has notified the Company
in  writing  of such  Investor's  election  to  exclude  all of such  Investor's
Registrable Securities from such Registration Statement.

                  c. Each Investor  agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind  described in Section 3(g)
or the first  sentence  of 3(f),  such  Investor  will  immediately  discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the  supplemented or amended  prospectus  contemplated by Section 3(g) or the
first  sentence of 3(f) or receipt of notice that no  supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver  unlegended  Shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection  with any sale of  Registrable  Securities  with  respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section  3(g) or the first  sentence of 3(f) and for which the  Investor has not
yet settled.

                                       10
<PAGE>

                  d. Each Investor covenants and agrees that it will comply with
the prospectus  delivery  requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable  Securities pursuant
to the Registration Statement.

            5.    Expenses of Registration.

            All  reasonable  expenses,  other than  underwriting  discounts  and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and  disbursements of counsel for the Company shall be paid by the Company.
The Company shall also reimburse the Investors for the fees and disbursements of
Legal Counsel in connection with registration,  filing or qualification pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to $15,000.

            6.    Indemnification.

            In  the  event  any   Registrable   Securities  are  included  in  a
Registration Statement under this Agreement:

                  a. To the fullest  extent  permitted by law, the Company will,
and hereby  does,  indemnify,  hold  harmless  and  defend  each  Investor,  the
directors,  officers, members, partners, employees, agents,  representatives of,
and each Person,  if any,  who  controls any Investor  within the meaning of the
1933 Act or the 1934 Act (each,  an "Indemnified  Person"),  against any losses,
claims,  damages,  liabilities,  judgments,  fines,  penalties,  charges, costs,
reasonable  attorneys'  fees,  amounts paid in settlement or expenses,  joint or
several,  (collectively,  "Claims")  incurred  in  investigating,  preparing  or
defending any action, claim, suit, inquiry, proceeding,  investigation or appeal
taken from the foregoing by or before any court or governmental,  administrative
or other  regulatory  agency,  body or the SEC,  whether  pending or threatened,
whether or not an indemnified  party is or may be a party thereto  ("Indemnified
Damages"),  to which any of them may become  subject  insofar as such Claims (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
arise out of or are based  upon:  (i) any untrue  statement  or  alleged  untrue
statement of a material fact in a Registration  Statement or any  post-effective
amendment  thereto or in any filing made in connection with the qualification of
the offering under the  securities or other "blue sky" laws of any  jurisdiction
in which Registrable Securities are offered ("Blue Sky Filing"), or the omission
or alleged  omission to state a material fact  required to be stated  therein or
necessary  to make the  statements  therein  not  misleading,  (ii)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant to a  Registration  Statement or (iv) any violation of this
Agreement  (the  matters  in the  foregoing  clauses  (i)  through  (iv)  being,
collectively,   "Violations").  Subject  to  Section  6(c),  the  Company  shall
reimburse the  Indemnified  Persons,  promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them  in   connection   with   investigating   or  defending   any  such  Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified  Person  arising  out of or based upon a Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for use
in connection  with the  preparation of the  Registration  Statement or any such
amendment  thereof or supplement  thereto,  if such  prospectus  was timely made
available by the Company  pursuant to Section 3(d);  (ii) shall not be available
to the extent such Claim is based on a failure of the  Investor to deliver or to
cause to be delivered the prospectus made available by the Company,  including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company  pursuant to Section 3(d); and (iii) shall not apply to
amounts paid in settlement of any Claim if such  settlement is effected  without
the  prior  written  consent  of  the  Company,   which  consent  shall  not  be
unreasonably  withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any  investigation  made by or on behalf of the Indemnified
Person and shall  survive the  transfer  of the  Registrable  Securities  by the
Investors pursuant to Section 9.

                                       11
<PAGE>

                  b. In connection with any  Registration  Statement in which an
Investor  is  participating,  each such  Investor  agrees to  severally  and not
jointly indemnify,  hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the  Registration  Statement and each Person,  if any,
who  controls  the  Company  within the  meaning of the 1933 Act or the 1934 Act
(each,  an  "Indemnified  Party"),  against any Claim or Indemnified  Damages to
which  any of them may  become  subject,  under  the 1933  Act,  the 1934 Act or
otherwise,  insofar as such  Claim or  Indemnified  Damages  arise out of or are
based upon any  Violation,  in each case to the extent,  and only to the extent,
that such  Violation  occurs in reliance  upon and in  conformity  with  written
information  furnished  to the  Company by such  Investor  expressly  for use in
connection with such Registration Statement;  and, subject to Section 6(c), such
Investor will  reimburse any legal or other expenses  reasonably  incurred by an
Indemnified Party in connection with  investigating or defending any such Claim;
provided,  however,  that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution  contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior written  consent of such Investor,  which consent shall not be
unreasonably withheld or delayed; provided,  further, however, that the Investor
shall be liable  under  this  Section  6(b) for only  that  amount of a Claim or
Indemnified  Damages as does not exceed the net  proceeds to such  Investor as a
result  of the sale of  Registrable  Securities  pursuant  to such  Registration
Statement.  Such indemnity  shall remain in full force and effect  regardless of
any  investigation  made by or on  behalf  of such  Indemnified  Party and shall
survive the transfer of the Registrable  Securities by the Investors pursuant to
Section 9.  Notwithstanding  anything  to the  contrary  contained  herein,  the
indemnification  agreement  contained  in this  Section 6(b) with respect to any
preliminary  prospectus shall not inure to the benefit of any Indemnified  Party
if  the  untrue  statement  or  omission  of  material  fact  contained  in  the
preliminary  prospectus  was corrected on a timely basis in the  prospectus,  as
then amended or supplemented.

                                       12
<PAGE>

                  c.  Promptly  after  receipt  by  an  Indemnified   Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action or proceeding (including any governmental action or proceeding) involving
a Claim,  such  Indemnified  Person or  Indemnified  Party shall,  if a Claim in
respect thereof is to be made against any indemnifying  party under this Section
6,  deliver  to the  indemnifying  party a written  notice  of the  commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the  extent  the  indemnifying  party so  desires,  jointly  with  any  other
indemnifying party similarly  noticed,  to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,  however, that an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel  with the fees  and  expenses  of not  more  than one  counsel  for such
Indemnified  Person or Indemnified  Party to be paid by the indemnifying  party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented by such counsel in such  proceeding.  In the case of an
Indemnified  Person,  legal  counsel  referred to in the  immediately  preceding
sentence  shall be  selected  by the  Investors  holding at least a majority  in
interest of the Registrable Securities included in the Registration Statement to
which  the  Claim  relates;  provided,  however  that  if  the  holders  of  the
Registrable  Securities  included in the  Registration  Statement  includes  the
Collateral  Agent,  the legal counsel  referred to in the immediately  preceding
sentence  shall be  selected  by the  Investors  holding at least a majority  in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates and such holders must include the Collateral  Agent. The
Indemnified  Party  or  Indemnified   Person  shall  cooperate  fully  with  the
indemnifying  party in connection  with any  negotiation  or defense of any such
action or Claim by the indemnifying  party and shall furnish to the indemnifying
party  all  information   reasonably  available  to  the  Indemnified  Party  or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the Indemnified Party or Indemnified  Person  reasonably  apprised at
all times as to the status of the defense or any  settlement  negotiations  with
respect thereto. No indemnifying party shall be liable for any settlement of any
action,  claim  or  proceeding  effected  without  its  prior  written  consent,
provided,  however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall,  without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other  compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified  Person of a release from all liability
in respect to such Claim or litigation,  and such  settlement  shall not include
any  admission  as to  fault  on the part of the  Indemnified  Party.  Following
indemnification  as provided  for  hereunder,  the  indemnifying  party shall be
subrogated to all rights of the  Indemnified  Party or  Indemnified  Person with
respect to all third parties,  firms or corporations  relating to the matter for
which  indemnification  has been made. The failure to deliver  written notice to
the indemnifying  party within a reasonable time of the commencement of any such
action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action.

                                       13
<PAGE>

                  d. The  indemnification  required  by this  Section 6 shall be
made by  periodic  payments  of the  amount  thereof  during  the  course of the
investigation or defense,  as and when bills are received or Indemnified Damages
are incurred.

                  e.  The  indemnity  agreements  contained  herein  shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

            7.    Contribution.

            To the  extent  any  indemnification  by an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person  involved in the sale of  Registrable  Securities  which Person is
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the 1933 Act) in  connection  with such sale shall be entitled  to  contribution
from any Person  involved  in such sale of  Registrable  Securities  who was not
guilty of fraudulent  misrepresentation;  and (ii) contribution by any seller of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.

            8.    Reports Under the 1934 Act.

            With a view to making  available  to the  Investors  the benefits of
Rule 144 promulgated  under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the  Investors to sell  securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:

                  a. make and keep public information available,  as those terms
are understood and defined in Rule 144;

                  b. file with the SEC in a timely  manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such  requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

                  c.  furnish to each  Investor  so long as such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company,  if true, that it has complied with the reporting  requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual report
of the Company and such other reports and documents so filed by the Company, and
(iii)  such  other  information  as may be  reasonably  requested  to permit the
Investors to sell such securities pursuant to Rule 144 without registration.

                                       14
<PAGE>

            9.    Assignment of Registration Rights.

            The rights under this Agreement shall be automatically assignable by
the  Investors  to any  transferee  of all or any  portion  of  such  Investor's
Registrable  Securities  if:  (i)  the  Investor  agrees  in  writing  with  the
transferee  or assignee to assign such rights,  and a copy of such  agreement is
furnished to the Company within a reasonable  time after such  assignment;  (ii)
the Company is,  within a  reasonable  time after such  transfer or  assignment,
furnished with written notice of (a) the name and address of such  transferee or
assignee,  and (b) the securities with respect to which such registration rights
are being transferred or assigned;  (iii) immediately following such transfer or
assignment  the further  disposition  of such  securities  by the  transferee or
assignee is restricted  under the 1933 Act or applicable  state securities laws;
(iv) at or before the time the Company receives the written notice  contemplated
by clause (ii) of this  sentence the  transferee  or assignee  agrees in writing
with the Company to be bound by all of the provisions  contained herein; and (v)
such  transfer   shall  have  been  made  in  accordance   with  the  applicable
requirements of the Securities Purchase Agreement.

            10.   Amendment of Registration Rights.

            Provisions  of this  Agreement  may be  amended  and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and the Required  Holders.  Any amendment or waiver  effected in accordance with
this  Section 10 shall be binding upon each  Investor  and the Company.  No such
amendment  shall be  effective to the extent that it applies to less than all of
the holders of the Registrable Securities.  No consideration shall be offered or
paid to any  Person  to amend or  consent  to a waiver  or  modification  of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.

            11.   Miscellaneous.

                  a. A Person is deemed to be a holder of Registrable Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the such record owner of such Registrable Securities.

                  b. 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  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

                                       15
<PAGE>

         If to the Company:

                  American United Global, Inc.
                  108 Village Square #327
                  Somers, New York 10589
                  Telephone: 425-869-7410
                  Facsimile: 631-254-2136
                  Attention: Robert Rubin, CEO

                  With a copy to:

                  Sichenzia Ross Friedman Ference LLP
                  1065 Avenue of the Americas, 21st Floor
                  New York, New York  10018
                  Telephone: 212-930-9700
                  Facsimile: 212-930-9725
                  Attention: Richard A. Friedman, Esq.

         If to Legal Counsel:

                  Schulte Roth & Zabel LLP
                  919 Third Avenue
                  New York, New York  10022
                  Telephone:        (212) 756-2000
                  Facsimile:        (212) 593-5955
                  Attention:        Eleazer N. Klein, Esq.

If to a Buyer, to its address and facsimile  number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers,  or to such other  address  and/or  facsimile  number
and/or  to the  attention  of such  other  Person  as the  recipient  party  has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  or  electronically  generated  by the sender's  facsimile  machine
containing the time, date,  recipient facsimile number and an image of the first
page of such  transmission  or (C)  provided by a courier or  overnight  courier
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

                  c.  Failure of any party to exercise any right or remedy under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

                                       16
<PAGE>

                  d.  All  questions  concerning  the  construction,   validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by the
internal laws of the State of New York,  without  giving effect to any choice of
law or conflict of law  provision  or rule  (whether of the State of New York or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions  other than the State of New York.  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, 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
brought  in an  inconvenient  forum or that the  venue of 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 to such  party at the  address  for such
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. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or the  validity  or  enforceability  of  any  provision  of  this
Agreement in any other  jurisdiction.  EACH PARTY HEREBY  IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,  A JURY TRIAL FOR THE ADJUDICATION
OF ANY  DISPUTE  HEREUNDER  OR IN  CONNECTION  HEREWITH  OR ARISING  OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                  e. This Agreement, the other Transaction Documents (as defined
in the Securities Purchase Agreement) and the instruments  referenced herein and
therein constitute the entire agreement among the parties hereto with respect to
the subject  matter  hereof and thereof.  There are no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This Agreement,  the other  Transaction  Documents and the instruments
referenced herein and therein supersede all prior agreements and  understandings
among the parties hereto with respect to the subject matter hereof and thereof.

                  f. Subject to the  requirements  of Section 9, this  Agreement
shall inure to the benefit of and be binding upon the permitted  successors  and
assigns of each of the parties hereto.

                  g. The  headings  in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

                  h. This  Agreement may be executed in identical  counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same  agreement.  This  Agreement,  once  executed  by a  party,  may be
delivered to the other party hereto by facsimile  transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

                  i. Each party  shall do and  perform,  or cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                                       17
<PAGE>

                  j. All consents and other  determinations  required to be made
by the Investors  pursuant to this  Agreement  shall be made,  unless  otherwise
specified in this Agreement, by the Required Holders.

                  k. The language  used in this  Agreement  will be deemed to be
the language  chosen by the parties to express  their mutual intent and no rules
of strict construction will be applied against any party.

                  l. This  Agreement  is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                  m. The obligations of each Buyer hereunder are several and not
joint  with  the  obligations  of any  other  Buyer,  and no  provision  of this
Agreement is intended to confer any obligations on any Buyer vis-a-vis any other
Buyer.  Nothing  contained  herein,  and no action  taken by any Buyer  pursuant
hereto,  shall  be  deemed  to  constitute  the  Buyers  as  a  partnership,  an
association,  a  joint  venture  or any  other  kind  of  entity,  or  create  a
presumption  that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated herein.

                            [Signature Page Follows]

                                       18
<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        COMPANY:

                                        AMERICAN UNITED GLOBAL, INC.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        BUYERS:

                                        SMITHFIELD FIDUCIARY LLC

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        IROQUOIS MASTER FUND, LTD.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        ROCKMORE INVESTMENT MASTER FUND, LIMITED

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        CRANSHIRE CAPITAL, L.P

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        GRACE BROTHERS, LTD.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        RAQ, LLC

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        PARAGON CAPITAL, LP

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        NITE CAPITAL L.P.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                       ALPHA CAPITAL AKTIENGESELLSCHAFT

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        BN VENTURES LLC

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        BRISTOL INVESTMENT FUND, LTD.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        GLOBAL HUNTER HOLDINGS, L.P

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        HUDSON BAY FUND LP

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

     IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        RONALD HART

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        KUEKENHOF EQUITY FUND, L.P.

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                        OTHER BUYERS:

                                        SIMON HALEGOUA

                                        By: __________________________________
                                            Name:
                                            Title:

<PAGE>

            IN WITNESS  WHEREOF,  each Buyer and the Company  have caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                    OTHER BUYERS:

                                    ISAAK HALEGOUA & AUDREY HALEGOUA JOINT TRUST

                                    By: __________________________________
                                        Name:
                                        Title:

<PAGE>

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                    Buyer's Address and                        Buyer's Representative's Address
           Buyer                      Facsimile Number                                and Facsimile Number
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                           <C>
Smithfield Fiduciary LLC       c/o Highbridge Capital Management, LLC        Schulte Roth & Zabel LLP
                               9 West 57th Street                            919 Third Avenue
                               27th Floor                                    New York, New York  10022
                               New York, New York  10019                     Attention:  Eleazer Klein, Esq.
                               Attention:  Ari J. Storch                     Facsimile: (212) 593-5955
                                            Adam J. Chill                    Telephone:  (212) 756-2376
                               Facsimile:  (212) 751-0755
                               Telephone:  (212) 287-4720
                               Residence:  Cayman Islands

Iroquois Master Fund, Ltd.     641 Lexington Avenue                          Malhotra & Associates
                               26th Floor                                    11 Penn Plaza, 5th Floor
                               New York, New York 10022                      New York, NY 10001
                               Attention:  Joshua Silverman                  Attention: Gary Malhotra, Esq.
                               Facsimile:  (212) 207-3452                    Facsimile: (212) 504-0863
                               Telephone:  (212) 974-3070                    Telephone: (212) 593-2284
                               Residence:  Cayman Islands

Lilac Ventures Master          650 Fifth Avenue                              Malhotra & Associates
Fund, Limited                  24th Floor                                    11 Penn Plaza, 5th Floor
                               New York, New York 10019                      New York, NY 10001
                               Attention:  Bruce Bermnstein                  Attention: Gary Malhotra, Esq.
                               Facsimile: (212) 258-2315                     Facsimile: (212) 504-0863
                               Telephone: (212) 803-5261                     Telephone: (212) 593-2284
                               Residence:  Bermuda

Cranshire Capital, L.P         3100 Dundee Road                              Malhotra & Associates
                               Suite 703                                     11 Penn Plaza, 5th Floor
                               Northbrook, IL 60062                          New York, NY 10001
                               Attention: Mitch Kopin                        Attention: Gary Malhotra, Esq.
                               Facsimile: (847) 562-9031                     Facsimile: (212) 504-0863
                               Telephone: (847) 562-9030                     Telephone: (212) 593-2284
                               Residence: Illinois

Grace Brothers, Ltd.,          1560 Sherman Ave                              Sachnoff & Weaver, Ltd
                               Evanston, Illinois 60201                      10 South Wacker Drive
                               Attention:  Bradford T. Whitmore              40th Floor
                               Facsimile:  (847) 733-0339                    Chicago, IL 60606
                               Telephone:  (847) 733-1230                    Attention: Evelyn Arkebauer
                               Residence:  Illinois                          Facsimile:  (312) 207-6400
                                                                             Telephone: (312) 207-3879

RAQ, LLC                       787 7th Avenue                                N/A
                               48th Floor
                               New York, New York 10019
                               Attention:  J. Jay Lobell
                                                 Steve Rocamboli
                               Facsimile:  (212) 554-4490
                               Telephone: (212) 554-4300
                               Residence:  New York
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                    Buyer's Address and                        Buyer's Representative's Address
           Buyer                      Facsimile Number                                and Facsimile Number
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                           <C>
Paragon Capital, LP            110 East 59th St                              N/A
                               New York, New York 10022
                               Attention: Alan P. Donenfeld
                               Facsimile:  (212) 593-3157
                               Telephone:  (212) 202-5022
                               Residence:  Delaware

Nite Capital L.P.              100 E Cook Avenue                             Michael Gray
                               #201                                          Schwartz Cooper Greenberger Krauss
                               Libertyville, Illinois 60048                  180 N. LaSalle Street, Suite 2700
                               Attention:  Keith Goodman                     Chicago, IL  60601
                               Facsimile:  (847) 968-2648                    Telephone: (312) 845-5113
                               Telephone:  (847) 968-2655
                               Residence:  Delaware

Alpha Capital                  c/o Alpha Capital, AG                         Ed Grushko
Aktiengesellschaft             160 Central Park South                        Grushko & Mittman
                               #2701                                         551 Fifth Avenue, Ste 1601
                               New York, New York 10019                      NY, NY 10176
                               Attention:  Joe Hammer                        Facsimile: 697-3575
                               Facsimile:  (212) 586-8244                    Telephone: 212-697-9500
                               Telephone:  (212) 586-8224
                               Residence:  Lichtenstein

Bristol Investment Fund, Ltd.  c/o Bristol Investment Fund, Ltd.             N/A
                               10990 Wilshire Blvd
                               #1410
                               Los Angeles, California  90024
                               Attention:  Paul Kessler
                                           Amy Wong
                               Facsimile:  (310) 696-0334
                               Telephone:  (310) 696-0333
                               Residence:  Cayman Islands

Global Hunter Holdings, L.P    1808 Point de Vue                             N/A
                               Suite 1000
                               Ft. Mound, Texas  75022
                               Attention:  Daniel O. Conwill
                               Facsimile:  (504) 525-5607
                               Telephone: (504) 527-0333
                               Residence:  Delaware

Hudson Bay Fund LP             120 Broadway                                  N/A
                               40th Floor
                               New York, New York 10271
                               Attention:  Yoav Roth
                               Facsimile:  (212) 571-1279
                               Telephone: (212) 571-1244
                               Residence:  Delaware
Ronald Hart                                                                  Jerry Larkaowski
                               4821 Crestwood Drive                          308 South Louisiana, Little Rock
                               Little Rock, Arkansas 72207                   Arkansas, 72201.  Phone,
                               Attention: Ron Hunt                           501-376-6277, fax, 501-376-6279.
                               Telephone: (501) 265-0063

Kuekenhof Equity Fund, L.P.    c/o Kuekenhof Capital Management, LLC         N/A
                               22 Church St
                               Suite #5
                               Ramsey, New Jersey 07446
                               Attention:  Michael C. James
                               Facsimile:  (201) 995-1954
                               Telephone: (201) 995-1950
                               Residence:  Delaware
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                    Buyer's Address and                        Buyer's Representative's Address
           Buyer                      Facsimile Number                                and Facsimile Number
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                           <C>
Simon Halegoua                 1 Crescent Road                               N/A
                               Belle Teere, New York 11777
                               Attention: Simon Halegoua
                               Telephone: (631) 928-9225

Isaak Halegoua & Audrey        1 Crescent Road                               N/A
Halegoua Joint Trust           Belle Teere, New York 11777
                               Attention:
                               Telephone: (631) 928-9225
                               Residence:  New York
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Transfer Agent]
[Address]
Attention:

                        Re: AMERICAN UNITED GLOBAL, INC..

Ladies and Gentlemen:

            [We are][I am] counsel to American  United Global,  Inc., a Delaware
corporation (the "Company"), and have represented the Company in connection with
that certain Securities Purchase Agreement (the "Securities Purchase Agreement")
entered   into  by  and  among  the  Company  and  the  buyers   named   therein
(collectively,  the  "Holders")  pursuant  to which  the  Company  issued to the
Holders  common  stock of the  Company,  $0.01 par value per share (the  "Common
Stock"),  senior secured convertible notes (the "Notes") convertible into Common
Stock and  warrants  exercisable  for shares of Common  Stock (the  "Warrants").
Pursuant to the Securities Purchase Agreement, the Company also has entered into
a  Registration  Rights  Agreement  with the Holders (the  "Registration  Rights
Agreement")  pursuant  to which the  Company  agreed,  among  other  things,  to
register  the  Registrable  Securities  (as defined in the  Registration  Rights
Agreement), including the shares of Common Stock issuable upon conversion of the
Notes and the shares of Common Stock  issuable  upon  exercise of the  Warrants,
under the  Securities  Act of 1933,  as amended (the "1933 Act").  In connection
with the Company's  obligations  under the  Registration  Rights  Agreement,  on
____________ ___, 200_, the Company filed a Registration  Statement on Form SB-2
(File No.  333-_____________) (the "Registration Statement") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.

            In connection  with the foregoing,  [we][I] advise you that a member
of the SEC's staff has advised [us][me] by telephone that the SEC has entered an
order  declaring  the  Registration  Statement  effective  under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]  and [we][I] have
no knowledge,  after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its  effectiveness has been issued or that any proceedings
for  that  purpose  are  pending  before,  or  threatened  by,  the  SEC and the
Registrable  Securities  are available for resale under the 1933 Act pursuant to
the Registration Statement.

<PAGE>

            This  letter  shall  serve as our  standing  opinion to you that the
shares of Common Stock are freely  transferable  by the Holders  pursuant to the
Registration  Statement.  You need not require further letters from us to effect
any future  legend-free  issuance or reissuance of shares of Common Stock to the
Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions
dated ________ __, 2006.

                                          Very truly yours,

                                          [ISSUER'S COUNSEL]

                                          By:_____________________
CC: [LIST NAMES OF HOLDERS]

<PAGE>

                                                                       EXHIBIT B

                              SELLING STOCKHOLDERS

      The shares of Common Stock being offered by the selling  stockholders  are
those  previously  issued to the selling  stockholders  and those  issuable upon
conversion  of the  convertible  notes and upon  exercise of the  warrants.  For
additional information regarding the issuance of the shares of Common Stock, the
convertible  notes and the  warrants,  see "Private  Placement of Common  Stock,
Convertible  Notes and Warrants"  above. We are registering the shares of Common
Stock in order to permit the selling stockholders to offer the shares for resale
from time to time.  Except for the ownership of the shares of Common Stock,  the
convertible  notes and the warrants issued  pursuant to the Securities  Purchase
Agreement,  the selling stockholders have not had any material relationship with
us within the past three years.

      The table  below  lists the  selling  stockholders  and other  information
regarding the beneficial  ownership of the shares of Common Stock by each of the
selling stockholders.

      In accordance  with the terms of registration  rights  agreements with the
selling stockholders,  this prospectus generally covers the resale of the sum of
(i) the  number  of  shares of Common  Stock  previously  issued to the  selling
stockholder,  (ii) 130% of the  number of shares  of  Common  Stock  issued  and
issuable  pursuant to the  convertible  notes as of the trading day  immediately
preceding the applicable date of determination,  and (iii) 130% of the number of
shares of Common Stock  issued and  issuable  pursuant to the warrants as of the
trading day immediately preceding the applicable date of determination.  Because
the  conversion  price of the  convertible  notes and the exercise  price of the
warrants may be adjusted,  the number of shares that will actually be issued may
be more or less than the number of shares being offered by this prospectus.

      Under  the terms of the  convertible  notes  and the  warrants,  a selling
stockholder  may not convert the  convertible  notes or exercise the warrants to
the extent such  conversion  or exercise  would cause such selling  stockholder,
together with its affiliates,  to beneficially  own a number of shares of Common
Stock which would  exceed 4.99% of our then  outstanding  shares of Common Stock
following  such   conversion  or  exercise,   excluding  for  purposes  of  such
determination shares of Common Stock issuable upon conversion of the convertible
notes which have not been converted and upon exercise of the warrants which have
not been  exercised.  The number of shares in the second column does not reflect
this  limitation.  The selling  stockholders may sell all, some or none of their
shares in this offering. See "Plan of Distribution."

<PAGE>

<TABLE>
<CAPTION>
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Name of Selling      Total         Total          Shares of    Beneficial    Percentage    Beneficial    Percentage
Stockholder          Shares        Percentage     Common       Ownership     of Common     Ownership     of Common
                     Held          of             Stock        Before        Stock         After the     Stock Owned
                     Assuming      Outstanding    Included     Offering      Before        Offering(4)   After
                     Full          Shares         in           (1)(2)        Offering                    Offering(4)
                     Conversion    Assuming       Prospectus                 (1)(2)
                     (3)           Full           (3)
                                   Conversion
                                   (3)
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
<S>                  <C>           <C>            <C>          <C>           <C>           <C>           <C>
Smithfield                                                                   4.99%         --            --
Fiduciary LLC (5)
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Iroquois Master
Fund, Ltd. (6)
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Lilac Ventures
Master Fund,
Limited
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Cranshire Capital,
L.P
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Grace Brothers,
Ltd.,
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
RAQ, LLC
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Paragon Capital, LP
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Nite Capital L.P.
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Alpha Capital
Aktiengesellschaft
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Bristol Investment
Fund, Ltd.
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Global Hunter
Holdings, L.P
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Hudson Bay Fund LP
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Ronald Hart
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Kuekenhof Equity
Fund, L.P.
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Simon Halegoua
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
Isaak Halegoua &
Audrey Halegoua
Joint Trust
-------------------- ------------- -------------- ------------ ------------- ------------- ------------- -------------
</TABLE>

      (1) These columns represent the aggregate maximum number and percentage of
shares that the selling  stockholders can own at one time (and therefore,  offer
for resale at any one time) due to their 4.99% limitation.

<PAGE>

      (2) The number and percentage of shares  beneficially  owned is determined
in accordance  with Rule 13d-3 of the  Securities  Exchange Act of 1934, and the
information is not necessarily  indicative of beneficial ownership for any other
purpose.  Under such rule,  beneficial ownership includes any shares as to which
the selling stockholders has sole or shared voting power or investment power and
also any shares,  which the selling stockholders has the right to acquire within
60 days.  The  actual  number  of  shares  of  common  stock  issuable  upon the
conversion of the secured  convertible notes is subject to adjustment  depending
on, among other factors,  the future market price of the common stock, and could
be materially less or more than the number estimated in the table.

      (3)  The  actual  number  of  shares  of  common  stock  offered  in  this
prospectus,  and included in the registration statement of which this prospectus
is a part,  includes such additional  number of shares of common stock as may be
issued or issuable upon conversion of the secured convertible notes and exercise
of the  warrants  by  reason of any  stock  split,  stock  dividend  or  similar
transaction  involving the common stock,  in accordance  with Rule 416 under the
Securities  Act of 1933.  However the selling  stockholders  have  contractually
agreed to restrict their ability to convert their secured  convertible  notes or
exercise  their  warrants  and receive  shares of our common stock such that the
number  of  shares  of  common  stock  held by them in the  aggregate  and their
affiliates  after such  conversion or exercise does not exceed 4.99% of the then
issued and  outstanding  shares of common stock as determined in accordance with
Section 13(d) of the Exchange Act.  Accordingly,  the number of shares of common
stock set forth in the table for the selling  stockholders exceeds the number of
shares of common stock that the selling  stockholders  could own beneficially at
any given time through their ownership of the secured  convertible notes and the
warrants.  In that regard,  the beneficial  ownership of the common stock by the
selling  stockholder set forth in the table is not determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

      (4) Assumes that all securities registered will be sold.

      (5)  Highbridge  Capital  Management,   LLC  is  the  trading  manager  of
Smithfield  Fiduciary LLC and  consequently  has voting  control and  investment
discretion  over the shares of Common Stock held by Smithfield.  Glenn Dubin and
Henry Swieca control Highbridge. Each of Highbridge and Messrs. Dubin and Swieca
disclaims beneficial ownership of the shares held by Smithfield.

      (6) Joshua  Silverman has voting and investment  control of the securities
held by Iroquois Master Fund Ltd. Mr. Silverman disclaims  beneficial  ownership
of the shares held by Iroquois Master Fund Ltd.

<PAGE>

                              PLAN OF DISTRIBUTION

      We are  registering the shares of Common Stock issuable upon conversion of
the convertible  notes and upon exercise of the warrants to permit the resale of
these  shares  of  Common  Stock by the  holders  of the  convertible  notes and
warrants  from  time to time  after  the  date of this  prospectus.  We will not
receive any of the  proceeds  from the sale by the selling  stockholders  of the
shares  of Common  Stock.  We will bear all fees and  expenses  incident  to our
obligation to register the shares of Common Stock.

      The selling stockholders may sell all or a portion of the shares of Common
Stock  beneficially  owned by them and offered hereby from time to time directly
or through one or more underwriters,  broker-dealers or agents. If the shares of
Common  Stock are sold  through  underwriters  or  broker-dealers,  the  selling
stockholders  will be responsible for  underwriting  discounts or commissions or
agent's  commissions.  The  shares  of  Common  Stock may be sold in one or more
transactions  at fixed prices,  at  prevailing  market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions,  which may involve crosses or block
transactions,

      o     on any national  securities  exchange or quotation  service on which
            the securities may be listed or quoted at the time of sale;

      o     in the over-the-counter market;

      o     in  transactions  otherwise than on these exchanges or systems or in
            the over-the-counter market;

      o     through the writing of options,  whether  such options are listed on
            an options exchange or otherwise;

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     short sales;

      o     sales pursuant to Rule 144;

<PAGE>

      o     broker-dealers may agree with the selling  securityholders to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale; and

      o     any other method permitted pursuant to applicable law.

      If the selling  stockholders effect such transactions by selling shares of
Common  Stock  to  or  through  underwriters,  broker-dealers  or  agents,  such
underwriters,  broker-dealers  or agents may receive  commissions in the form of
discounts,   concessions  or  commissions  from  the  selling   stockholders  or
commissions  from purchasers of the shares of Common Stock for whom they may act
as agent or to whom they may sell as principal (which discounts,  concessions or
commissions as to particular  underwriters,  broker-dealers  or agents may be in
excess of those customary in the types of transactions  involved). In connection
with sales of the shares of Common Stock or otherwise,  the selling stockholders
may enter  into  hedging  transactions  with  broker-dealers,  which may in turn
engage in short sales of the shares of Common  Stock in the course of hedging in
positions they assume.  The selling  stockholders may also sell shares of Common
Stock short and deliver  shares of Common Stock  covered by this  prospectus  to
close out short  positions and to return borrowed shares in connection with such
short sales.  The selling  stockholders may also loan or pledge shares of Common
Stock to broker-dealers that in turn may sell such shares.

      The selling  stockholders may pledge or grant a security  interest in some
or all of the  convertible  notes,  warrants or shares of Common  Stock owned by
them and, if they default in the performance of their secured  obligations,  the
pledgees or secured  parties may offer and sell the shares of Common  Stock from
time to time pursuant to this  prospectus  or any  amendment to this  prospectus
under Rule  424(b)(3) or other  applicable  provision of the  Securities  Act of
1933, as amended,  amending,  if necessary,  the list of selling stockholders to
include  the  pledgee,  transferee  or other  successors  in interest as selling
stockholders under this prospectus.  The selling  stockholders also may transfer
and donate the shares of Common Stock in other  circumstances  in which case the
transferees,  donees,  pledgees  or other  successors  in  interest  will be the
selling beneficial owners for purposes of this prospectus.

      The  selling  stockholders  and  any  broker-dealer  participating  in the
distribution  of the shares of Common  Stock may be deemed to be  "underwriters"
within the  meaning of the  Securities  Act,  and any  commission  paid,  or any
discounts or concessions  allowed to, any such broker-dealer may be deemed to be
underwriting  commissions or discounts  under the Securities  Act. At the time a
particular  offering  of the  shares  of  Common  Stock  is made,  a  prospectus
supplement,  if required, will be distributed which will set forth the aggregate
amount of shares of Common  Stock being  offered and the terms of the  offering,
including  the name or names of any  broker-dealers  or agents,  any  discounts,
commissions  and  other  terms   constituting   compensation  from  the  selling
stockholders and any discounts,  commissions or concessions allowed or reallowed
or paid to broker-dealers.

<PAGE>

      Under the securities  laws of some states,  the shares of Common Stock may
be sold in such states only through  registered or licensed  brokers or dealers.
In  addition,  in some states the shares of Common  Stock may not be sold unless
such  shares  have been  registered  or  qualified  for sale in such state or an
exemption from registration or qualification is available and is complied with.

      There can be no assurance  that any selling  stockholder  will sell any or
all of the shares of Common Stock registered  pursuant to the shelf registration
statement, of which this prospectus forms a part.

      The  selling  stockholders  and any  other  person  participating  in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended,  and the rules and regulations  thereunder,  including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of  purchases  and sales of any of the  shares of  Common  Stock by the  selling
stockholders and any other participating person.  Regulation M may also restrict
the ability of any person  engaged in the  distribution  of the shares of Common
Stock to engage in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the shares of Common
Stock and the  ability  of any  person  or  entity  to  engage in  market-making
activities with respect to the shares of Common Stock.

      We will pay all expenses of the registration of the shares of Common Stock
pursuant to the registration  rights  agreement,  estimated to be $[ ] in total,
including,  without  limitation,  Securities and Exchange Commission filing fees
and expenses of compliance with state  securities or "blue sky" laws;  provided,
however,  that a selling  stockholder  will pay all  underwriting  discounts and
selling commissions,  if any. We will indemnify the selling stockholders against
liabilities,  including some liabilities under the Securities Act, in accordance
with the registration  rights  agreements,  or the selling  stockholders will be
entitled to  contribution.  We may be  indemnified  by the selling  stockholders
against civil liabilities,  including liabilities under the Securities Act, that
may  arise  from  any  written  information  furnished  to  us  by  the  selling
stockholder  specifically  for use in this  prospectus,  in accordance  with the
related registration rights agreements, or we may be entitled to contribution.

      Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of Common Stock will be freely tradable in the hands of
persons other than our affiliates.NEITHER THE ISSUANCE AND SALE OF THE SECURITIES  REPRESENTED BY THIS CERTIFICATE
NOR THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE  CONVERTIBLE  HAVE BEEN
REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,  SOLD,  TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE  REGISTRATION  STATEMENT  FOR
THE SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR (B) AN OPINION
OF COUNSEL,  IN A GENERALLY  ACCEPTABLE FORM, THAT  REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD  PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING  ARRANGEMENT  SECURED
BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF THIS NOTE,  INCLUDING  SECTIONS  3(c)(iii)  AND 20(a)  HEREOF.  THE PRINCIPAL
AMOUNT REPRESENTED BY THIS NOTE AND,  ACCORDINGLY,  THE SECURITIES ISSUABLE UPON
CONVERSION  HEREOF  MAY BE LESS THAN THE  AMOUNTS  SET FORTH ON THE FACE  HEREOF
PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

                          AMERICAN UNITED GLOBAL, INC.

                         SENIOR SECURED CONVERTIBLE NOTE

Issuance Date:  June 14, 2006           Original Principal Amount: U.S. $_______

            FOR  VALUE  RECEIVED,  American  United  Global,  Inc.,  a  Delaware
corporation   (the   "Company"),   hereby  promises  to  pay  to  the  order  of
______________________ or registered assigns ("Holder") the amount set out above
as the  Original  Principal  Amount (as  reduced  pursuant  to the terms  hereof
pursuant to  redemption,  conversion or otherwise,  the  "Principal")  when due,
whether upon the Maturity Date (as defined below),  acceleration,  redemption or
otherwise  (in each case in  accordance  with the  terms  hereof).  This  Senior
Secured  Convertible Note (including all Senior Secured Convertible Notes issued
in exchange,  transfer or replacement hereof, this "Note") is one of an issue of
Senior  Secured  Convertible  Notes  (collectively,  the  "Notes" and such other
Senior Secured  Convertible  Notes,  the "Other  Notes") issued  pursuant to the
Securities Purchase Agreement (as defined below).  Certain capitalized terms are
defined in Section 29.

            (1) MATURITY.  On the Maturity Date, the Holder shall surrender this
Note to the Company  and the  Company  shall pay to the Holder an amount in cash
representing all outstanding Principal,  and accrued and unpaid Late Charges, if
any.  The  "Maturity  Date"  shall be June 14,  2009,  as may be extended at the
option  of the  Holder  (i) in the event  that,  and for so long as, an Event of
Default (as defined in Section  4(a)) shall have  occurred and be  continuing or
any event shall have occurred and be  continuing  which with the passage of time
and the failure to cure would result in an Event of Default and (ii) through the
date that is ten days after the consummation of a Change of Control in the event
that a Change of Control is publicly announced or a Change of Control Notice (as
defined in Section 5) is delivered prior to the Maturity Date. This Note may not
be prepaid by the  Company  prior to the  Maturity  Date  except  pursuant  to a
redemption as provided in Sections 4(b), 5(b), 8 and 12 herein.

<PAGE>

            (2) INTEREST; INTEREST RATE. The Notes shall not bear interest.

            (3) CONVERSION OF NOTES.  This Note shall be convertible into shares
of common stock of the Company,  $0.01 par value per share (the "Common Stock"),
on the terms and conditions set forth in this Section 3.

                  (a)  Conversion  Right.  Subject to the  provisions of Section
3(d),  at any time or times on or after the date set out  above as the  Issuance
Date (the "Issuance Date"),  the Holder shall be entitled to convert any portion
of the  outstanding and unpaid  Conversion  Amount (as defined below) into fully
paid and  nonassessable  shares of Common Stock in accordance with Section 3(c),
at the  Conversion  Rate (as defined  below).  The  Company  shall not issue any
fraction of a share of Common Stock upon any  conversion.  If the issuance would
result in the  issuance  of a fraction of a share of Common  Stock,  the Company
shall  round such  fraction of a share of Common  Stock up to the nearest  whole
share.  The Company shall pay any and all taxes that may be payable with respect
to the issuance and delivery of Common Stock upon  conversion of any  Conversion
Amount.

                  (b)  Conversion  Rate.  The  number of shares of Common  Stock
issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall
be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the "Conversion Rate").

                        (i) "Conversion Amount" means the sum of (A) the portion
      of the  Principal to be converted,  redeemed or otherwise  with respect to
      which this  determination  is being made and (B)  accrued  and unpaid Late
      Charges with respect to such Principal.

                        (ii) "Conversion Price" means, as of any Conversion Date
      (as  defined  below) or other  date of  determination,  $1.00  subject  to
      adjustment as provided herein.

                  (c) Mechanics of Conversion.

                        (i)  Optional  Conversion.  To  convert  any  Conversion
      Amount into shares of Common Stock on any date (a "Conversion  Date"), the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or prior to 11:59  p.m.,  New York  Time,  on such  date,  a copy of an
      executed  notice of conversion  in the form  attached  hereto as Exhibit I
      (the  "Conversion  Notice")  to the Company and (B) if required by Section
      3(c)(iii),  surrender  this Note to a common  carrier for  delivery to the
      Company  as  soon  as  practicable  on  or  following  such  date  (or  an
      indemnification  undertaking  with respect to this Note in the case of its
      loss,  theft or  destruction).  On or before the first  (1st)  Trading Day
      following  the date of receipt of a Conversion  Notice,  the Company shall
      transmit by facsimile a confirmation of receipt of such Conversion  Notice
      to the Holder and the Company's  Transfer  Agent.  On or before the second
      (2nd)  Trading Day  following  the date of receipt of a Conversion  Notice
      (the "Share Delivery  Date"),  the Company shall (X) provided the Transfer
      Agent is  participating  in the DTC's Fast Automated  Securities  Transfer
      Program  and  such  shares  are  registered  for  resale  pursuant  to the
      Securities Act of 1933, as amended, credit such aggregate number of shares
      of Common  Stock to which the Holder  shall be entitled to the Holder's or
      its  designee's  balance  account with DTC through its Deposit  Withdrawal
      Agent Commission  system or (Y) if the Transfer Agent is not participating
      in the DTC Fast Automated  Securities Transfer Program,  issue and deliver
      to the address as  specified  in the  Conversion  Notice,  a  certificate,
      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. If this Note
      is physically  surrendered for conversion as required by Section 3(c)(iii)
      and the  outstanding  Principal of this Note is greater than the Principal
      portion of the Conversion  Amount being converted,  then the Company shall
      as soon as  practicable  and in no event  later than three  Business  Days
      after  receipt of this Note and at its own  expense,  issue and deliver to
      the holder a new Note (in accordance with Section 19(d))  representing the
      outstanding  Principal not  converted.  The Person or Persons  entitled to
      receive the shares of Common Stock issuable upon a conversion of this Note
      shall be treated for all purposes as the record  holder or holders of such
      shares of Common Stock on the Conversion Date.

                                     - 2 -
<PAGE>

                    (ii) Company's Failure to Timely Convert. If the Company
      shall fail to issue a  certificate  to the  Holder or credit the  Holder's
      balance account with DTC for the number of shares of Common Stock to which
      the Holder is entitled  upon  conversion  of any  Conversion  Amount on or
      prior to the date which is five (5) Trading Days after the Conversion Date
      (a  "Conversion  Failure"),  then (A) the Company shall pay damages to the
      Holder for each date of such Conversion Failure in an amount equal to 2.0%
      of the product of (I) the sum of the number of shares of Common  Stock not
      issued to the Holder on or prior to the Share  Delivery  Date and to which
      the  Holder is  entitled,  and (II) the  Closing  Sale Price of the Common
      Stock on the Share  Delivery Date and (B) the Holder,  upon written notice
      to the Company, may void its Conversion Notice with respect to, and retain
      or have  returned,  as the case may be, any  portion of this Note that has
      not been converted pursuant to such Conversion  Notice;  provided that the
      voiding of a Conversion Notice shall not affect the Company's  obligations
      to make any payments  which have accrued  prior to the date of such notice
      pursuant  to this  Section  3(c)(ii)  or  otherwise.  In  addition  to the
      foregoing, if within three (3) Trading Days after the Company's receipt of
      the facsimile copy of a Conversion  Notice the Company shall fail to issue
      and deliver a  certificate  to the Holder or credit the  Holder's  balance
      account  with DTC for the  number of  shares of Common  Stock to which the
      Holder is entitled upon such holder's conversion of any Conversion Amount,
      and if on or after  such  Trading  Day the  Holder  purchases  (in an open
      market  transaction or otherwise)  Common Stock to deliver in satisfaction
      of a sale by the Holder of Common Stock issuable upon such conversion that
      the Holder anticipated  receiving from the Company (a "Buy-In"),  then the
      Company  shall,  within three (3) Trading Days after the Holder's  request
      and in the  Holder's  discretion,  either (i) pay cash to the Holder in an
      amount equal to the Holder's  total purchase  price  (including  brokerage
      commissions and other  out-of-pocket  expenses,  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 the Holder a certificate or certificates representing such Common Stock
      and pay cash to the  Holder 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 Bid Price on the Conversion Date.

                                     - 3 -
<PAGE>

                        (iii)  Book-Entry.   Notwithstanding   anything  to  the
      contrary set forth herein,  upon conversion of any portion of this Note in
      accordance  with the terms  hereof,  the Holder  shall not be  required to
      physically  surrender  this  Note  to the  Company  unless  (A)  the  full
      Conversion  Amount  represented by this Note is being converted or (B) the
      Holder has provided the Company with prior  written  notice  (which notice
      may be included in a Conversion Notice) requesting  physical surrender and
      reissue of this Note.  The Holder and the Company shall  maintain  records
      showing the  Principal  and Late Charges  converted  and the dates of such
      conversions or shall use such other method, reasonably satisfactory to the
      Holder and the Company,  so as not to require  physical  surrender of this
      Note upon conversion.

                        (iv) Pro Rata  Conversion;  Disputes.  In the event that
      the  Company  receives a  Conversion  Notice  from more than one holder of
      Notes for the same  Conversion  Date and the Company can convert some, but
      not all,  of such  portions of the Notes  submitted  for  conversion,  the
      Company,  subject to Section 3(d), shall convert from each holder of Notes
      electing  to have Notes  converted  on such date a pro rata amount of such
      holder's  portion  of its  Notes  submitted  for  conversion  based on the
      principal  amount of Notes  submitted for  conversion on such date by such
      holder relative to the aggregate  principal  amount of all Notes submitted
      for conversion on such date. In the event of a dispute as to the number of
      shares  of Common  Stock  issuable  to the  Holder  in  connection  with a
      conversion of this Note,  the Company shall issue to the Holder the number
      of shares of Common  Stock not in  dispute  and  resolve  such  dispute in
      accordance with Section 24.

                  (d) Limitations on  Conversions.  The Company shall not effect
any  conversion  of this  Note,  and the  Holder of this Note shall not have the
right to convert  any  portion of this Note  pursuant  to Section  3(a),  to the
extent that after giving effect to such  conversion,  the Holder  (together with
the Holder's affiliates) would beneficially own in excess of 4.99% (the "Maximum
Percentage")  of the number of shares of Common  Stock  outstanding  immediately
after giving effect to such conversion.  For purposes of the foregoing sentence,
the number of shares of Common  Stock  beneficially  owned by the Holder and its
affiliates  shall  include the number of shares of Common  Stock  issuable  upon
conversion of this Note with respect to which the determination of such sentence
is being  made,  but shall  exclude  the number of shares of Common  Stock which
would be issuable upon (A) conversion of the remaining,  nonconverted portion of
this Note  beneficially  owned by the  Holder or any of its  affiliates  and (B)
exercise or conversion of the unexercised or  nonconverted  portion of any other
securities of the Company  (including,  without  limitation,  any Other Notes or
warrants)  subject to a limitation on  conversion  or exercise  analogous to the
limitation  contained  herein  beneficially  owned by the  Holder  or any of its
affiliates.  Except as set forth in the preceding sentence, for purposes of this
Section  3(d)(i),  beneficial  ownership  shall be calculated in accordance with
Section 13(d) of the Securities  Exchange Act of 1934, as amended.  For purposes
of this Section  3(d)(i),  in determining  the number of  outstanding  shares of
Common Stock, the Holder may rely on the number of outstanding  shares of Common
Stock as reflected in (x) the Company's most recent Form 10-KSB, Form 10-K, Form
10-QSB,  Form  10-Q or Form  8-K,  as the case may be (y) a more  recent  public
announcement  by the  Company  or (z) any  other  notice by the  Company  or the
Transfer  Agent setting forth the number of shares of Common Stock  outstanding.
For any reason at any time, upon the written or oral request of the Holder,  the
Company  shall within one (1) Business Day confirm  orally and in writing to the
Holder the number of shares of Common Stock then  outstanding.  In any case, the
number of  outstanding  shares of Common Stock shall be determined  after giving
effect to the  conversion or exercise of  securities  of the Company,  including
this  Note,  by the  Holder or its  affiliates  since the date as of which  such
number of outstanding shares of Common Stock was reported.  By written notice to
the Company,  the Holder may increase or decrease the Maximum  Percentage to any
other percentage not in excess of 9.99% specified in such notice;  provided that
(i) any such increase  will not be effective  until the  sixty-first  (61st) day
after such notice is  delivered to the  Company,  and (ii) any such  increase or
decrease will apply only to the Holder and not to any other holder of Notes.

                                     - 4 -
<PAGE>

            (4) RIGHTS UPON EVENT OF DEFAULT.

                  (a)  Event of  Default.  Each of the  following  events  shall
constitute an "Event of Default":

                        (i) the failure of the applicable Registration Statement
      required to be filed pursuant to the  Registration  Rights Agreement to be
      declared  effective  by the SEC on or prior to the date that is sixty (60)
      days  after the  applicable  Effectiveness  Deadline  (as  defined  in the
      Registration  Rights  Agreement),  or, while the  applicable  Registration
      Statement is required to be maintained  effective pursuant to the terms of
      the Registration  Rights  Agreement,  the  effectiveness of the applicable
      Registration   Statement  lapses  for  any  reason   (including,   without
      limitation,  the issuance of a stop order) or is unavailable to any holder
      of the Notes for sale of all of such holder's  Registrable  Securities (as
      defined in the Registration Rights Agreement) in accordance with the terms
      of the Registration  Rights  Agreement,  and such lapse or  unavailability
      continues for a period of thirty (30) consecutive days or for more than an
      aggregate of sixty (60) days in any 365-day period (other than days during
      an  Allowable  Grace  Period  (as  defined  in  the  Registration   Rights
      Agreement));

                        (ii) the  suspension  from  trading  or  failure  of the
      Common Stock to be listed on the Principal Market or on an Eligible Market
      for a period  of ten (10)  consecutive  Trading  Days or for more  than an
      aggregate of twenty (20) Trading Days in any 365-day period;

                        (iii) the  Company's  (A)  failure to cure a  Conversion
      Failure  by  delivery  of the  required  number of shares of Common  Stock
      within ten (10) Business Days after the applicable  Conversion Date or (B)
      notice,  written or oral, to any holder of the Notes,  including by way of
      public  announcement  or through  any of its agents,  at any time,  of its
      intention  not to comply with a request for  conversion  of any Notes into
      shares of Common Stock that is tendered in accordance  with the provisions
      of the Notes;

                                     - 5 -
<PAGE>

                        (iv) at any time following the tenth (10th)  consecutive
      Business Day that the Holder's  Authorized  Share  Allocation is less than
      the number of shares of Common  Stock that the Holder would be entitled to
      receive  upon a  conversion  of the full  Conversion  Amount  of this Note
      (without regard to any limitations on conversion set forth in Section 3(d)
      or otherwise);

                        (v)  the  Company's  failure  to pay to the  Holder  any
      amount  of  Principal  (including,   without  limitation,  any  redemption
      payments),  Late Charges or other  amounts when and as due under this Note
      or any other Transaction  Document (as defined in the Securities  Purchase
      Agreement)  or  any  other  agreement,   document,  certificate  or  other
      instrument  delivered in  connection  with the  transactions  contemplated
      hereby and thereby to which the Holder is a party,  except, in the case of
      a failure to pay Late  Charges when and as due, in which case only if such
      failure continues for a period of at least three (3) Business Days;

                        (vi) any default  under,  redemption of or  acceleration
      prior  to  maturity  of  any  Indebtedness  of the  Company  or any of its
      Subsidiaries  (as  defined  in  Section  3(a) of the  Securities  Purchase
      Agreement), other than with respect to any Other Notes;

                        (vii) the Company or any of its  Subsidiaries,  pursuant
      to or within the meaning of Title 11, U.S.  Code, or any similar  Federal,
      foreign or state law for the relief of debtors (collectively,  "Bankruptcy
      Law"),  (A)  commences a voluntary  case,  (B) consents to the entry of an
      order for relief  against it in an  involuntary  case, (C) consents to the
      appointment  of a  receiver,  trustee,  assignee,  liquidator  or  similar
      official (a "Custodian"),  (D) makes a general  assignment for the benefit
      of its  creditors or (E) admits in writing that it is generally  unable to
      pay its debts as they become due;

                        (viii) a court of competent jurisdiction enters an order
      or decree  under any  Bankruptcy  Law that (A) is for relief  against  the
      Company or any of its Subsidiaries in an involuntary  case, (B) appoints a
      Custodian  of the  Company  or any of its  Subsidiaries  or (C) orders the
      liquidation of the Company or any of its Subsidiaries;

                        (ix) a final  judgment or  judgments  for the payment of
      money  aggregating in excess of $150,000 are rendered  against the Company
      or any of its  Subsidiaries and which judgments are not, within sixty (60)
      days after the entry thereof, bonded, discharged or stayed pending appeal,
      or are not discharged  within sixty (60) days after the expiration of such
      stay; provided,  however,  that any judgment which is covered by insurance
      or an  indemnity  from a credit  worthy  party  shall not be  included  in
      calculating  the  $150,000  amount set forth  above so long as the Company
      provides  the Holder a written  statement  from such  insurer or indemnity
      provider (which written statement shall be reasonably  satisfactory to the
      Holder) to the effect  that such  judgment is covered by  insurance  or an
      indemnity  and the Company will receive the proceeds of such  insurance or
      indemnity within thirty (30) days of the issuance of such judgment;

                                     - 6 -
<PAGE>

                        (x) the Company breaches any  representation,  warranty,
      covenant or other term or  condition  of any  Transaction  Document or the
      Acquisition  Agreement (as defined in the Securities Purchase  Agreement),
      except,  in the case of a breach of a covenant  which is curable,  only if
      such  breach  continues  for a  period  of at least  ten (10)  consecutive
      Business Days;

                        (xi) any breach or failure in any respect to comply with
      Section 15 of this Note; or

                        (xii)  any Event of  Default  (as  defined  in the Other
      Notes) occurs with respect to any Other Notes.

                  (b)  Redemption  Right.  Upon  the  occurrence  of an Event of
Default  with respect to this Note or any Other Note,  the Company  shall within
one (1) Business Day deliver  written notice thereof via facsimile and overnight
courier  (an "Event of Default  Notice")  to the  Holder.  At any time after the
earlier of the  Holder's  receipt  of an Event of Default  Notice and the Holder
becoming  aware of an Event of  Default,  the Holder may  require the Company to
redeem all or any portion of this Note by delivering written notice thereof (the
"Event of Default  Redemption  Notice") to the  Company,  which Event of Default
Redemption Notice shall indicate the portion of this Note the Holder is electing
to redeem.  Each  portion  of this Note  subject to  redemption  by the  Company
pursuant to this  Section 4(b) shall be redeemed by the Company at a price equal
to the  greater of (i) the product of (x) the  Conversion  Amount to be redeemed
and (y) the Redemption  Premium and (ii) the product of (A) the Conversion  Rate
with  respect  to such  Conversion  Amount in effect at such time as the  Holder
delivers an Event of Default Redemption Notice and (B) the Closing Sale Price of
the Common Stock on the date  immediately  preceding  such Event of Default (the
"Event of Default Redemption Price").  Redemptions required by this Section 4(b)
shall be made in  accordance  with the  provisions  of Section 12. To the extent
redemptions required by this Section 4(b) are deemed or determined by a court of
competent  jurisdiction  to be  prepayments  of the  Note by the  Company,  such
redemptions  shall be deemed to be  voluntary  prepayments.  The parties  hereto
agree that in the event of the  Company's  redemption of any portion of the Note
under this Section 4(b),  the Holder's  damages would be uncertain and difficult
to estimate  because of the parties'  inability to predict future interest rates
and the  uncertainty of the  availability  of a suitable  substitute  investment
opportunity for the Holder.  Accordingly,  any Redemption Premium due under this
Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable
estimate of the Holder's actual loss of its investment  opportunity and not as a
penalty.

            (5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

                  (a)  Assumption.  The Company shall not enter into or be party
to a Fundamental  Transaction unless (i) the Successor Entity assumes in writing
all of the obligations of the Company under this Note and the other  Transaction
Documents in  accordance  with the  provisions  of this Section 5(a) pursuant to
written  agreements in form and substance  satisfactory to the Required  Holders
and  approved by the Required  Holders  prior to such  Fundamental  Transaction,
including  agreements  to deliver to each holder of Notes in  exchange  for such
Notes a security  of the  Successor  Entity  evidenced  by a written  instrument
substantially  similar in form and  substance to the Notes,  including,  without
limitation,  having a principal  amount and interest rate equal to the principal
amounts and the interest rates of the Notes held by such holder,  having similar
conversion  rights as the Notes and having  similar  ranking  to the Notes,  and
satisfactory to the Required  Holders and (ii) the Successor  Entity  (including
its Parent Entity) is a publicly traded corporation whose common stock is quoted
on or listed for  trading on an  Eligible  Market.  Upon the  occurrence  of any
Fundamental  Transaction,   the  Successor  Entity  shall  succeed  to,  and  be
substituted  for  (so  that  from  and  after  the  date  of  such   Fundamental
Transaction,  the provisions of this Note referring to the "Company" shall refer
instead to the Successor Entity),  and may exercise every right and power of the
Company and shall assume all of the  obligations  of the Company under this Note
with the same effect as if such  Successor  Entity had been named as the Company
herein. Upon consummation of the Fundamental  Transaction,  the Successor Entity
shall  deliver  to the  Holder  confirmation  that  there  shall be issued  upon
conversion or redemption of this Note at any time after the  consummation of the
Fundamental  Transaction,  in lieu of the  shares  of  Common  Stock  (or  other
securities,  cash, assets or other property) issuable upon the conversion of the
Notes prior to such  Fundamental  Transaction,  such  shares of publicly  traded
common  stock (or their  equivalent)  of the  Successor  Entity,  as adjusted in
accordance  with the  provisions  of this Note.  The  provisions of this Section
shall apply  similarly and equally to successive  Fundamental  Transactions  and
shall be applied  without  regard to any  limitations  on the conversion of this
Note.

                                     - 7 -
<PAGE>

                  (b)  Redemption  Right.  No sooner than  fifteen (15) days nor
later than ten (10) days prior to the  consummation of a Change of Control,  but
not prior to the public  announcement  of such  Change of  Control,  the Company
shall deliver written notice thereof via facsimile and overnight  courier to the
Holder (a "Change of Control  Notice").  At any time during the period beginning
after the Holder's  receipt of a Change of Control Notice and ending twenty (20)
Trading Days after the  consummation  of such Change of Control,  the Holder may
require  the  Company  to redeem all or any  portion of this Note by  delivering
written notice thereof ("Change of Control  Redemption  Notice") to the Company,
which Change of Control  Redemption  Notice shall indicate the Conversion Amount
the Holder is electing to redeem. The portion of this Note subject to redemption
pursuant  to this  Section 5 shall be redeemed by the Company in cash at a price
equal to the  greater of (i) the  product  of (x) the  Conversion  Amount  being
redeemed and (y) the quotient  determined by dividing (A) the Closing Sale Price
of the  Common  Stock  immediately  following  the public  announcement  of such
proposed  Change of  Control  by (B) the  Conversion  Price and (ii) 125% of the
Conversion  Amount being  redeemed (the "Change of Control  Redemption  Price").
Redemptions  required  by this  Section 5 shall be made in  accordance  with the
provisions of Section 12 and shall have priority to payments to  stockholders in
connection with a Change of Control. To the extent redemptions  required by this
Section 5(b) are deemed or determined by a court of competent jurisdiction to be
prepayments of the Note by the Company,  such redemptions  shall be deemed to be
voluntary prepayments.  Notwithstanding anything to the contrary in this Section
5, until the Change of Control  Redemption  Price  (together  with any  interest
thereon) is paid in full, the Conversion  Amount  submitted for redemption under
this  Section  5(c) may be  converted,  in whole or in part,  by the Holder into
shares  of  Common  Stock,  or in the  event  the  Conversion  Date is after the
consummation  of the Change of Control,  shares of publicly  traded common stock
(or their equivalent) of the Successor Entity pursuant to Section 3. The parties
hereto agree that in the event of the Company's redemption of any portion of the
Note under this Section  5(b),  the  Holder's  damages  would be  uncertain  and
difficult  to  estimate  because of the  parties'  inability  to predict  future
interest rates and the uncertainty of the availability of a suitable  substitute
investment opportunity for the Holder.  Accordingly,  any redemption premium due
under this Section 5(b) is intended by the parties to be, and shall be deemed, a
reasonable  estimate of the Holder's  actual loss of its investment  opportunity
and not as a penalty.

                                     - 8 -
<PAGE>

            (6) RIGHTS  UPON  ISSUANCE OF  PURCHASE  RIGHTS AND OTHER  CORPORATE
EVENTS.

                  (a) Purchase Rights. If at any time the Company grants, issues
or sells any  Options,  Convertible  Securities  or rights  to  purchase  stock,
warrants,  securities  or other  property pro rata to the record  holders of any
class of Common Stock (the "Purchase Rights"),  then the Holder will be entitled
to acquire,  upon the terms  applicable to such Purchase  Rights,  the aggregate
Purchase  Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock  acquirable  upon  complete  conversion of this
Note  (without  taking  into  account any  limitations  or  restrictions  on the
convertibility  of this Note)  immediately  before the date on which a record is
taken for the grant,  issuance or sale of such Purchase  Rights,  or, if no such
record is taken,  the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

                  (b)  Other  Corporate  Events.  In  addition  to  and  not  in
substitution  for any other rights  hereunder,  prior to the consummation of any
Fundamental  Transaction pursuant to which holders of shares of Common Stock are
entitled to receive  securities  or other  assets with respect to or in exchange
for  shares of Common  Stock (a  "Corporate  Event"),  the  Company  shall  make
appropriate  provision to insure that the Holder will  thereafter have the right
to receive  upon a  conversion  of this Note,  at the  Holder's  option,  (i) in
addition to the shares of Common Stock  receivable  upon such  conversion,  such
securities  or other  assets to which the Holder would have been  entitled  with
respect to such shares of Common Stock had such shares of Common Stock been held
by the Holder upon the consummation of such Corporate Event (without taking into
account any limitations or restrictions on the  convertibility  of this Note) or
(ii) in lieu of the  shares  of  Common  Stock  otherwise  receivable  upon such
conversion, such securities or other assets received by the holders of shares of
Common Stock in connection with the consummation of such Corporate Event in such
amounts  as the  Holder  would  have  been  entitled  to  receive  had this Note
initially been issued with conversion rights for the form of such  consideration
(as  opposed  to  shares  of  Common  Stock)  at  a  conversion  rate  for  such
consideration  commensurate with the Conversion Rate. Provision made pursuant to
the  preceding  sentence  shall be in a form and substance  satisfactory  to the
Required  Holders.  The  provisions  of this Section  shall apply  similarly and
equally to successive  Corporate  Events and shall be applied  without regard to
any limitations on the conversion or redemption of this Note.

            (7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

                  (a)  Adjustment  of  Conversion  Price upon Issuance of Common
Stock. If and whenever on or after the Subscription  Date, the Company issues or
sells, or in accordance with this Section 7(a) is deemed to have issued or sold,
any shares of Common Stock  (including  the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company,  but excluding  shares
of Common Stock deemed to have been issued or sold by the Company in  connection
with any Excluded  Security)  for a  consideration  per share (the "New Issuance
Price") less than a price (the "Applicable Price") equal to the Conversion Price
in effect  immediately  prior to such issue or sale (the  foregoing  a "Dilutive
Issuance"),  but excluding  shares of common stock deemed to have been issued by
the Company in connection with any Excluded  Securities,  then immediately after
such Dilutive Issuance,  the Conversion Price then in effect shall be reduced to
an amount  equal to the New Issuance  Price.  For  purposes of  determining  the
adjusted  Conversion  Price under this  Section  7(a),  the  following  shall be
applicable:

                                     - 9 -
<PAGE>

                        (i)  Issuance of  Options.  If the Company in any manner
      grants or sells any Options  and the lowest  price per share for which one
      share of Common Stock is issuable  upon the exercise of any such Option or
      upon  conversion  or exchange or  exercise of any  Convertible  Securities
      issuable upon exercise of such Option is less than the  Applicable  Price,
      then such share of Common Stock shall be deemed to be  outstanding  and to
      have been  issued and sold by the  Company at the time of the  granting or
      sale of such Option for such price per share. For purposes of this Section
      7(a)(i),  the "lowest  price per share for which one share of Common Stock
      is issuable  upon the  exercise of any such Option or upon  conversion  or
      exchange or exercise of any Convertible  Securities issuable upon exercise
      of such  Option"  shall  be  equal  to the sum of the  lowest  amounts  of
      consideration  (if any) received or receivable by the Company with respect
      to any one share of Common Stock upon granting or sale of the Option, upon
      exercise of the Option and upon  conversion or exchange or exercise of any
      Convertible  Security  issuable upon  exercise of such Option.  No further
      adjustment of the Conversion  Price shall be made upon the actual issuance
      of such share of Common Stock or of such  Convertible  Securities upon the
      exercise of such Options or upon the actual  issuance of such Common Stock
      upon conversion or exchange or exercise of such Convertible Securities.

                        (ii) Issuance of Convertible Securities.  If the Company
      in any manner issues or sells any  Convertible  Securities  and the lowest
      price per share for which one share of Common Stock is issuable  upon such
      conversion  or exchange or  exercise  thereof is less than the  Applicable
      Price,  then such share of Common Stock shall be deemed to be  outstanding
      and to have  been  issued  and  sold  by the  Company  at the  time of the
      issuance or sale of such Convertible  Securities for such price per share.
      For the purposes of this Section 7(a)(ii), the "lowest price per share for
      which one share of  Common  Stock is  issuable  upon  such  conversion  or
      exchange or exercise"  shall be equal to the sum of the lowest  amounts of
      consideration  (if any) received or receivable by the Company with respect
      to any  one  share  of  Common  Stock  upon  the  issuance  or sale of the
      Convertible  Security and upon the  conversion  or exchange or exercise of
      such Convertible  Security.  No further adjustment of the Conversion Price
      shall be made upon the actual  issuance of such share of Common Stock upon
      conversion or exchange or exercise of such Convertible Securities,  and if
      any  such  issue  or sale  of such  Convertible  Securities  is made  upon
      exercise of any Options for which  adjustment of the Conversion  Price had
      been or are to be made pursuant to other  provisions of this Section 7(a),
      no further  adjustment of the Conversion  Price shall be made by reason of
      such issue or sale.

                                     - 10 -
<PAGE>

                        (iii) Change in Option Price or Rate of  Conversion.  If
      the  purchase   price   provided  for  in  any  Options,   the  additional
      consideration,  if any,  payable upon the issue,  conversion,  exchange or
      exercise  of  any  Convertible  Securities,  or  the  rate  at  which  any
      Convertible Securities are convertible into or exchangeable or exercisable
      for Common Stock changes at any time,  the  Conversion  Price in effect at
      the time of such change  shall be adjusted to the  Conversion  Price which
      would  have been in effect at such time had such  Options  or  Convertible
      Securities   provided  for  such  changed   purchase   price,   additional
      consideration or changed  conversion rate, as the case may be, at the time
      initially granted, issued or sold. For purposes of this Section 7(a)(iii),
      if the terms of any Option or Convertible Security that was outstanding as
      of the  Subscription  Date are  changed  in the  manner  described  in the
      immediately  preceding sentence,  then such Option or Convertible Security
      and the Common Stock deemed issuable upon exercise, conversion or exchange
      thereof shall be deemed to have been issued as of the date of such change.
      No adjustment shall be made if such adjustment would result in an increase
      of the Conversion Price then in effect.

                        (iv) Calculation of Consideration  Received. In case any
      Option is issued in connection with the issue or sale of other  securities
      of the Company, together comprising one integrated transaction in which no
      specific  consideration  is  allocated  to  such  Options  by the  parties
      thereto,   the  Options   will  be  deemed  to  have  been  issued  for  a
      consideration  of  $.01.  If any  Common  Stock,  Options  or  Convertible
      Securities  are  issued or sold or deemed to have been  issued or sold for
      cash,  the  consideration  received  therefor will be deemed to be the net
      amount received by the Company therefor.  If any Common Stock,  Options or
      Convertible  Securities are issued or sold for a consideration  other than
      cash,  the amount of the  consideration  other than cash  received  by the
      Company  will be the fair value of such  consideration,  except where such
      consideration  consists  of  securities,  in  which  case  the  amount  of
      consideration  received by the Company  will be the Closing  Sale Price of
      such  securities on the date of receipt.  If any Common Stock,  Options or
      Convertible  Securities  are  issued to the  owners  of the  non-surviving
      entity in connection with any merger in which the Company is the surviving
      entity, the amount of consideration therefor will be deemed to be the fair
      value of such portion of the net assets and business of the  non-surviving
      entity as is  attributable  to such Common Stock,  Options or  Convertible
      Securities,  as the case may be. The fair value of any consideration other
      than cash or securities will be determined  jointly by the Company and the
      Required Holders. If such parties are unable to reach agreement within ten
      (10) days  after  the  occurrence  of an event  requiring  valuation  (the
      "Valuation  Event"),   the  fair  value  of  such  consideration  will  be
      determined within five (5) Business Days after the tenth day following the
      Valuation Event by an independent, reputable appraiser jointly selected by
      the Company and the Required Holders.  The determination of such appraiser
      shall be deemed  binding upon all parties  absent  manifest  error and the
      fees and expenses of such appraiser shall be borne by the Company.

                        (v) Record  Date.  If the Company  takes a record of the
      holders of Common Stock for the purpose of entitling them (A) to receive a
      dividend  or other  distribution  payable in Common  Stock,  Options or in
      Convertible  Securities or (B) to subscribe for or purchase  Common Stock,
      Options or Convertible Securities, then such record date will be deemed to
      be the date of the issue or sale of the Common  Stock  deemed to have been
      issued or sold upon the declaration of such dividend or the making of such
      other  distribution  or  the  date  of  the  granting  of  such  right  of
      subscription or purchase, as the case may be.

                                     - 11 -
<PAGE>

                  (b)  Adjustment  of  Conversion   Price  upon  Subdivision  or
Combination  of  Common  Stock.  If the  Company  at any  time on or  after  the
Subscription   Date   subdivides   (by  any   stock   split,   stock   dividend,
recapitalization  or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater  number of shares,  the  Conversion  Price in effect
immediately prior to such subdivision will be  proportionately  reduced.  If the
Company at any time on or after the Subscription  Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding  shares
of Common Stock into a smaller number of shares,  the Conversion Price in effect
immediately  prior  to  such  combination  will  be  proportionately  increased.
Notwithstanding  anything  herein to the contrary,  the Company shall not adjust
the Conversion  Price hereunder or the number of shares of Common Stock issuable
upon  conversion of this Note for any reverse stock split of one or more classes
of the Company's Common Stock at any time on or after the Subscription Date.

                  (c) Other Events. If any event occurs of the type contemplated
by the  provisions  of this  Section 7 but not  expressly  provided  for by such
provisions  (including,  without limitation,  the granting of stock appreciation
rights,  phantom  stock rights or other rights with equity  features),  then the
Company's  Board  of  Directors  will  make  an  appropriate  adjustment  in the
Conversion  Price so as to protect  the  rights of the  Holder  under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7.

            (8) HOLDER'S  RIGHT OF OPTIONAL  REDEMPTION.  On the  eighteen  (18)
month anniversary of the Issuance Date (or the Trading Day immediately following
such date if such  date is not a Trading  Day) (a  "Holder  Optional  Redemption
Eligibility Date"), the Holder shall have the right, in its sole discretion,  to
require that the Company redeem (each, a "Holder Optional Redemption") up to all
of the Conversion Amount of this Note (the "Holder Optional  Redemption Amount")
by delivering written notice thereof (a "Holder Optional  Redemption Notice") to
the Company.  The Holder Optional Redemption Notice shall indicate the amount of
the applicable Holder Optional  Redemption Amount the Holder is electing to have
redeemed  (the  "Holder  Optional  Redemption  Amount")  and  the  date  of such
redemption (the "Holder Optional Redemption Date"); provided, however, that such
Holder  Optional  Redemption Date shall not be less than three (3) Business Days
after the date of  delivery  of such  Holder  Optional  Redemption  Notice.  The
portion of this Note subject to  redemption  pursuant to this Section 8 shall be
redeemed by the Company in cash on the  applicable  Holder  Optional  Redemption
Date at a price equal to the Holder  Optional  Redemption  Amount being redeemed
(the "Holder Optional Redemption Price"). Redemptions required by this Section 8
shall be made in accordance  with the provisions of Section 12.  Notwithstanding
anything to the contrary in this Section 8, but subject to Section  3(d),  until
the Holder receives the Holder Optional  Redemption  Price,  the Holder Optional
Redemption  Amount may be  converted,  in whole or in part,  by the Holder  into
Common  Stock  pursuant to Section 3, and any such  conversion  shall reduce the
Holder Optional  Redemption  Amount in the manner set forth by the Holder in the
applicable Conversion Notice.

                                     - 12 -
<PAGE>

            (9)  SECURITY.  This Note and the Other  Notes  are  secured  to the
extent and in the manner set forth in the Security  Documents (as defined in the
Securities Purchase Agreement).

            (10) NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of  Incorporation,  Bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of  this  Note,  and  will  at all  times  in good  faith  carry  out all of the
provisions  of this Note and take all action as may be  required  to protect the
rights of the Holder of this Note.

            (11) RESERVATION OF AUTHORIZED SHARES.

                  (a)  Reservation.  The Company  initially shall reserve out of
its authorized and unissued  Common Stock a number of shares of Common Stock for
each of the  Notes  equal to 130% of the  Conversion  Rate with  respect  to the
Conversion  Amount of each such Note as of the Issuance  Date. So long as any of
the Notes are  outstanding,  the  Company  shall  take all action  necessary  to
reserve and keep  available  out of its  authorized  and unissued  Common Stock,
solely for the purpose of effecting  the  conversion  of the Notes,  130% of the
number  of shares of Common  Stock as shall  from time to time be  necessary  to
effect the conversion of all of the Notes then outstanding;  provided that at no
time shall the  number of shares of Common  Stock so  reserved  be less than the
number of shares  required  to be  reserved of the  previous  sentence  (without
regard to any limitations on conversions) (the "Required  Reserve Amount").  The
initial number of shares of Common Stock  reserved for  conversions of the Notes
and each  increase in the number of shares so reserved  shall be  allocated  pro
rata among the holders of the Notes based on the  principal  amount of the Notes
held by each  holder at the  Closing  (as  defined  in the  Securities  Purchase
Agreement) or increase in the number of reserved shares, as the case may be (the
"Authorized  Share  Allocation").  In the  event  that a  holder  shall  sell or
otherwise  transfer  any of  such  holder's  Notes,  each  transferee  shall  be
allocated a pro rata portion of such holder's  Authorized Share Allocation.  Any
shares of Common Stock reserved and allocated to any Person which ceases to hold
any Notes shall be allocated to the remaining  holders of Notes,  pro rata based
on the principal amount of the Notes then held by such holders.

                  (b) Insufficient  Authorized  Shares. If at any time while any
of the Notes remain outstanding the Company does not have a sufficient number of
authorized  and  unreserved  shares of Common Stock to satisfy its obligation to
reserve for issuance upon conversion of the Notes at least a number of shares of
Common  Stock  equal  to the  Required  Reserve  Amount  (an  "Authorized  Share
Failure"),  then the Company  shall  immediately  take all action  necessary  to
increase the Company's authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required  Reserve  Amount for the Notes then
outstanding.  Without limiting the generality of the foregoing sentence, as soon
as practicable  after the date of the occurrence of an Authorized Share Failure,
but in no event  later  than  sixty  (60)  days  after  the  occurrence  of such
Authorized  Share Failure,  the Company shall hold a meeting of its stockholders
for the  approval of an increase  in the number of  authorized  shares of Common
Stock.  In  connection  with  such  meeting,  the  Company  shall  provide  each
stockholder with a proxy statement and shall use its best efforts to solicit its
stockholders' approval of such increase in authorized shares of Common Stock and
to cause its board of  directors  to  recommend  to the  stockholders  that they
approve such proposal.

                                     - 13 -
<PAGE>

            (12) HOLDER'S REDEMPTIONS.

                  (a) Mechanics.  The Company shall deliver the applicable Event
of Default  Redemption  Price to the Holder  within five (5) Business Days after
the Company's receipt of the Holder's Event of Default Redemption Notice. If the
Holder has submitted a Change of Control  Redemption  Notice in accordance  with
Section  5(b),  the  Company  shall  deliver  the  applicable  Change of Control
Redemption Price to the Holder concurrently with the consummation of such Change
of Control if such notice is received prior to the  consummation  of such Change
of Control and within five (5) Business Days after the Company's receipt of such
notice otherwise. The Company shall deliver the Holder Optional Redemption Price
to the Holder on the Optional  Redemption  Date. In the event of a redemption of
less than all of the Conversion  Amount of this Note, the Company shall promptly
cause to be issued and  delivered to the Holder a new Note (in  accordance  with
Section  19(d))  representing  the  outstanding  Principal  which  has not  been
redeemed. In the event that the Company does not pay the Redemption Price to the
Holder within the time period  required,  at any time  thereafter  and until the
Company  pays such unpaid  Redemption  Price in full,  the Holder shall have the
option, in lieu of redemption,  to require the Company to promptly return to the
Holder all or any portion of this Note  representing the Conversion  Amount that
was submitted  for  redemption  and for which the  applicable  Redemption  Price
(together with any Late Charges  thereon) has not been paid.  Upon the Company's
receipt of such notice,  (x) the  Redemption  Notice shall be null and void with
respect to such Conversion Amount, (y) the Company shall immediately return this
Note,  or issue a new Note (in  accordance  with  Section  19(d)) to the  Holder
representing such Conversion Amount and (z) the Conversion Price of this Note or
such new Notes shall be adjusted to the lesser of (A) the Conversion Price as in
effect on the date on which the  Redemption  Notice is voided and (B) the lowest
Closing Bid Price during the period beginning on and including the date on which
the  Redemption  Notice is delivered to the Company and ending on and  including
the date on which the Redemption  Notice is voided.  The Holder's  delivery of a
notice  voiding a Redemption  Notice and exercise of its rights  following  such
notice shall not affect the Company's  obligations  to make any payments of Late
Charges  which have accrued prior to the date of such notice with respect to the
Conversion Amount subject to such notice.

                  (b) Redemption by Other Holders. Upon the Company's receipt of
notice from any of the holders of the Other Notes for redemption or repayment as
a result  of an event or  occurrence  substantially  similar  to the  events  or
occurrences  described in Section 4(b), Section 5(b), Section 8 (each, an "Other
Redemption  Notice"),  the Company shall immediately,  but no later than one (1)
Business Day of its receipt thereof),  forward to the Holder by facsimile a copy
of such  notice.  If the Company  receives a  Redemption  Notice and one or more
Other Redemption Notices,  during the period beginning on and including the date
which is three (3) Business Days prior to the Company's  receipt of the Holder's
Redemption  Notice and ending on and including the date which is three  Business
Days after the  Company's  receipt  of the  Holder's  Redemption  Notice and the
Company is unable to redeem all principal, interest and other amounts designated
in such Redemption Notice and such Other Redemption Notices received during such
seven (7) Business Day period,  then the Company  shall redeem a pro rata amount
from each  holder of the Notes  (including  the Holder)  based on the  principal
amount of the Notes submitted for redemption  pursuant to such Redemption Notice
and such Other Redemption  Notices received by the Company during such seven (7)
Business Day period.

                                     - 14 -
<PAGE>

            (13) RESTRICTION ON REDEMPTION AND CASH DIVIDENDS.  Until all of the
Notes have been  converted,  redeemed or otherwise  satisfied in accordance with
their terms, the Company shall not, directly or indirectly,  redeem,  repurchase
or declare or pay any cash dividend or distribution on its capital stock without
the prior express written consent of the Required Holders.

            (14) VOTING  RIGHTS.  The Holder shall have no voting  rights as the
holder of this Note, except as required by law, including but not limited to the
Delaware General Corporation Law, and as expressly provided in this Note.

            (15) COVENANTS.

                  (a) Rank. All payments due under this Note (a) shall rank pari
passu with all Other Notes and (b) shall be senior to all other  Indebtedness of
the Company and its Subsidiaries other than the Senior Indebtedness.

                  (b)  Incurrence  of  Indebtedness.  So long  as  this  Note is
outstanding,  the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to
exist any Indebtedness,  other than (i) the Indebtedness  evidenced by this Note
and the Other Notes and (ii) Permitted Indebtedness.

                  (c) Existence of Liens.  So long as this Note is  outstanding,
the Company shall not, and the Company shall not permit any of its  Subsidiaries
to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets
(including  accounts  and  contract  rights)  owned by the Company or any of its
Subsidiaries (collectively, "Liens") other than Permitted Liens.

                  (d)  Restricted  Payments.  The  Company  shall  not,  and the
Company shall not permit any of its  Subsidiaries  to,  directly or  indirectly,
redeem,  defease,  repurchase,  repay or make any payments in respect of, by the
payment of cash or cash equivalents (in whole or in part, whether by way of open
market purchases,  tender offers, private transactions or otherwise), all or any
portion of any Permitted  Indebtedness,  whether by way of payment in respect of
principal of (or premium,  if any) or interest on, such  Indebtedness  if at the
time such  payment is due or is otherwise  made or, after giving  effect to such
payment,  an event  constituting,  or that with the  passage of time and without
being  cured  would  constitute,  an  Event  of  Default  has  occurred  and  is
continuing.

            (16) PARTICIPATION. The Holder, as the holder of this Note, shall be
entitled to such dividends paid and distributions  made to the holders of Common
Stock to the same  extent as if the Holder had  converted  this Note into Common
Stock (without regard to any limitations on conversion  herein or elsewhere) and
had held such shares of Common Stock on the record date for such  dividends  and
distributions.  Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock

                                     - 15 -
<PAGE>

            (17) VOTE TO ISSUE,  OR CHANGE THE TERMS OF, NOTES.  The affirmative
vote at a meeting duly called for such purpose or the written  consent without a
meeting of the Required Holders shall be required for any change or amendment to
this Note or the Other  Notes;  provided  that no such action may (i) reduce the
rate of, or extend the time for  payment of Interest  on, any Note;  (ii) reduce
the Principal  Amount of, or extend the Maturity  Date of, any Note,  (iii) make
any change that impairs or adversely affects the conversion rights of any Notes,
(iv)  increase  the  Conversion  Price of any Note or (v) decrease the number of
shares or change the class of stock obtainable upon exercise of any Note without
the  written  consent  of the Holder of such Note.  No such  amendment  shall be
effective  to the extent  that it applies to less than all of the holders of the
Notes then outstanding.

            (18)  TRANSFER.   This  Note  may  be  offered,  sold,  assigned  or
transferred  by the Holder  without the consent of the Company,  subject only to
the provisions of Section 2(f) of the Securities Purchase Agreement.

            (19) REISSUANCE OF THIS NOTE.

                  (a) Transfer.  If this Note is to be  transferred,  the Holder
shall  surrender this Note to the Company,  whereupon the Company will forthwith
issue and deliver  upon the order of the Holder a new Note (in  accordance  with
Section  19(d)),  registered  as  the  Holder  may  request,   representing  the
outstanding  Principal  being  transferred  by the Holder  and, if less then the
entire  outstanding  Principal is being  transferred,  a new Note (in accordance
with Section 19(d)) to the Holder  representing  the  outstanding  Principal not
being  transferred.  The Holder and any  assignee,  by  acceptance of this Note,
acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) and
this Section  19(a),  following  conversion or redemption of any portion of this
Note, the  outstanding  Principal  represented by this Note may be less than the
Principal stated on the face of this Note.

                  (b) Lost,  Stolen  or  Mutilated  Note.  Upon  receipt  by the
Company of evidence  reasonably  satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Note,  and,  in the case of loss,  theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation,  upon surrender and  cancellation
of this Note, the Company shall execute and deliver to the Holder a new Note (in
accordance with Section 19(d)) representing the outstanding Principal.

                  (c) Note Exchangeable for Different  Denominations.  This Note
is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Note or Notes (in accordance with Section 19(d) and in
principal  amounts  of at least  $100,000)  representing  in the  aggregate  the
outstanding  Principal of this Note,  and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

                  (d) Issuance of New Notes. Whenever the Company is required to
issue a new Note pursuant to the terms of this Note,  such new Note (i) shall be
of like tenor with this Note, (ii) shall represent,  as indicated on the face of
such new Note, the Principal remaining outstanding (or in the case of a new Note
being  issued  pursuant  to  Section  19(a)  or  Section  19(c),  the  Principal
designated by the Holder which,  when added to the principal  represented by the
other new Notes issued in  connection  with such  issuance,  does not exceed the
Principal  remaining  outstanding  under  this  Note  immediately  prior to such
issuance of new Notes),  (iii) shall have an issuance  date, as indicated on the
face of such new Note, which is the same as the Issuance Date of this Note, (iv)
shall have the same rights and conditions as this Note, and (v) shall  represent
accrued Late Charges on the Principal of this Note, from the Issuance Date.

                                     - 16 -
<PAGE>

            (20) REMEDIES,  CHARACTERIZATIONS,  OTHER OBLIGATIONS,  BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other  remedies  available  under this Note and any of the other
Transaction  Documents  at law or in  equity  (including  a decree  of  specific
performance and/or other injunctive relief),  and nothing herein shall limit the
Holder's right to pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments,  conversion  and the like (and the  computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly  provided herein, be subject to any other obligation of the Company
(or the performance  thereof).  The Company  acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such  breach  may be  inadequate.  The  Company  therefore
agrees that,  in the event of any such breach or threatened  breach,  the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining  any breach,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

            (21) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this
Note is placed in the hands of an attorney for  collection or  enforcement or is
collected or enforced through any legal proceeding or the Holder otherwise takes
action to collect  amounts due under this Note or to enforce the  provisions  of
this Note or (b) there occurs any  bankruptcy,  reorganization,  receivership of
the  Company  or other  proceedings  affecting  Company  creditors'  rights  and
involving a claim under this Note, then the Company shall pay the costs incurred
by the Holder for such  collection,  enforcement or action or in connection with
such bankruptcy,  reorganization,  receivership or other proceeding,  including,
but not limited to, attorneys' fees and disbursements.

            (22) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly
drafted by the Company and all the Purchasers and shall not be construed against
any person as the drafter hereof.  The headings of this Note are for convenience
of reference and shall not form part of, or affect the  interpretation  of, this
Note.

            (23) FAILURE OR  INDULGENCE  NOT WAIVER.  No failure or delay on the
part of the Holder in the exercise of any power,  right or  privilege  hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.

            (24)  DISPUTE  RESOLUTION.  In  the  case  of a  dispute  as to  the
determination  of the Closing Bid Price,  the Closing Sale Price or the Weighted
Average  Price  or the  arithmetic  calculation  of the  Conversion  Rate or any
Redemption  Price,  the Company  shall  submit the  disputed  determinations  or
arithmetic  calculations via facsimile within one (1) Business Day of receipt of
the  Conversion  Notice or Redemption  Notice or other event giving rise to such
dispute,  as the case may be, to the  Holder.  If the Holder and the Company are
unable to agree upon such  determination or calculation  within one (1) Business
Day of such disputed  determination or arithmetic calculation being submitted to
the  Holder,  then the Company  shall,  within one (1)  Business  Day submit via
facsimile (a) the disputed  determination  of the Closing Bid Price, the Closing
Sale Price or the Weighted Average Price to an independent, reputable investment
bank  selected  by the Company  and  approved by the Holder or (b) the  disputed
arithmetic  calculation  of the Conversion  Rate or any Redemption  Price to the
Company's  independent,  outside  accountant.  The  Company,  at  the  Company's
expense, shall cause the investment bank or the accountant,  as the case may be,
to perform the  determinations  or  calculations  and notify the Company and the
Holder of the  results  no later  than five (5)  Business  Days from the time it
receives the disputed determinations or calculations.  Such investment bank's or
accountant's determination or calculation,  as the case may be, shall be binding
upon all parties absent demonstrable error.

                                     - 17 -
<PAGE>

(25)     NOTICES; PAYMENTS.

                  (a)  Notices.  Whenever  notice is  required to be given under
this Note,  unless  otherwise  provided  herein,  such notice  shall be given in
accordance with Section 10(f) of the Securities Purchase Agreement.  The Company
shall  provide  the Holder  with  prompt  written  notice of all  actions  taken
pursuant to this Note,  including in  reasonable  detail a  description  of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing,  the Company will give written  notice to the Holder (i)  immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least twenty days
prior to the date on which the  Company  closes  its books or takes a record (A)
with respect to any dividend or  distribution  upon the Common  Stock,  (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining  rights  to  vote  with  respect  to  any  Fundamental  Transaction,
dissolution or liquidation, provided in each case that such information shall be
made known to the  public  prior to or in  conjunction  with such  notice  being
provided to the Holder.

                  (b)  Payments.  Whenever  any payment of cash is to be made by
the Company to any Person  pursuant to this Note,  such payment shall be made in
lawful money of the United  States of America by a check drawn on the account of
the  Company  and sent via  overnight  courier  service  to such  Person at such
address as previously  provided to the Company in writing (which address, in the
case of each of the Purchasers,  shall initially be as set forth on the Schedule
of Buyers  attached to the  Securities  Purchase  Agreement);  provided that the
Holder may elect to receive a payment of cash via wire  transfer of  immediately
available  funds by providing the Company with prior written  notice setting out
such request and the Holder's  wire transfer  instructions.  Whenever any amount
expressed  to be due by the  terms of this Note is due on any day which is not a
Business Day, the same shall instead be due on the next  succeeding day which is
a  Business  Day.  Any  amount  of  Principal  or other  amounts  due  under the
Transaction Documents,  which is not paid when due shall result in a late charge
being incurred and payable by the Company in an amount equal to interest on such
amount at the rate of eighteen percent (18%) per annum from the date such amount
was due until the same is paid in full ("Late Charge").

                                     - 18 -
<PAGE>

            (26) CANCELLATION. After all Principal and other amounts at any time
owed on this Note has been paid in full, this Note shall automatically be deemed
canceled,  shall be surrendered to the Company for cancellation and shall not be
reissued.

            (27) WAIVER OF NOTICE.  To the extent  permitted by law, the Company
hereby  waives  demand,  notice,  protest  and all other  demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Securities Purchase Agreement.

            (28) GOVERNING  LAW;  JURISDICTION;  JURY TRIAL.  This Note shall be
construed and enforced in accordance  with,  and all  questions  concerning  the
construction,  validity,  interpretation  and  performance of this Note shall be
governed by, the internal laws of the State of New York,  without  giving effect
to any choice of law or conflict of law  provision or rule (whether of the State
of New York or any other  jurisdictions) that would cause the application of the
laws of any  jurisdictions  other than the State of New York. The Company 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,  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 brought in an inconvenient  forum or that the
venue of such  suit,  action or  proceeding  is  improper.  The  Company  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 to such
party at the address it set forth on the  signature  page hereto 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. In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule of
law, then such provision  shall be deemed  inoperative to the extent that it may
conflict  therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or  unenforceable  under
any law shall not affect the validity or  enforceability  of any other provision
of this Note.  Nothing  contained  herein shall be deemed or operate to preclude
the Holder from bringing  suit or taking other legal action  against the Company
in any other jurisdiction to collect on the Company's obligations to the Holder,
to realize on any collateral or any other security for such  obligations,  or to
enforce a judgment  or other court  ruling in favor of the  Holder.  THE COMPANY
HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,  A
JURY TRIAL FOR THE  ADJUDICATION OF ANY DISPUTE  HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

            (29) CERTAIN  DEFINITIONS.  For purposes of this Note, the following
terms shall have the following meanings:

                  (a)  "Approved  Stock Plan" means any  employee  benefit  plan
which has been  approved by the Board of Directors  of the Company,  pursuant to
which  the  Company's  securities  may be  issued to any  employee,  officer  or
director for services provided to the Company.

                                     - 19 -
<PAGE>

                  (b) "Bloomberg" means Bloomberg Financial Markets.

                  (c) "Business Day" means any day other than  Saturday,  Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

                  (d) "Calendar  Quarter" means each of: the period beginning on
and  including  January 1 and  ending on and  including  March  31;  the  period
beginning  on and  including  April 1 and ending on and  including  June 30; the
period  beginning on and including July 1 and ending on and including  September
30;  and the  period  beginning  on and  including  October 1 and  ending on and
including December 31.

                  (e)  "Change of  Control"  means any  Fundamental  Transaction
other than (i) any  reorganization,  recapitalization or reclassification of the
Common Stock in which holders of the Company's voting power immediately prior to
such  reorganization,  recapitalization or reclassification  continue after such
reorganization,  recapitalization  or  reclassification  to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or  entities  necessary  to elect a  majority  of the  members  of the  board of
directors (or their  equivalent if other than a  corporation)  of such entity or
entities, or (ii) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company.

                  (f) "Closing Bid Price" and "Closing  Sale Price"  means,  for
any security as of any date,  the last closing bid price and last closing  trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or, if the Principal  Market begins to operate on an extended  hours
basis and does not  designate  the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade  price,  respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal  securities exchange or trading
market  for such  security,  the last  closing  bid price or last  trade  price,
respectively,  of such security on the principal  securities exchange or trading
market where such security is listed or traded as reported by  Bloomberg,  or if
the  foregoing  do not apply,  the last  closing bid price or last trade  price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade  price,  respectively,  is  reported  for such  security  by
Bloomberg,  the average of the bid prices, or the ask prices,  respectively,  of
any market  makers for such  security as  reported in the "pink  sheets" by Pink
Sheets LLC (formerly the National  Quotation  Bureau,  Inc.). If the Closing Bid
Price or the  Closing  Sale  Price  cannot be  calculated  for a  security  on a
particular  date on any of the  foregoing  bases,  the  Closing Bid Price or the
Closing Sale Price,  as the case may be, of such  security on such date shall be
the fair market value as mutually  determined by the Company and the Holder.  If
the  Company  and the Holder are unable to agree upon the fair  market  value of
such security,  then such dispute shall be resolved  pursuant to Section 24. All
such determinations to be appropriately  adjusted for any stock dividend,  stock
split,  stock  combination  or other similar  transaction  during the applicable
calculation period.

                                     - 20 -
<PAGE>

                  (g)  "Closing  Date"  shall have the  meaning set forth in the
Securities  Purchase  Agreement,  which date is the date the  Company  initially
issued Notes pursuant to the terms of the Securities Purchase Agreement.

                  (h)  "Contingent  Obligation"  means,  as to any  Person,  any
direct or  indirect  liability,  contingent  or  otherwise,  of that Person with
respect to any  indebtedness,  lease,  dividend or other  obligation  of another
Person if the primary purpose or intent of the Person  incurring such liability,
or the primary effect  thereof,  is to provide  assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating  thereto will be complied  with, or that the holders of such  liability
will be protected (in whole or in part) against loss with respect thereto.

                  (i)  "Convertible  Securities"  means any stock or  securities
(other than Options)  directly or indirectly  convertible into or exercisable or
exchangeable for Common Stock.

                  (j) "Eligible  Market" means,  the Principal  Market,  The New
York Stock  Exchange,  Inc., the American Stock  Exchange,  the Nasdaq  National
Market or The Nasdaq Capital Market.

                  (k)  "Excluded  Securities"  means any Common  Stock issued or
issuable:  (i) in connection  with any Approved Stock Plan; (ii) upon conversion
of the  Notes or upon the  exercise  of the  Warrants;  (iii)  upon  conversion,
exercise  or  exchange  of any  Options  or  Convertible  Securities  which  are
outstanding on the day immediately  preceding the  Subscription  Date,  provided
that the  terms of such  Options  or  Convertible  Securities  are not  amended,
modified or changed on or after the Subscription Date; or (iv) securities issued
pursuant to acquisitions or strategic  transactions,  provided any such issuance
shall  only be to a party  which is,  itself or  through  its  subsidiaries,  an
operating company in a business synergistic with the business of the Company and
in which the Company  receives  benefits in addition to the investment of funds,
but shall not include a transaction  in which the Company is issuing  securities
primarily  for the  purpose of raising  capital  or to an entity  whose  primary
business is investing in securities.

                  (l)  "Fundamental  Transaction"  means that the Company shall,
directly or indirectly, in one or more related transactions,  (i) consolidate or
merge with or into  (whether  or not the Company is the  surviving  corporation)
another Person, or (ii) sell, assign,  transfer,  convey or otherwise dispose of
all or  substantially  all of the properties or assets of the Company to another
Person,  or (iii) allow another Person or Persons to make a purchase,  tender or
exchange  offer  that is  accepted  by the  holders  of more than the 50% of the
outstanding  shares of Voting  Stock (not  including  any shares of Voting Stock
held by the Person or Persons  making or party to, or  associated  or affiliated
with the Person or Persons making or party to, such purchase, tender or exchange
offer),  or (iv)  consummate  a  stock  purchase  agreement  or  other  business
combination (including, without limitation, a reorganization,  recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of either the outstanding shares of Voting Stock (not
including  any shares of Voting Stock held by the other Person or other  Persons
making or party to, or associated or affiliated with the other Persons making or
party to, such stock  purchase  agreement or other  business  combination),  (v)
reorganize,  recapitalize or reclassify its Common Stock or (vi) any "person" or
"group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange  Act) is or shall  become the  "beneficial  owner" (as  defined in Rule
13d-3 under the Exchange Act),  directly or indirectly,  of 50% of the aggregate
Voting Stock of the Company.

                                     - 21 -
<PAGE>

                  (m) "GAAP" means United States generally  accepted  accounting
principles, consistently applied.

                  (n) "Senior Indebtedness" means the Senior Secured Convertible
Notes due March 22, 2007, with an aggregate  principal face amount not to exceed
$525,000,  issued by the Company  pursuant to that certain  securities  purchase
agreement, dated September 22, 2005, by and among the Company and the purchasers
a party thereto.

                  (o)  "Holder  Pro  Rata  Amount"  means  a  fraction  (i)  the
numerator  of which is the Original  Principal  Amount of this Note and (ii) the
denominator  of which is the aggregate  original  principal  amount of all Notes
issued to the initial purchasers  pursuant to the Securities  Purchase Agreement
on the Closing Date.

                  (p)  "Indebtedness" of any Person means,  without  duplication
(i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken
or assumed as the deferred  purchase  price of property or  services,  including
(without  limitation)  "capital  leases" in accordance  with generally  accepted
accounting  principles  (other than trade payables  entered into in the ordinary
course of business), (iii) all reimbursement or payment obligations with respect
to letters of  credit,  surety  bonds and other  similar  instruments,  (iv) all
obligations  evidenced  by notes,  bonds,  debentures  or  similar  instruments,
including  obligations so evidenced  incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising under
any  conditional  sale or  other  title  retention  agreement,  or  incurred  as
financing,  in either case with respect to any property or assets  acquired with
the  proceeds of such  indebtedness  (even though the rights and remedies of the
seller or bank  under such  agreement  in the event of  default  are  limited to
repossession or sale of such property),  (vi) all monetary obligations under any
leasing or similar  arrangement  which,  in connection  with generally  accepted
accounting principles,  consistently applied for the periods covered thereby, is
classified as a capital lease, (vii) all indebtedness referred to in clauses (i)
through (vi) above secured by (or for which the holder of such  Indebtedness has
an existing  right,  contingent  or  otherwise,  to be secured by) any mortgage,
lien,  pledge,  charge,  security  interest or other  encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person  which owns such  assets or  property  has not assumed or
become liable for the payment of such  indebtedness,  and (viii) all  Contingent
Obligations  in respect of  indebtedness  or  obligations of others of the kinds
referred to in clauses (i) through (vii) above.

                  (q)  "Options"  means  any  rights,  warrants  or  options  to
subscribe for or purchase Common Stock or Convertible Securities.

                  (r) "Parent Entity" of a Person means an entity that, directly
or  indirectly,  controls  the  applicable  Person  and  whose  common  stock or
equivalent  equity  security is quoted or listed on an Eligible  Market,  or, if
there is more than one such Person or Parent Entity, the Person or Parent Entity
with the largest public market  capitalization as of the date of consummation of
the Fundamental Transaction.

                                     - 22 -
<PAGE>

                  (s)   "Permitted    Indebtedness"   means   (A)   the   Senior
Indebtedness,  (B)  Indebtedness  incurred by the Company that is made expressly
subordinate in right of payment to the  Indebtedness  evidenced by this Note, as
reflected in a written  agreement  acceptable  to the Holder and approved by the
Holder in writing,  and which  Indebtedness does not provide at any time for (1)
the  payment,  prepayment,  repayment,  repurchase  or  defeasance,  directly or
indirectly,  of any principal or premium,  if any, thereon until ninety-one (91)
days after the Maturity Date or later and (2) total  interest and fees at a rate
in excess of six percent (6%), (C) Indebtedness  secured by Permitted Liens, (D)
Indebtedness to trade creditors incurred in the ordinary course of business, and
(E)   extensions,   refinancings   and   renewals  of  any  items  of  Permitted
Indebtedness,  provided that the principal  amount is not increased or the terms
modified to impose more burdensome terms upon the Company or its Subsidiary,  as
the case may be.

                  (t) "Permitted Liens" means (i) any Lien for taxes not yet due
or delinquent or being  contested in good faith by appropriate  proceedings  for
which adequate  reserves have been established in accordance with GAAP, (ii) any
statutory  Lien arising in the  ordinary  course of business by operation of law
with respect to a liability  that is not yet due or  delinquent,  (iii) any Lien
created by operation of law, such as materialmen's  liens,  mechanics' liens and
other similar liens,  arising in the ordinary course of business with respect to
a liability  that is not yet due or  delinquent  or that are being  contested in
good  faith by  appropriate  proceedings,  (iv)  Liens  securing  the  Company's
obligations  under the Notes, (v) Liens (A) upon or in any equipment (as defined
in the  Security  Agreement)  acquired  or  held  by the  Company  or any of its
Subsidiaries  to secure the purchase  price of such  equipment  or  indebtedness
incurred  solely for the purpose of financing the  acquisition  or lease of such
equipment,  or (B) existing on such  equipment  at the time of its  acquisition,
provided  that the Lien is  confined  solely to the  property  so  acquired  and
improvements thereon, and the proceeds of such equipment, (vi) Liens incurred in
connection  with the  extension,  renewal  or  refinancing  of the  indebtedness
secured by Liens of the type  described  in clauses (i) and (v) above,  provided
that any extension, renewal or replacement Lien shall be limited to the property
encumbered  by the existing Lien and the  principal  amount of the  Indebtedness
being  extended,  renewed  or  refinanced  does not  increase,  (vii)  leases or
subleases and licenses and sublicenses  granted to others in the ordinary course
of the Company's  business,  not  interfering  in any material  respect with the
business of the Company and its Subsidiaries  taken as a whole,  (viii) Liens in
favor of customs  and revenue  authorities  arising as a matter of law to secure
payments of custom duties in connection  with the  importation of goods and (ix)
Liens  arising from  judgments,  decrees or  attachments  in  circumstances  not
constituting an Event of Default under Section 4(a)(ix).

                  (u) "Person" means an individual, a limited liability company,
a  partnership,  a joint  venture,  a corporation,  a trust,  an  unincorporated
organization,  any other entity and a  government  or any  department  or agency
thereof.

                                     - 23 -
<PAGE>

                  (v) "Principal Market" means the Pink Sheets.

                  (w)  "Redemption  Notices" means,  collectively,  the Event of
Default Redemption Notices,  Change of Control Redemption Notices and the Holder
Optional  Redemption  Notices  and,  each  of  the  foregoing,  individually,  a
Redemption Notice.

                  (x)  "Redemption  Premium" means (i) in the case of the Events
of Default  described in Section 4(a)(i) - (vi) and (ix) - (xiii),  125% or (ii)
in the case of the Events of Default  described  in Section  4(a)(vii) - (viii),
100%.

                  (y)  "Redemption  Prices"  means,  collectively,  the Event of
Default  Redemption  Price,  Change of Control  Redemption Price, and the Holder
Optional Redemption Price and, each of the foregoing, individually, a Redemption
Price.

                  (z)   "Registration   Rights  Agreement"  means  that  certain
registration rights agreement between the Company and the initial holders of the
Notes  relating to, among other things,  the  registration  of the resale of the
Common Stock issuable upon conversion of the Notes and exercise of the Warrants.

                  (aa)   "Required   Holders"   means  the   holders   of  Notes
representing, at least a majority of the aggregate principal amount of the Notes
then outstanding;  provided, however that any such holders of Notes must include
the Collateral Agent (as defined in the Securities Purchase Agreement).

                  (bb) "SEC" means the United  States  Securities  and  Exchange
Commission.

                  (cc)  "Securities   Purchase  Agreement"  means  that  certain
securities  purchase  agreement  dated  the  Subscription  Date by and among the
Company  and the  initial  holders of the Notes  pursuant  to which the  Company
issued the Notes.

                  (dd) "Subscription Date" means June 14, 2006.

                  (ee)  "Successor  Entity"  means the Person,  which may be the
Company,  formed by, resulting from or surviving any Fundamental  Transaction or
the  Person  with  which  such  Fundamental  Transaction  shall  have been made,
provided that if such Person is not a publicly  traded entity whose common stock
or  equivalent  equity  security  is quoted or listed for trading on an Eligible
Market, Successor Entity shall mean such Person's Parent Entity.

                  (ff) "Trading Day" means any day on which the Common Stock are
traded on the Principal Market, or, if the Principal Market is not the principal
trading market for the Common Stock, then on the principal  securities  exchange
or  securities  market on which the Common Stock are then traded;  provided that
"Trading  Day" shall not include any day on which the Common Stock are scheduled
to trade on such  exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such  exchange or market does not designate in advance
the closing  time of trading on such  exchange  or market,  then during the hour
ending at 4:00:00 p.m., New York Time).

                                     - 24 -
<PAGE>

                  (gg) "Voting  Stock" of a Person means  capital  stock of such
Person of the class or classes  pursuant to which the holders  thereof  have the
general  voting  power to elect,  or the general  power to  appoint,  at least a
majority  of the  board  of  directors,  managers  or  trustees  of such  Person
(irrespective  of whether or not at the time capital stock of any other class or
classes  shall have or might have voting power by reason of the happening of any
contingency).

                  (hh)  "Warrants" has the meaning  ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

                  (ii) "Weighted  Average  Price" means,  for any security as of
any date,  the dollar  volume-weighted  average  price for such  security on the
Principal  Market during the period beginning at 9:30:01 a.m., New York Time (or
such other time as the Principal Market publicly  announces is the official open
of trading),  and ending at 4:00:00  p.m.,  New York Time (or such other time as
the Principal  Market  publicly  announces is the official  close of trading) as
reported  by  Bloomberg  through  its  "Volume at Price"  functions,  or, if the
foregoing  does not apply,  the  dollar  volume-weighted  average  price of such
security in the  over-the-counter  market on the  electronic  bulletin board for
such security  during the period  beginning at 9:30:01  a.m.,  New York Time (or
such  other time as such  market  publicly  announces  is the  official  open of
trading),  and ending at 4:00:00 p.m., New York Time (or such other time as such
market  publicly  announces  is the  official  close of  trading) as reported by
Bloomberg,  or, if no dollar volume-weighted  average price is reported for such
security by  Bloomberg  for such hours,  the average of the highest  closing bid
price and the  lowest  closing  ask price of any of the  market  makers for such
security  as  reported in the "pink  sheets" by Pink  Sheets LLC  (formerly  the
National  Quotation  Bureau,  Inc.).  If the  Weighted  Average  Price cannot be
calculated  for a security on a particular  date on any of the foregoing  bases,
the  Weighted  Average  Price of such  security  on such date  shall be the fair
market  value as mutually  determined  by the  Company  and the  Holder.  If the
Company  and the Holder are unable to agree upon the fair  market  value of such
security,  then such dispute shall be resolved  pursuant to Section 24. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.

            (30)  DISCLOSURE.  Upon  receipt or  delivery  by the Company of any
notice in accordance with the terms of this Note, unless the Company has in good
faith  determined  that the matters  relating  to such notice do not  constitute
material, nonpublic information relating to the Company or its Subsidiaries, the
Company  shall  within one (1)  Business  Day after any such receipt or delivery
publicly  disclose such material,  nonpublic  information on a Current Report on
Form 8-K or  otherwise.  In the event that the  Company  believes  that a notice
contains  material,  nonpublic  information,  relating  to  the  Company  or its
Subsidiaries,  the Company shall indicate to the Holder  contemporaneously  with
delivery of such notice,  and in the absence of any such indication,  the Holder
shall be allowed to presume  that all  matters  relating  to such  notice do not
constitute  material,  nonpublic  information  relating  to the  Company  or its
Subsidiaries.

                            [Signature Page Follows]

                                     - 25 -
<PAGE>

            IN WITNESS  WHEREOF,  the  Company  has caused  this Note to be duly
executed as of the Issuance Date set out above.

                                        AMERICAN UNITED GLOBAL, INC.
                                        By:_____________________________________
                                              Name: Robert Rubin
                                              Title: Chief Executive Officer

<PAGE>

                                    EXHIBIT I

                          AMERICAN UNITED GLOBAL, INC.

                                CONVERSION NOTICE

Reference is made to the Senior Secured  Convertible Note (the "Note") issued to
the undersigned by American United Global,  Inc. (the "Company").  In accordance
with and  pursuant to the Note,  the  undersigned  hereby  elects to convert the
Conversion  Amount  (as  defined in the Note) of the Note  indicated  below into
shares of Common  Stock no par value per share (the "Common  Stock"),  as of the
date specified below.

         Date of Conversion:
                             ---------------------------------------------------

        Aggregate Conversion Amount to be converted:
                                                     ---------------------------

Please confirm the following information:

         Conversion Price:
                          ------------------------------------------------------

         Number of shares of Common Stock to be issued:
                                                       -------------------------

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

         Issue to:
                   -------------------------------------------------------------

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

         Facsimile Number:
                           -----------------------------------------------------

         Authorization:
                        --------------------------------------------------------

                  By:
                      ----------------------------------------------------------

                        Title:
                               -------------------------------------------------

Dated:
      --------------------------------------------------------------------------

         Account Number:
                         -------------------------------------------------------
         (if electronic book entry transfer)

         Transaction Code Number:
                                  ----------------------------------------------
         (if electronic book entry transfer)

<PAGE>

                                ACKNOWLEDGMENT

            The Company hereby  acknowledges  this Conversion  Notice and hereby
directs [Insert Name of Transfer  Agent] to issue the above indicated  number of
shares of Common Stock in accordance with the Transfer Agent  Instructions dated
____ __, 20__ from the Company and acknowledged and agreed to by [Insert Name of
Transfer Agent].

                                        AMERICAN UNITED GLOBAL, INC.
                                        By:_____________________________________
                                           Name:
                                           Title:

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