Document:

EXECUTION VERSION

                              SECURITY AGREEMENT

      SECURITY  AGREEMENT,  dated as of June 14, 2006 (this "AGREEMENT") made by
AMERICAN  UNITED GLOBAL,  INC., a Delaware  corporation  (the "COMPANY") and the
undersigned  subsidiaries of the Company (each a "GUARANTOR"  and  collectively,
the  "GUARANTORS"   and  together  with  the  Company,   each  a  "Grantor"  and
collectively,  the  "GRANTORS"),  in favor of Smithfield  Fiduciary  LLC, in its
capacity as collateral agent (in such capacity,  the "COLLATERAL AGENT") for the
Buyers referred to below.

                             W I T N E S S E T H:

      WHEREAS, the Company and each party listed as a "Buyer" on the Schedule of
Buyers  attached  to  the  Securities   Purchase  Agreement  referred  to  below
(collectively,  the  "BUYERS") are parties to that certain  Securities  Purchase
Agreement,  dated as of even date  herewith (as  amended,  restated or otherwise
modified from time to time, the "SECURITIES  PURCHASE  AGREEMENT"),  pursuant to
which the Company shall sell, and the Buyers shall purchase or have the right to
purchase, the Notes referred to below;

      WHEREAS,  each of the  Guarantors  has executed  and  delivered a Guaranty
dated the date hereof (the  "GUARANTY") in favor of the Collateral Agent for the
benefit of itself and the  Buyers,  with  respect to the  Company's  obligations
under the  Securities  Purchase  Agreement,  the Notes referred to below and the
Transaction Documents (as defined below); and

      WHEREAS,  it is a  condition  precedent  to the Buyers  entering  into the
Securities  Purchase  Agreement  that  the  Grantors  shall  have  executed  and
delivered to the Collateral Agent this Agreement  providing for the grant to the
Collateral  Agent for the  benefit of the Buyers of a security  interest  in all
personal  property of each  Grantor to secure all of the  Company's  obligations
under the Securities Purchase Agreement, the "Notes" issued pursuant thereto (as
such Notes may be amended, restated, replaced or otherwise modified from time to
time in accordance  with the terms  thereof,  collectively,  the  "NOTES"),  the
"Transaction  Documents" (as defined in the Securities Purchase  Agreement,  the
"TRANSACTION DOCUMENTS") and the Guarantors obligations under the Guaranty.

      NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce  the  Buyers to  perform  under the  Securities  Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows:

      SECTION 1. Definitions.

      (a) Reference is hereby made to the Securities  Purchase Agreement and the
Notes for a statement of the terms thereof. All terms used in this Agreement and
the recitals hereto which are defined in the Securities Purchase Agreement,  the
Notes,  or in Articles 8 or 9 of the Uniform  Commercial  Code as in effect from
time to time in the State of New York (the "CODE"),  and which are not otherwise
defined  herein  shall  have the same  meanings  herein  as set  forth  therein;
provided  that terms used  herein  which are defined in the Code as in effect in
the State of New York on the date hereof shall continue to have the same meaning
notwithstanding  any  replacement  or amendment  of such  statute  except as the
Collateral Agent may otherwise determine.

                                      -10-
<PAGE>

      (b) The following terms shall have the respective meanings provided for in
the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim",
"Commodity  Account",  "Commodity  Contracts",  "Deposit Account",  "Documents",
"Equipment",   "Fixtures",   "General  Intangibles",   "Goods",   "Instruments",
"Inventory",   "Investment  Property",   "Letter-of-Credit   Rights",   "Noncash
Proceeds",  "Payment Intangibles",  "Proceeds",  "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting Obligations".

      (c) As used  in  this  Agreement,  the  following  terms  shall  have  the
respective  meanings  indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:

      "COPYRIGHT  LICENSES" means all licenses,  contracts or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensee  or  licensor  and
providing  for the grant of any right to use or sell any  works  covered  by any
copyright  (including,  without limitation,  all Copyright Licenses set forth in
Schedule II hereto).

      "COPYRIGHTS" means all domestic and foreign copyrights, whether registered
or not,  including,  without  limitation,  all copyright  rights  throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
hereafter  developed),  in and to all original works of authorship  fixed in any
tangible  medium of  expression,  acquired  or used by any  Grantor  (including,
without  limitation,  all  copyrights  described  in Schedule  II  hereto),  all
applications,   registrations  and  recordings   thereof   (including,   without
limitation,  applications,  registrations  and  recordings  in the United States
Copyright  Office or in any similar office or agency of the United States or any
other  country  or  any  political  subdivision  thereof),   and  all  reissues,
divisions,  continuations,  continuations  in part and  extensions  or  renewals
thereof.

      "EVENT OF DEFAULT" shall have the meaning set forth in the Notes.

      "INSOLVENCY  PROCEEDING" means any proceeding  commenced by or against any
Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors,  formal or informal  moratoria,  compositions,  or
extensions  generally with  creditors,  or proceedings  seeking  reorganization,
arrangement, or other similar relief.

      "INTELLECTUAL PROPERTY" means the Copyrights, Trademarks and Patents.

      "LICENSES" means the Copyright  Licenses,  the Trademark  Licenses and the
Patent Licenses.

      "LIEN" means any  mortgage,  deed of trust,  pledge,  lien  (statutory  or
otherwise),  security  interest,  charge or other  encumbrance  or  security  or
preferential  arrangement  of any nature,  including,  without  limitation,  any
conditional sale or title retention  arrangement,  any capitalized lease and any
assignment,  deposit  arrangement or financing  lease intended as, or having the
effect of, security.

      "PATENT  LICENSES"  means all  licenses,  contracts  or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensee  or  licensor  and
providing for the grant of any right to  manufacture,  use or sell any invention
covered by any Patent (including,  without  limitation,  all Patent Licenses set
forth in Schedule II hereto).

                                      -2-
<PAGE>

      "PATENTS" means all domestic and foreign  letters patent,  design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques,  processes, proprietary information,  technology, know-how,
formulae,  rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including,  without limitation, all domestic and
foreign letters patent,  design patents,  utility patents,  industrial  designs,
inventions,  trade secrets,  ideas, concepts,  methods,  techniques,  processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto),  all applications,  registrations and recordings thereof (including,
without  limitation,  applications,  registrations  and recordings in the United
States Patent and Trademark  Office,  or in any similar  office or agency of the
United States or any other country or any political  subdivision  thereof),  and
all reissues, divisions, continuations,  continuations in part and extensions or
renewals thereof.

      "TRADEMARK  LICENSES" means all licenses,  contracts or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensor  or  licensee  and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such trademark licenses, contracts
or  agreements  and the right to prepare for sale or lease and sell or lease any
and all  Inventory  now or  hereafter  owned by any Grantor and now or hereafter
covered by such licenses (including,  without limitation, all Trademark Licenses
described in Schedule II hereto).

      "TRADEMARKS"  means all domestic and foreign  trademarks,  service  marks,
collective marks,  certification  marks, trade names,  business names,  d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general  intangibles of like nature, now or hereafter owned,
adopted,  acquired or used by any Grantor (including,  without  limitation,  all
domestic and foreign trademarks,  service marks, collective marks, certification
marks,  trade names,  business  names,  d/b/a's,  Internet  domain names,  trade
styles,  designs,  logos and other source or business  identifiers  described in
Schedule II hereto),  all  applications,  registrations  and recordings  thereof
(including,  without limitation,  applications,  registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United  States,  any state  thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all  goodwill of the  business  symbolized  by such marks and all  customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.

                                      -3-
<PAGE>

      SECTION 2. Grant of Security Interest.  As collateral  security for all of
the "Obligations" (as defined in Section 3 hereof),  each Grantor hereby pledges
and assigns to the Collateral Agent for the benefit of the Buyers, and grants to
the  Collateral  Agent  for the  benefit  of the  Buyers a  continuing  security
interest in, all personal property of each Grantor, wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired,  of every
kind and description,  tangible or intangible (collectively,  the "COLLATERAL"),
including, without limitation, the following:

      (a) all Accounts;

      (b) all Chattel Paper (whether tangible or electronic);

      (c) the Commercial Tort Claims specified on Schedule VI hereto;

      (d) all Deposit  Accounts,  all cash,  and all other property from time to
time  deposited  therein and the monies and property in the  possession or under
the control of the Collateral  Agent or Buyer or any affiliate,  representative,
agent or correspondent of the Collateral Agent or Buyer;

      (e) all Documents;

      (f) all Equipment;

      (g) all Fixtures;

      (h) all General Intangibles  (including,  without limitation,  all Payment
Intangibles);

      (i) all Goods;

      (j) all Instruments (including,  without limitation,  Promissory Notes and
each certificated Security);

      (k) all Inventory;

      (l) all Investment Property;

      (m) all  Copyrights,  Patents and  Trademarks,  and all Licenses;  (n) all
Letter-of-Credit Rights;

      (o) all Supporting Obligations;

      (p) all other  tangible and intangible  personal  property of each Grantor
(whether or not subject to the Code),  including,  without limitation,  all bank
and other  accounts  and all cash and all  investments  therein,  all  proceeds,
products, offspring, accessions, rents, profits, income, benefits, substitutions
and  replacements of and to any of the property of any Grantor  described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of  insurance  thereon and all causes of action,  claims and  warranties  now or
hereafter held by each Grantor in respect of any of the items listed above), and
all  books,   correspondence,   files  and  other  Records,  including,  without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession  or under the control of any Grantor or any other Person from time to
time acting for any  Grantor  that at any time  evidence or contain  information
relating  to any of the  property  described  in the  preceding  clauses of this
Section 2 or are otherwise necessary or helpful in the collection or realization
thereof; and

                                      -4-
<PAGE>

(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;

in each  case  howsoever  any  Grantor's  interest  therein  may arise or appear
(whether by ownership, security interest, claim or otherwise).

      SECTION 3. Security for Obligations.  The security interest created hereby
in the  Collateral  constitutes  continuing  collateral  security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the "OBLIGATIONS"):

      (a) (i) the  payment  by the  Company,  as and  when due and  payable  (by
scheduled maturity, required prepayment,  acceleration, demand or otherwise), of
all amounts from time to time owing by it in respect of the Securities  Purchase
Agreement,  the Notes, and the other "TRANSACTION  DOCUMENTS" (as defined in the
Securities Purchase Agreement), including, without limitation, (A) all principal
of and interest on the Notes (including,  without limitation,  all interest that
accrues  after the  commencement  of any  Insolvency  Proceeding of any Grantor,
whether or not the payment of such interest is unenforceable or is not allowable
due to  the  existence  of  such  Insolvency  Proceeding),  and  (B)  all  fees,
commissions, expense reimbursements,  indemnifications and all other amounts due
or to become due under any of the Transaction Documents; and

      (b) the due performance and observance by each Grantor of all of its other
obligations  from time to time  existing  in respect  of any of the  Transaction
Documents,  including  without  limitation,  with respect to any  conversion  or
redemption  rights  of the  Buyers  under  the  Notes,  for so long as they  are
outstanding.

      SECTION 4.  Representations  and Warranties.  Each Grantor  represents and
warrants as follows:

      (a)  Schedule I hereto  sets forth (i) the exact legal name of each of the
Grantors,  and (ii) the organizational  identification number of each Grantor or
states that no such organizational identification number exists.

      (b) There is no pending or written notice  threatening  any action,  suit,
proceeding or claim affecting any Grantor before any  governmental  authority or
any arbitrator, or any order, judgment or award by any governmental authority or
arbitrator,  that  may  adversely  affect  the  grant  by  any  Grantor,  or the
perfection,  of the  security  interest  purported  to be created  hereby in the
Collateral,  or the  exercise  by the  Collateral  Agent of any of its rights or
remedies hereunder.

      (c) All Federal, state and local tax returns and other reports required by
applicable  law to be filed by any Grantor have been filed,  or extensions  have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Grantor or any property of any Grantor (including,  without limitation,
all federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid,  except to
the  extent  contested  in good  faith  by  proper  proceedings  which  stay the
imposition of any penalty,  fine or Lien resulting from the non-payment  thereof
and with respect to which adequate  reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied ("GAAP").

                                      -5-
<PAGE>

      (d) All  Equipment,  Fixtures,  Goods and  Inventory  of each  Grantor now
existing are, and all Equipment,  Fixtures,  Goods and Inventory of each Grantor
hereafter  existing will be,  located  and/or based at the  addresses  specified
therefor  in  Schedule  III  hereto,  except  that  each  Grantor  will give the
Collateral  Agent not less than 30 days' prior  written  notice of any change of
the  location  of any such  Collateral,  other  than to  locations  set forth on
Schedule III and with respect to which the Collateral  Agent has filed financing
statements and otherwise fully perfected its Liens thereon. Each Grantor's chief
place of business and chief executive office, the place where each Grantor keeps
its Records  concerning  Accounts  and all  originals  of all Chattel  Paper are
located at the addresses  specified therefor in Schedule III hereto. None of the
Accounts is evidenced by  Promissory  Notes or other  Instruments.  Set forth in
Schedule  IV hereto is a  complete  and  accurate  list,  as of the date of this
Agreement,  of (i) each Promissory Note,  Security and other Instrument owned by
each Grantor and (ii) each Deposit Account,  Securities  Account and Commodities
Account of each Grantor,  together with the name and address of each institution
at which  each such  Account is  maintained,  the  account  number for each such
Account  and a  description  of the purpose of each such  Account.  Set forth in
Schedule I hereto is a complete and correct list of each trade name used by each
Grantor  and the name of, and each trade name used by,  each  person  from which
each Grantor has acquired any substantial part of the Collateral.

      (e) Each  Grantor has  delivered  to the  Collateral  Agent  complete  and
correct  copies of each License  described in Schedule II hereto,  including all
schedules and exhibits thereto, which represents all of the Licenses existing on
the date of this  Agreement.  Each such License sets forth the entire  agreement
and understanding of the parties thereto relating to the subject matter thereof,
and there are no other agreements,  arrangements or  understandings,  written or
oral,  relating to the matters  covered thereby or the rights of each Grantor or
any of its affiliates in respect thereof. Each material License now existing is,
and any material  License  entered into in the future will be, the legal,  valid
and binding obligation of the parties thereto,  enforceable against such parties
in accordance with its terms. No default under any material  License by any such
party has  occurred,  nor does any defense,  offset,  deduction or  counterclaim
exist thereunder in favor of any such party.

      (f) Each Grantor owns and controls, or otherwise possesses adequate rights
to use, all Trademarks,  Patents and Copyrights,  which are the only trademarks,
patents,  copyrights,  inventions,  trade secrets,  proprietary  information and
technology,  know-how,  formulae,  rights of publicity  necessary to conduct its
business in  substantially  the same manner as  conducted as of the date hereof.
Schedule  II  hereto  sets  forth a true  and  complete  list of all  registered
copyrights,  issued Patents,  Trademarks, and Licenses annually owned or used by
each Grantor as of the date hereof.  To the best knowledge of the Grantors,  all
such  Intellectual  Property of each Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable
and has not been abandoned in whole or in part.  Except as set forth in Schedule
II, no such Intellectual Property is the subject of any licensing or franchising
agreement.  Each Grantor has no  knowledge  of any  conflict  with the rights of
others to any Intellectual  Property and, to the best knowledge of the Grantors,
each Grantor is not now infringing or in conflict with any such rights of others
in any material  respect,  and to the best  knowledge of the Grantors,  no other
Person is now  infringing  or in conflict in any material  respect with any such
properties,  assets and rights  owned or used by each  Grantor.  No Grantor  has
received  any  notice  that it is  violating  or has  violated  the  trademarks,
patents,  copyrights,  inventions,  trade secrets,  proprietary  information and
technology,  know-how,  formulae,  rights  of  publicity  or other  intellectual
property rights of any third party.

                                      -6-
<PAGE>

      (g) Each Grantor is and will be at all times the sole and exclusive  owner
of, or otherwise has and will have adequate  rights in, the Collateral  free and
clear of any Liens,  except for Permitted Liens on any Collateral.  No effective
financing  statement or other  instrument  similar in effect covering all or any
part of the  Collateral is on file in any recording or filing office except such
as may  have  been  filed  in favor of the  Collateral  Agent  relating  to this
Agreement.

      (h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual  restriction binding on
or otherwise affecting each Grantor or any of its properties and will not result
in or  require  the  creation  of any Lien,  upon or with  respect to any of its
properties.

      (i) No  authorization  or approval or other action by, and no notice to or
filing with, any  governmental  authority or other regulatory body, or any other
Person, is required for (i) the grant by each Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral,  or (ii) the
exercise by the  Collateral  Agent of any of its rights and remedies  hereunder,
except (A) for the filing under the Uniform  Commercial Code as in effect in the
applicable  jurisdiction  of the financing  statements,  all of which  financing
statements,  have been duly  filed and are in full  force and  effect,  (B) with
respect  to the  perfection  of the  security  interest  created  hereby  in the
Intellectual  Property,  for the  recording of the  appropriate  Assignment  for
Security,  substantially in the form of Exhibit A hereto, as applicable,  in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable,  and (C) with respect to the perfection of the security  interest
created hereby in foreign Intellectual Property and Licenses,  for registrations
and filings in  jurisdictions  located outside of the United States and covering
rights in such jurisdictions relating to the Intellectual Property and Licenses.

      (j) This Agreement creates in favor of the Collateral Agent a legal, valid
and  enforceable  security  interest  in the  Collateral,  as  security  for the
Obligations.  The Collateral  Agent's having  possession of all  Instruments and
cash  constituting  Collateral  from time to time,  (or with  respect to deposit
accounts,  entry into  appropriate  control  agreements)  the  recording  of the
appropriate  Assignment  for  Security  executed  pursuant  hereto in the United
States Patent and Trademark Office and the United States Copyright  Office,  the
execution of appropriate  assignments of Letter of Credit Rights, as applicable,
and the filing of the financing statements and the other filings and recordings,
as  applicable,  described  in  Schedule  V  hereto  and,  with  respect  to the
Intellectual  Property  hereafter  existing  and not  covered by an  appropriate
Assignment for Security, the recording in the United States Patent and Trademark
Office or the United States  Copyright  Office,  as  applicable,  of appropriate
instruments of assignment,  result in the perfection of such security interests.
Such security  interests are, or in the case of Collateral in which each Grantor
obtains  rights  after  the date  hereof,  will be,  perfected,  first  priority
security  interests,  subject only to Permitted  Liens and the recording of such
instruments  of  assignment.  Such  recordings  and filings and all other action
necessary or desirable to perfect and protect such  security  interest have been
duly taken,  except for the Collateral  Agent's having possession of Instruments
and cash constituting Collateral after the date hereof and the other filings and
recordations described in Section 4(l) hereof.

                                      -7-
<PAGE>

      (k) As of the date hereof, no Grantor holds any Commercial Tort Claims nor
is aware of any such  pending  claims,  except  for  such  claims  described  in
Schedule VI.

      SECTION  5.  Covenants  as to  the  Collateral.  So  long  as  any  of the
Obligations  shall  remain  outstanding,   unless  the  Collateral  Agent  shall
otherwise consent in writing:

      (a) Further Assurances.  Each Grantor will at its expense, at any time and
from time to time,  promptly  execute and deliver  all further  instruments  and
documents and take all further action that the  Collateral  Agent may reasonably
request in order to: (i) perfect and protect the security interest  purported to
be created hereby;  (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies  hereunder in respect of the Collateral;  or (iii) otherwise
effect the  purposes  of this  Agreement,  including,  without  limitation:  (A)
marking  conspicuously all Chattel Paper and each License and, at the request of
the Collateral  Agent,  each of its Records  pertaining to the Collateral with a
legend, in form and substance  satisfactory to the Collateral Agent,  indicating
that such  Chattel  Paper,  License or  Collateral  is  subject to the  security
interest  created hereby (B)  delivering  and pledging to the  Collateral  Agent
hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now
or hereafter  owned by any Grantor,  duly endorsed and  accompanied  by executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral  Agent, (C) executing and filing (to the extent, if any, that any
Grantor's  signature is required thereon) or authenticating  the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or  desirable or that the  Collateral  Agent may request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing to
the  Collateral  Agent  from  time  to time  statements  and  schedules  further
identifying  and  describing the Collateral and such other reports in connection
with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable  detail, (E) if any Collateral shall be in the possession of a
third party,  notifying such Person of the Collateral  Agent's security interest
created hereby and obtaining a written acknowledgment from such Person that such
Person holds  possession  of the  Collateral  for the benefit of the  Collateral
Agent,  which  such  written  acknowledgement  shall  be in form  and  substance
satisfactory to the Collateral  Agent, (F) if at any time after the date hereof,
any Grantor acquires or holds any Commercial Tort Claim,  promptly notifying the
Collateral  Agent in a writing  signed  by such  Grantor  setting  forth a brief
description of such Commercial Tort Claim and granting to the Collateral Agent a
security  interest  therein and in the proceeds  thereof,  which  writing  shall
incorporate   the  provisions   hereof  and  shall  be  in  form  and  substance
satisfactory to the Collateral  Agent,  (G) upon the acquisition  after the date
hereof by any  Grantor  of any motor  vehicle  or other  Equipment  subject to a
certificate of title or ownership  (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest),  causing the Collateral Agent
to be listed as the  lienholder  on such  certificate  of title or ownership and
delivering  evidence of the same to the Collateral  Agent in accordance with the
Securities  Purchase  Agreement;  and (H) taking  all  actions  required  by any
earlier versions of the Uniform  Commercial Code or by other law, as applicable,
in any  relevant  Uniform  Commercial  Code  jurisdiction,  or by  other  law as
applicable in any foreign jurisdiction.

                                      -8-
<PAGE>

      (b)  Location of  Equipment  and  Inventory.  Each  Grantor  will keep the
Equipment  and  Inventory  at the  locations  specified  therefor on Schedule II
hereto or, at such other locations in the United States, provided that within 10
days following the relocation of Equipment or Inventory to such other  location,
Grantor shall deliver to the Collateral  Agent a new Schedule II indicating each
such new location.

      (c)  Condition  of  Equipment.  Each  Grantor  will  maintain or cause the
Equipment  (necessary or useful to its business) to be maintained  and preserved
in good  condition,  repair and working order,  ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of any
Grantor within a commercially reasonable time after the occurrence thereof, make
or  cause  to be made  all  repairs,  replacements  and  other  improvements  in
connection  therewith  which are  necessary or desirable,  consistent  with past
practice,  or which the  Collateral  Agent may request to such end.  Any Grantor
will  promptly  furnish  to the  Collateral  Agent  a  statement  describing  in
reasonable  detail any such loss or damage in excess of $250,000 per  occurrence
to any Equipment.

      (d) Taxes,  Etc. Each Grantor agrees to pay promptly when due all property
and other taxes,  assessments and  governmental  charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment  and  Inventory,  except to the extent the  validity  thereof is being
contested in good faith by proper  proceedings  which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which  adequate  reserves  in  accordance  with GAAP have been set aside for the
payment thereof.

      (e) Insurance.

            (i)  Each  Grantor  will,  at its own  expense,  maintain  insurance
(including,  without  limitation,  commercial  general  liability  and  property
insurance) with respect to the Equipment and Inventory in such amounts,  against
such risks, in such form and with responsible and reputable  insurance companies
or associations as is required by any governmental authority having jurisdiction
with  respect  thereto  or as is  carried  generally  in  accordance  with sound
business practice by companies in similar  businesses  similarly situated and in
any  event,  in  amount,  adequacy  and  scope  reasonably  satisfactory  to the
Collateral  Agent. To the extent  requested by the Collateral  Agent at any time
and from time to time,  each such policy for liability  insurance  shall provide
for all losses to be paid on behalf of the  Collateral  Agent and any Grantor as
their  respective  interests  may appear,  and each policy for  property  damage
insurance  shall provide for all losses to be adjusted  with,  and paid directly
to, the Collateral Agent. To the extent requested by the Collateral Agent at any
time and from time to time,  each such  policy  shall in  addition  (A) name the
Collateral  Agent  as  an  additional  insured  party  thereunder  (without  any
representation  or warranty by or obligation upon the Collateral Agent) as their
interests  may appear,  (B) contain an  agreement  by the insurer  that any loss
thereunder  shall  be  payable  to  the  Collateral  Agent  on its  own  account
notwithstanding any action,  inaction or breach of representation or warranty by
any Grantor,  (C) provide that there shall be no recourse against the Collateral
Agent for payment of premiums or other  amounts  with respect  thereto,  and (D)
provide  that at least 30 days' prior  written  notice of  cancellation,  lapse,
expiration or other adverse change shall be given to the Collateral Agent by the
insurer.  Any Grantor will, if so requested by the Collateral Agent,  deliver to
the Collateral  Agent  original or duplicate  policies of such insurance and, as
often as the Collateral  Agent may reasonably  request,  a report of a reputable
insurance  broker with respect to such insurance.  Any Grantor will also, at the
request of the Collateral Agent,  execute and deliver  instruments of assignment
of such  insurance  policies and cause the  respective  insurers to  acknowledge
notice of such assignment.

                                      -9-
<PAGE>

            (ii) Reimbursement under any liability  insurance  maintained by any
Grantor  pursuant to this  Section  5(e) may be paid  directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory, any proceeds of insurance maintained
by any Grantor  pursuant to this  Section  5(e) shall be paid to the  Collateral
Agent  (except  as to  which  paragraph  (iii)  of  this  Section  5(e)  is  not
applicable),  any Grantor will make or cause to be made the necessary repairs to
or  replacements  of such Equipment or Inventory,  and any proceeds of insurance
maintained  by any Grantor  pursuant to this  Section  5(e) shall be paid by the
Collateral Agent to any Grantor as  reimbursement  for the costs of such repairs
or replacements.

            (iii)  All  insurance  payments  in  respect  of such  Equipment  or
Inventory  shall be paid to the  Collateral  Agent and applied as  specified  in
Section 7(b) hereof.

      (f) Provisions Concerning the Accounts and the Licenses.

            (i) Any Grantor will (A) give the Collateral Agent at least 30 days'
prior  written  notice  of any  change  in  such  Grantor's  name,  identity  or
organizational  structure, (B) maintain its jurisdiction of incorporation as set
forth in Section 4(b) hereto,  (C) immediately  notify the Collateral Agent upon
obtaining an  organizational  identification  number, if on the date hereof such
Grantor did not have such  identification  number, and (D) keep adequate records
concerning  the Accounts  and Chattel  Paper and permit  representatives  of the
Collateral  Agent during  normal  business  hours on  reasonable  notice to such
Grantor, to inspect and make abstracts from such Records and Chattel Paper.

            (ii)  Each  Grantor  will,  except  as  otherwise  provided  in this
subsection (f), continue to collect,  at its own expense,  all amounts due or to
become due under the Accounts. In connection with such collections,  any Grantor
may (and, at the  Collateral  Agent's  direction,  will) take such action as any
Grantor or the  Collateral  Agent may deem  necessary  or  advisable  to enforce
collection  or  performance  of  the  Accounts;   provided,  however,  that  the
Collateral  Agent  shall  have the right at any time,  upon the  occurrence  and
during the continuance of an Event of Default,  to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such  account  debtors or  obligors  to make  payment of all
amounts  due  or to  become  due  to  any  Grantor  thereunder  directly  to the
Collateral Agent or its designated agent and, upon such  notification and at the
expense of any Grantor and to the extent permitted by law, to enforce collection
of any such Accounts and to adjust,  settle or compromise  the amount or payment
thereof,  in the same manner and to the same  extent as may  Grantor  might have
done.  After receipt by any Grantor of a notice from the  Collateral  Agent that
the Collateral Agent has notified, intends to notify, or has enforced or intends
to enforce any Grantor's  rights  against the account  debtors or obligors under
any  Accounts  as  referred  to in  the  proviso  to the  immediately  preceding
sentence,  (A) all amounts and proceeds (including  Instruments) received by any
Grantor in respect of the Accounts shall be received in trust for the benefit of
the  Collateral  Agent  hereunder,  shall be segregated  from other funds of any
Grantor and shall be  forthwith  paid over to the  Collateral  Agent in the same
form  as so  received  (with  any  necessary  endorsement)  to be  held  as cash
collateral and either (i) credited to the outstanding  obligations so long as no
Event of Default  shall have  occurred and be  continuing or (ii) if an Event of
Default shall have occurred and be  continuing,  applied as specified in Section
7(b) hereof, and (B) no Grantor will adjust,  settle or compromise the amount or
payment of any Account or release wholly or partly any account debtor or obligor
thereof  or  allow  any  credit  or  discount  thereon.  In  addition,  upon the
occurrence  and during the  continuance  of an Event of Default,  the Collateral
Agent may (in its sole and absolute  discretion)  direct any or all of the banks
and financial  institutions  with which any Grantor  either  maintains a Deposit
Account  or a  lockbox  or  deposits  the  proceeds  of  any  Accounts  to  send
immediately  to the  Collateral  Agent by wire  transfer (to such account as the
Collateral Agent shall specify,  or in such other manner as the Collateral Agent
shall direct) all or a portion of such securities,  cash,  investments and other
items held by such institution. Any such securities, cash, investments and other
items so  received  by the  Collateral  Agent  shall  (in the sole and  absolute
discretion of the  Collateral  Agent) be held as additional  Collateral  for the
Obligations or distributed in accordance with Section 7 hereof.

                                      -10-
<PAGE>

            (iii) Upon the occurrence  and during the  continuance of any breach
or default under any material  License  referred to in Schedule II hereto by any
party thereto other than any Grantor,  each Grantor party thereto will, promptly
after obtaining  knowledge thereof,  give the Collateral Agent written notice of
the nature and duration  thereof,  specifying what action,  if any, it has taken
and proposes to take with respect  thereto and thereafter  will take  reasonable
steps to protect and  preserve its rights and remedies in respect of such breach
or default, or will obtain or acquire an appropriate substitute License.

            (iv) Each  Grantor  will,  at its expense,  promptly  deliver to the
Collateral Agent a copy of each notice or other communication  received by it by
which any other party to any material  License referred to in Schedule II hereto
purports  to  exercise  any of  its  rights  or  affect  any of its  obligations
thereunder, together with a copy of any reply by such Grantor thereto.

            (v) Each Grantor will  exercise  promptly  and  diligently  each and
every right which it may have under each material  License (other than any right
of  termination)  and will duly  perform and observe in all  respects all of its
obligations  under each  material  License  and will take all action  reasonably
necessary to maintain such  Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Collateral  Agent,  cancel,  terminate,
amend or  otherwise  modify in any  respect,  or waive  any  provision  of,  any
material License referred to in Schedule II hereto.

                                      -11-
<PAGE>

      (g) Transfers and Other Liens.

            (i) No Grantor will sell, assign (by operation of law or otherwise),
lease,  license,  exchange  or  otherwise  transfer  or  dispose  of  any of the
Collateral,  except (A)  Inventory in the ordinary  course of business,  and (B)
worn-out or obsolete assets not necessary to the business.

            (ii) No Grantor will create,  suffer to exist or grant any Lien upon
or with respect to any Collateral other than a Permitted Lien.

      (h) Intellectual Property.

            (i) If applicable,  any Grantor shall,  upon the Collateral  Agent's
written request, duly execute and deliver the applicable Assignment for Security
in the form attached hereto as Exhibit A. Each Grantor (either itself or through
licensees)  will,  and will  cause each  licensee  thereof  to,  take all action
necessary to maintain all of the Intellectual Property in full force and effect,
including,  without limitation,  using the proper statutory notices and markings
and using the Trademarks on each applicable trademark class of goods in order to
so maintain the  Trademarks in full force and free from any claim of abandonment
for non-use,  and each Grantor will not (nor permit any licensee  thereof to) do
any act or knowingly  omit to do any act whereby any  Intellectual  Property may
become invalidated;  provided,  however, that so long as no Event of Default has
occurred and is  continuing,  no Grantor  shall have an  obligation to use or to
maintain any  Intellectual  Property  (A) that relates  solely to any product or
work, that has been, or is in the process of being,  discontinued,  abandoned or
terminated,  (B) that is being replaced with Intellectual Property substantially
similar to the  Intellectual  Property that may be abandoned or otherwise become
invalid,  so long as the failure to use or maintain such  Intellectual  Property
does  not  materially   adversely   affect  the  validity  of  such  replacement
Intellectual  Property and so long as such replacement  Intellectual Property is
subject to the Lien created by this Agreement or (C) that is  substantially  the
same as another Intellectual Property that is in full force, so long the failure
to use or maintain  such  Intellectual  Property does not  materially  adversely
affect the  validity of such  replacement  Intellectual  Property and so long as
such other  Intellectual  Property is subject to the Lien and security  interest
created by this  Agreement.  Each Grantor  will cause to be taken all  necessary
steps in any proceeding before the United States Patent and Trademark Office and
the United States  Copyright Office or any similar office or agency in any other
country or political  subdivision  thereof to maintain each  registration of the
Intellectual  Property (other than the  Intellectual  Property  described in the
proviso to the immediately preceding sentence),  including,  without limitation,
filing of  renewals,  affidavits  of use,  affidavits  of  incontestability  and
opposition, interference and cancellation proceedings and payment of maintenance
fees,  filing  fees,  taxes  or other  governmental  fees.  If any  Intellectual
Property (other than Intellectual Property described in the proviso to the first
sentence of subsection  (i) of this clause (h)) is  infringed,  misappropriated,
diluted or  otherwise  violated in any material  respect by a third party,  each
Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other  violation,  promptly notify the Collateral Agent and (y) to the extent
any Grantor shall deem  appropriate  under the  circumstances,  promptly sue for
infringement,  misappropriation,  dilution or other  violation,  seek injunctive
relief where appropriate and recover any and all damages for such  infringement,
misappropriation,  dilution or other  violation,  or take such other  actions as
such Grantor  shall deem  appropriate  under the  circumstances  to protect such
Intellectual  Property.  Each Grantor shall furnish to the Collateral Agent from
time to time upon its request  statements and schedules further  identifying and
describing  the  Intellectual  Property and  Licenses and such other  reports in
connection with the  Intellectual  Property and Licenses as the Collateral Agent
may reasonably  request,  all in reasonable  detail and promptly upon request of
the Collateral  Agent,  following  receipt by the  Collateral  Agent of any such
statements,  schedules or reports,  each Grantor shall modify this  Agreement by
amending  Schedule II hereto,  as the case may be, to include  any  Intellectual
Property and License,  as the case may be, which becomes part of the  Collateral
under this  Agreement and shall execute and  authenticate  such documents and do
such acts as shall be  necessary  or, in the judgment of the  Collateral  Agent,
desirable  to subject  such  Intellectual  Property and Licenses to the Lien and
security interest created by this Agreement.  Notwithstanding anything herein to
the contrary,  upon the  occurrence  and during the  continuance  of an Event of
Default, no Grantor may abandon or otherwise permit any Intellectual Property to
become invalid without the prior written consent of the Collateral Agent, and if
any Intellectual  Property is infringed,  misappropriated,  diluted or otherwise
violated in any material  respect by a third party,  each Grantor will take such
action as the Collateral Agent shall deem appropriate under the circumstances to
protect such Intellectual Property.

                                      -12-
<PAGE>

            (ii) In no event  shall any  Grantor,  either  itself or through any
agent, employee,  licensee or designee, file an application for the registration
of any  Trademark  or  Copyright  or the  issuance of any Patent with the United
States Patent and Trademark  Office or the United States  Copyright  Office,  as
applicable,  or in any  similar  office or agency  of the  United  States or any
country or any  political  subdivision  thereof  unless it gives the  Collateral
Agent prior written notice thereof.  Upon request of the Collateral  Agent,  any
Grantor  shall  execute,  authenticate  and  deliver  any and  all  assignments,
agreements,  instruments,  documents  and  papers  as the  Collateral  Agent may
reasonably   request  to  evidence  the  Collateral  Agent's  security  interest
hereunder  in such  Intellectual  Property  and the General  Intangibles  of any
Grantor  relating  thereto  or  represented  thereby,  and each  Grantor  hereby
appoints  the   Collateral   Agent  its   attorney-in-fact   to  execute  and/or
authenticate and file all such writings for the foregoing purposes,  all acts of
such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until the indefeasible payment in full in
cash of all of the  Obligations  in  full  and  the  termination  of each of the
Transaction Documents.

      (i) Deposit,  Commodities  and  Securities  Accounts.  Upon the Collateral
Agent's written request,  each Grantor shall cause each bank and other financial
institution  with an account  referred  to in  Schedule IV hereto to execute and
deliver  to the  Collateral  Agent a control  agreement,  in form and  substance
reasonably  satisfactory to the Collateral  Agent, duly executed by each Grantor
and such bank or financial institution, or enter into other arrangements in form
and  substance  satisfactory  to the  Collateral  Agent,  pursuant to which such
institution shall irrevocably  agree, inter alia, that (i) it will comply at any
time with the  instructions  originated by the Collateral  Agent to such bank or
financial  institution  directing the disposition of cash,  Commodity Contracts,
securities,  Investment  Property and other items from time to time  credited to
such account,  without further consent of each Grantor,  which  instructions the
Collateral  Agent will not give to such bank or other  financial  institution in
the  absence  of a  continuing  Event  of  Default,  (ii)  all  cash,  Commodity
Contracts,  securities,  Investment  Property  and other  items of each  Grantor
deposited with such institution shall be subject to a perfected,  first priority
security interest in favor of the Collateral  Agent,  (iii) any right of set off
(other than recoupment of standard  fees),  banker's Lien or other similar Lien,
security interest or encumbrance shall be fully waived as against the Collateral
Agent,  and (iv) upon receipt of written notice from the Collateral Agent during
the continuance of an Event of Default, such bank or financial institution shall
immediately  send to the  Collateral  Agent by wire transfer (to such account as
the Collateral  Agent shall  specify,  or in such other manner as the Collateral
Agent  shall  direct)  all such  cash,  the  value of any  Commodity  Contracts,
securities,  Investment  Property and other items held by it.  Without the prior
written consent of the Collateral Agent, each Grantor shall not make or maintain
any Deposit  Account,  Commodity  Account or Securities  Account  except for the
accounts set forth in Schedule IV hereto.  The provisions of this paragraph 5(i)
shall not apply to (i) Deposit  Accounts for which the  Collateral  Agent is the
depositary and (ii) Deposit Accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of each Grantor's salaried employees.

                                      -13-
<PAGE>

      (j) Motor Vehicles.

            (i) Upon the Collateral Agent's written request,  each Grantor shall
deliver  to the  Collateral  Agent  originals  of the  certificates  of title or
ownership for all motor vehicles with a value in excess of $50,000,  owned by it
with the Collateral Agent listed as lienholder, for the benefit of the Buyers.

            (ii)  Each  Grantor  hereby  appoints  the  Collateral  Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this  Agreement,  for the purpose of (A)  executing on behalf of each Grantor
title or ownership  applications for filing with  appropriate  state agencies to
enable  motor  vehicles  now owned or  hereafter  acquired by each Grantor to be
retitled and the Collateral Agent listed as lienholder thereof,  (B) filing such
applications  with such state  agencies,  and (C) executing such other documents
and  instruments on behalf of, and taking such other action in the name of, each
Grantor as the  Collateral  Agent may deem  necessary or advisable to accomplish
the purposes hereof (including,  without limitation, for the purpose of creating
in favor of the  Collateral  Agent a perfected  Lien on the motor  vehicles  and
exercising  the rights and remedies of the  Collateral  Agent  hereunder).  This
appointment as  attorney-in-fact  is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash and after all
Transaction Documents have been terminated.

            (iii) Any certificates of title or ownership  delivered  pursuant to
the terms  hereof shall be  accompanied  by odometer  statements  for each motor
vehicle covered thereby.

            (iv) So long as no Event  of  Default  shall  have  occurred  and be
continuing,  upon the request of any Grantor, the Collateral Agent shall execute
and deliver to any Grantor  such  instruments  as any Grantor  shall  reasonably
request to remove the  notation of the  Collateral  Agent as  lienholder  on any
certificate of title for any motor  vehicle;  provided,  however,  that any such
instruments shall be delivered, and the release effective,  only upon receipt by
the Collateral  Agent of a certificate  from any Grantor stating that such motor
vehicle  is to be sold or has  suffered  a casualty  loss  (with  title  thereto
passing to the casualty  insurance  company  therefor in settlement of the claim
for such loss) and the amount that any Grantor will receive as sale  proceeds or
insurance proceeds.  Any proceeds of such sale or casualty loss shall be paid to
the Collateral Agent hereunder  immediately  upon receipt,  to be applied to the
Obligations then outstanding.

                                      -14-
<PAGE>

      (k) Control. Each Grantor hereby agrees to take any or all action that may
be necessary or desirable or that the Collateral  Agent may request in order for
the Collateral Agent to obtain control in accordance with Sections 9-105 - 9-107
of the Code with respect to the following  Collateral:  (i)  Electronic  Chattel
Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

      (l)  Inspection  and  Reporting.  Each Grantor shall permit the Collateral
Agent, or any agent or  representatives  thereof or such  professionals or other
Persons as the Collateral Agent may designate,  not more than once a year in the
absence of an Event of Default,  (i) to examine and make copies of and abstracts
from any Grantor's  records and books of account,  (ii) to visit and inspect its
properties, (iii) to verify materials, leases, Instruments,  Accounts, Inventory
and other  assets of any  Grantor  from time to time,  (iii) to conduct  audits,
physical counts, appraisals and/or valuations,  examinations at the locations of
any Grantor.  Each Grantor shall also permit the Collateral  Agent, or any agent
or  representatives  thereof  or such  professionals  or  other  Persons  as the
Collateral  Agent may designate to discuss any Grantor's  affairs,  finances and
accounts with any of its directors, officers, managerial employees,  independent
accountants or any of its other representatives.

      (m) Future Subsidiaries.  If any Grantor shall hereafter create or acquire
any  Subsidiary,  simultaneously  with  the  creation  of  acquisition  of  such
Subsidiary,  such Grantor shall cause such  Subsidiary to become a party to this
Agreement as an additional "Grantor" hereunder,  and to duly execute and deliver
a  guaranty  of the  Obligations  in favor of the  Collateral  Agent in form and
substance  reasonably  acceptable to the Collateral  Agent,  and to duly execute
and/or  deliver  such  opinions  of  counsel  and other  documents,  in form and
substance reasonably acceptable to the Collateral Agent, as the Collateral Agent
shall reasonably request with respect thereto.

      SECTION 6. Additional Provisions Concerning the Collateral.

      (a) Each Grantor hereby (i) authorizes the Collateral Agent to file one or
more  Uniform  Commercial  Code  financing  or  continuation   statements,   and
amendments   thereto,   relating  to  the  Collateral  and  (ii)  ratifies  such
authorization  to the  extent  that the  Collateral  Agent  has  filed  any such
financing or continuation  statements,  or amendments thereto, prior to the date
hereof.  A photocopy or other  reproduction  of this  Agreement or any financing
statement  covering the  Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.

      (b) Each Grantor hereby  irrevocably  appoints the Collateral Agent as its
attorney-in-fact  and proxy,  with full authority in the place and stead of each
Grantor and in the name of each Grantor or  otherwise,  from time to time in the
Collateral  Agent's  discretion,  so long as an  Event  of  Default  shall  have
occurred  and is  continuing,  to take any action and to execute any  instrument
which the  Collateral  Agent may deem  necessary or advisable to accomplish  the
purposes of this Agreement  (subject to the rights of each Grantor under Section
5 hereof),  including,  without  limitation,  (i) to obtain and adjust insurance
required to be paid to the  Collateral  Agent  pursuant to Section  5(e) hereof,
(ii) to ask,  demand,  collect,  sue for,  recover,  compound,  receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any  Collateral,  (iii) to  receive,  endorse,  and  collect any drafts or other
instruments,  documents and chattel paper in connection  with clause (i) or (ii)
above,  (iv) to file any claims or take any action or institute any  proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any  Collateral or otherwise to enforce the rights of the  Collateral  Agent and
the Buyers  with  respect  to any  Collateral,  and (v) to execute  assignments,
licenses and other  documents to enforce the rights of the Collateral  Agent and
the Buyers  with  respect  to any  Collateral.  This  power is  coupled  with an
interest and is irrevocable  until all of the Obligations are indefeasibly  paid
in full in cash.

                                      -15-
<PAGE>

      (c) For the purpose of enabling the  Collateral  Agent to exercise  rights
and remedies  hereunder,  at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies,  and for no other  purpose,  each
Grantor  hereby grants to the Collateral  Agent,  to the extent  assignable,  an
irrevocable,  non-exclusive  license  (exercisable without payment of royalty or
other  compensation  to any Grantor) to use,  assign,  license or sublicense any
Intellectual  Property now owned or hereafter acquired by any Grantor,  wherever
the same may be located,  including  in such  license  reasonable  access to all
media in which any of the  licensed  items may be  recorded or stored and to all
computer programs used for the compilation or printout thereof.  Notwithstanding
anything contained herein to the contrary,  but subject to the provisions of the
Securities  Purchase Agreement that limit the right of any Grantor to dispose of
its property and Section 5(h) hereof,  so long as no Event of Default shall have
occurred  and be  continuing,  any Grantor may  exploit,  use,  enjoy,  protect,
license, sublicense, assign, sell, dispose of or take other actions with respect
to the  Intellectual  Property  in the  ordinary  course  of  its  business.  In
furtherance of the foregoing, unless an Event of Default shall have occurred and
be continuing, the Collateral Agent shall from time to time, upon the request of
any  Grantor,  execute  and  deliver  any  instruments,  certificates  or  other
documents, in the form so requested, which such Grantor shall have certified are
appropriate (in any Grantor's judgment) to allow it to take any action permitted
above (including  relinquishment of the license provided pursuant to this clause
(c) as to any Intellectual Property).  Further, upon the indefeasible payment in
full in cash of all of the Obligations, the Collateral Agent (subject to Section
10(e) hereof)  shall  release and reassign to any Grantor all of the  Collateral
Agent's right, title and interest in and to the Intellectual  Property,  and the
Licenses,  all without  recourse,  representation  or warranty  whatsoever.  The
exercise of rights and  remedies  hereunder  by the  Collateral  Agent shall not
terminate the rights of the holders of any licenses or  sublicenses  theretofore
granted by each Grantor in  accordance  with the second  sentence of this clause
(c). Each Grantor hereby releases the Collateral  Agent from any claims,  causes
of action and demands at any time  arising out of or with respect to any actions
taken or  omitted  to be taken by the  Collateral  Agent  under  the  powers  of
attorney  granted herein other than actions taken or omitted to be taken through
the Collateral Agent's gross negligence or willful misconduct,  as determined by
a final determination of a court of competent jurisdiction.

      (d) If any Grantor fails to perform any agreement  contained  herein,  the
Collateral Agent may itself perform,  or cause performance of, such agreement or
obligation, in the name of any Grantor or the Collateral Agent, and the expenses
of the Collateral Agent incurred in connection therewith shall be payable by any
Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.

      (e) The powers  conferred on the Collateral  Agent hereunder are solely to
protect its interest in the  Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the safe custody of any  Collateral in its
possession and the accounting for moneys actually received by it hereunder,  the
Collateral  Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

                                      -16-
<PAGE>

      (f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain  liable  under the  Licenses  and  otherwise  with  respect to any of the
Collateral  to the extent set forth  therein to perform  all of its  obligations
thereunder to the same extent as if this Agreement had not been  executed,  (ii)
the exercise by the Collateral  Agent of any of its rights  hereunder  shall not
release any Grantor from any of its obligations  under the Licenses or otherwise
in respect of the Collateral,  and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this  Agreement  under the Licenses or with
respect  to any of the  other  Collateral,  nor shall  the  Collateral  Agent be
obligated to perform any of the obligations or duties of any Grantor  thereunder
or to take any  action to  collect or  enforce  any claim for  payment  assigned
hereunder.

      SECTION 7. Remedies  Upon Event of Default.  If any Event of Default shall
have occurred and be continuing:

      (a) The  Collateral  Agent may exercise in respect of the  Collateral,  in
addition  to any other  rights and  remedies  provided  for herein or  otherwise
available to it, all of the rights and remedies of a secured  party upon default
under the Code (whether or not the Code applies to the affected Collateral), and
also  may (i)  take  absolute  control  of the  Collateral,  including,  without
limitation,  transfer into the  Collateral  Agent's name or into the name of its
nominee or nominees (to the extent the Collateral Agent has not theretofore done
so) and  thereafter  receive,  for the  benefit  of the  Collateral  Agent,  all
payments made thereon,  give all consents,  waivers and ratifications in respect
thereof and  otherwise  act with respect  thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that
it will at its  expense  and upon  request of the  Collateral  Agent  forthwith,
assemble all or part of its respective  Collateral as directed by the Collateral
Agent and make it available to the  Collateral  Agent at a place or places to be
designated  by the  Collateral  Agent  that  is  reasonably  convenient  to both
parties,  and the Collateral  Agent may enter into and occupy any premises owned
or leased by any Grantor where the  Collateral or any part thereof is located or
assembled for a reasonable period in order to effectuate the Collateral  Agent's
rights and remedies hereunder or under law, without obligation to any Grantor in
respect of such  occupation,  and (iii) without notice except as specified below
and without any  obligation to prepare or process the  Collateral  for sale, (A)
sell the  Collateral  or any part  thereof  in one or more  parcels at public or
private sale, at any of the Collateral  Agent's offices or elsewhere,  for cash,
on credit or for  future  delivery,  and at such  price or prices  and upon such
other terms as the Collateral Agent may deem commercially  reasonable and/or (B)
lease,  license or dispose of the Collateral or any part thereof upon such terms
as the Collateral Agent may deem  commercially  reasonable.  Each Grantor agrees
that, to the extent notice of sale or any other  disposition  of its  respective
Collateral  shall be  required  by law,  at least ten (10)  days'  notice to any
Grantor  of the time and place of any public  sale or the time  after  which any
private sale or other  disposition  of its  respective  Collateral is to be made
shall  constitute  reasonable  notification.  The Collateral  Agent shall not be
obligated to make any sale or other disposition of any Collateral  regardless of
notice of sale having been given. The Collateral Agent may adjourn any public or
private  sale from  time to time by  announcement  at the time and  place  fixed
therefor,  and such sale may,  without further  notice,  be made at the time and
place to which it was so  adjourned.  Each  Grantor  hereby  waives  any  claims
against the  Collateral  Agent and the Buyers arising by reason of the fact that
the price at which  its  respective  Collateral  may have been sold at a private
sale was less than the price which might have been  obtained at a public sale or
was less than the aggregate  amount of the  Obligations,  even if the Collateral
Agent  accepts the first offer  received and does not offer such  Collateral  to
more than one  offeree,  and  waives  all rights  that any  Grantor  may have to
require  that all or any part of such  Collateral  be  marshalled  upon any sale
(public or private) thereof.  Each Grantor hereby acknowledges that (i) any such
sale of its respective  Collateral by the Collateral Agent shall be made without
warranty,  (ii) the Collateral Agent may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in  clauses  (i) and (ii)  above  shall  not  adversely  effect  the  commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar  thereto for any purpose  described in such notice;  (2) the  Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to such
Grantor,  license,  whether  general,  special or  otherwise,  and whether on an
exclusive or non-exclusive basis, any of the Intellectual  Property,  throughout
the universe for such term or terms, on such conditions,  and in such manner, as
the  Collateral  Agent  shall  in its  sole  discretion  determine;  and (3) the
Collateral Agent may, at any time,  pursuant to the authority granted in Section
6 hereof (such  authority  being  effective  upon the  occurrence and during the
continuance  of an Event of  Default),  execute  and  deliver  on behalf of such
Grantor, one or more instruments of assignment of the Intellectual  Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.

                                      -17-
<PAGE>

      (b) Any  cash  held by the  Collateral  Agent as  Collateral  and all Cash
Proceeds  received  by  the  Collateral  Agent  in  respect  of any  sale  of or
collection  from, or other  realization  upon, all or any part of the Collateral
may, in the discretion of the Collateral  Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter  applied (after payment
of any amounts payable to the Collateral  Agent pursuant to Section 8 hereof) in
whole  or in  part  by the  Collateral  Agent  against,  all or any  part of the
Obligations in such order as the Collateral  Agent shall elect,  consistent with
the provisions of the Securities Purchase Agreement. Any surplus of such cash or
Cash Proceeds held by the Collateral  Agent and remaining after the indefeasible
payment  in  full  in  cash of all of the  Obligations  shall  be  paid  over to
whomsoever  shall be  lawfully  entitled  to  receive  the same or as a court of
competent jurisdiction shall direct.

      (c) In the  event  that the  proceeds  of any  such  sale,  collection  or
realization are  insufficient  to pay all amounts to which the Collateral  Agent
and the  Buyers  are  legally  entitled,  such  each  shall  be  liable  for the
deficiency,  together with interest thereon at the highest rate specified in any
of the  applicable  Transaction  Documents  for  interest  on overdue  principal
thereof or such other rate as shall be fixed by  applicable  law,  together with
the costs of  collection  and the  reasonable  fees,  costs,  expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such
deficiency.

      (d) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Collateral,  such compliance will not adversely affect
the  commercial   reasonableness  of  any  sale  or  other  disposition  of  the
Collateral.

                                      -18-
<PAGE>

      (e) The  Collateral  Agent shall not be required to marshal any present or
future collateral  security  (including,  but not limited to, this Agreement and
the Collateral)  for, or other  assurances of payment of, the Obligations or any
of them or to resort to such collateral  security or other assurances of payment
in any particular order, and all of the Collateral  Agent's rights hereunder and
in respect of such collateral  security and other assurances of payment shall be
cumulative and in addition to all other rights,  however existing or arising. To
the extent that any Grantor  lawfully  may,  each Grantor  hereby agrees that it
will not invoke any law relating to the  marshalling  of collateral  which might
cause delay in or impede the enforcement of the Collateral  Agent's rights under
this Agreement or under any other  instrument  creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise  assured,  and, to
the extent that it lawfully  may,  each Grantor  hereby  irrevocably  waives the
benefits of all such laws.

      SECTION 8. Indemnity and Expenses.

      (a) Each  Grantor  agrees,  jointly  and  severally,  to defend,  protect,
indemnify  and hold the  Collateral  Agent and each of the  Buyers,  jointly and
severally,  harmless  from and  against  any and all  claims,  damages,  losses,
liabilities,  obligations,  penalties,  fees,  costs  and  expenses  (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements of
such Person's  counsel) to the extent that they arise out of or otherwise result
from  this  Agreement  (including,  without  limitation,   enforcement  of  this
Agreement),  except claims,  losses or liabilities resulting solely and directly
from such Person's gross  negligence or willful  misconduct,  as determined by a
final judgment of a court of competent jurisdiction.

      (b) Each Grantor agrees, jointly and severally,  to upon demand pay to the
Collateral  Agent the amount of any and all costs and  expenses,  including  the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent  and of  any  experts  and  agents  (including,  without  limitation,  any
collateral  trustee which may act as agent of the Collateral  Agent),  which the
Collateral Agent may incur in connection with (i) the preparation,  negotiation,
execution,  delivery,  recordation,  administration,  amendment, waiver or other
modification or termination of this Agreement,  (ii) the custody,  preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any  Collateral,  (iii) the exercise or  enforcement of any of the rights of the
Collateral  Agent  hereunder,  or (iv) the  failure by any Grantor to perform or
observe any of the provisions hereof.

                                      -19-
<PAGE>

      SECTION 9. Notices, Etc. All notices and other communications provided for
hereunder  shall be in writing and shall be mailed (by certified  mail,  postage
prepaid and return receipt requested),  telecopied, e-mailed or delivered, if to
any Grantor at its address specified below and if to the Collateral Agent to it,
at its address  specified below; or as to any such Person, at such other address
as shall be designated  by such Person in a written  notice to such other Person
complying as to delivery  with the terms of this Section 9. All such notices and
other  communications  shall be effective (a) if sent by certified mail,  return
receipt  requested,  when  received or three days after  deposited in the mails,
whichever occurs first, (b) if telecopied or e-mailed,  when transmitted (during
normal business hours) and  confirmation is received,  otherwise,  the day after
the notice was  transmitted if  confirmation  is received,  or (c) if delivered,
upon delivery.

      SECTION 10. Miscellaneous.

      (a) No amendment of any  provision  of this  Agreement  shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
each Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

      (b) No failure on the part of the  Collateral  Agent to  exercise,  and no
delay in exercising,  any right hereunder or under any of the other  Transaction
Documents  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.  The rights and remedies of the Collateral Agent or
any Buyer provided herein and in the other Transaction  Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law.  The  rights of the  Collateral  Agent or any Buyer  under any of the other
Transaction   Documents  against  any  party  thereto  are  not  conditional  or
contingent on any attempt by such Person to exercise any of its rights under any
of the other  Transaction  Documents  against  such party or  against  any other
Person, including but not limited to, any Grantor.

      (c) Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or  enforceability of such provision
in any other jurisdiction.

      (d) This  Agreement  shall  create a continuing  security  interest in the
Collateral and shall (i) remain in full force and effect until the  indefeasible
payment in full in cash of the Obligations,  and (ii) be binding on each Grantor
and all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure,  together with all rights and
remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the
Collateral  Agent and the  Buyers  and their  respective  permitted  successors,
transferees and assigns.  Without  limiting the generality of clause (ii) of the
immediately  preceding sentence,  without notice to any Grantor,  the Collateral
Agent  and the  Buyers  may  assign  or  otherwise  transfer  their  rights  and
obligations under this Agreement and any of the other Transaction Documents,  to
any other Person and such other Person shall thereupon become vested with all of
the benefits in respect thereof  granted to the Collateral  Agent and the Buyers
herein or otherwise.  Upon any such  assignment or transfer,  all  references in
this Agreement to the Collateral Agent or any such Buyer shall mean the assignee
of the Collateral Agent or such Buyer.  None of the rights or obligations of any
Grantor  hereunder  may be assigned or otherwise  transferred  without the prior
written  consent of the Collateral  Agent,  and any such  assignment or transfer
without the consent of the Collateral Agent shall be null and void.

                                      -20-
<PAGE>

      (e) Upon the indefeasible payment in full in cash of the Obligations,  (i)
this Agreement and the security interests created hereby shall terminate and all
rights to the  Collateral  shall revert to the  respective  Grantor that granted
such security interests hereunder,  and (ii) the Collateral Agent will promptly,
upon any Grantor's  request and at such  Grantor's  expense,  (A) return to such
Grantor such of the Collateral as shall not have been sold or otherwise disposed
of or applied pursuant to the terms hereof,  and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.

      (f) THIS  AGREEMENT  SHALL BE GOVERNED BY,  CONSTRUED AND  INTERPRETED  IN
ACCORDANCE  WITH THE LAWS OF THE  STATE  OF NEW  YORK,  EXCEPT  AS  REQUIRED  BY
MANDATORY  PROVISIONS  OF LAW AND EXCEPT TO THE  EXTENT  THAT THE  VALIDITY  AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR  NON-PERFECTION  OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES  HEREUNDER,  IN RESPECT OF ANY
PARTICULAR  COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION  OTHER THAN THE
STATE OF NEW YORK.

      (g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY  DOCUMENT  RELATED  THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK IN THE COUNTY OF NEW YORK OR THE UNITED  STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK,  AND  APPELLATE  COURTS  THEREOF,  AND, BY  EXECUTION  AND
DELIVERY  OF THIS  AGREEMENT,  EACH  GRANTOR  HEREBY  ACCEPTS  FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,  THE JURISDICTION OF THE
AFORESAID COURTS.  EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY  WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION,  INCLUDING,  WITHOUT LIMITATION,
ANY  OBJECTION  TO THE  LAYING  OF VENUE OR BASED ON THE  GROUNDS  OF FORUM  NON
CONVENIENS,  WHICH  IT MAY NOW OR  HEREAFTER  HAVE TO THE  BRINGING  OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE  JURISDICTIONS AND CONSENTS TO THE
GRANTING  OF SUCH  LEGAL OR  EQUITABLE  RELIEF AS IS DEEMED  APPROPRIATE  BY THE
COURT.

      (h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT)
THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY  LITIGATION  BASED ON,  ARISING  OUT OF,  UNDER OR IN  CONNECTION  WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION  DOCUMENTS,  OR ANY COURSE OF CONDUCT,
COURSE OF DEALING,  VERBAL OR WRITTEN  STATEMENT  OR OTHER ACTION OF THE PARTIES
HERETO.

                                      -21-
<PAGE>

      (i) Each Grantor irrevocably  consents to the service of process of any of
the  aforesaid  courts in any such action,  suit or proceeding by the mailing of
copies  thereof by registered or certified  mail (or any  substantially  similar
form of mail),  postage prepaid,  to any Grantor at its address provided herein,
such service to become effective 10 days after such mailing.

      (j) Nothing  contained  herein  shall  affect the right of the  Collateral
Agent to serve  process in any other manner  permitted by law or commence  legal
proceedings  or  otherwise  proceed  against any Grantor or any  property of any
Grantor in any other jurisdiction.

      (k) Each Grantor irrevocably and  unconditionally  waives any right it may
have to claim or recover in any legal action,  suit or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

      (l) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

      (m) This  Agreement may be executed in any number of  counterparts  and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original,  but all of which taken  together  constitute one in the same
Agreement.

              [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      -22-
<PAGE>

            IN WITNESS  WHEREOF,  each  Grantor has caused this  Agreement to be
executed and delivered by its officer thereunto duly authorized,  as of the date
first above written.

                                    GRANTOR:

                                    AMERICAN UNITED GLOBAL, INC.

                                    By:
                                       ---------------------------------
                                       Name:
                                       Title:
                                       Address: 108 Village Square, #327
                                                Somers, New York 10589

<PAGE>

                                    KRAFT ELEKTRONIKAI ZARTKORUEN MUKODO
                                       RESZVENYTARSASAG

                                    By:
                                       ---------------------------------
                                    Name:
                                    Title:
                                    Address:    H-112 Budapest
                                                Koerberki ut 36
                                    Registration No.:  01-10-044503
                                    Telecopy:
                                    Jurisdiction of Formation: Republic of
                                    Hungary

<PAGE>

ACCEPTED BY:
-----------

SMITHFIELD FIDUCIARY LLC,
as Collateral Agent

By:
   ---------------------------------
Name:
Title:

Address:  9 West 57th Street, 27th Floor
          New York, NY  10019

<PAGE>

                                  SCHEDULE I

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION OF
                                 ORGANIZATION

    LEGAL NAMES          STATE OF       FEDERAL EMPLOYER   ORGANIZATIONAL
                       ORGANIZATION            I.D.             I.D.
American United         Delaware          95-4359228          None.
Global, Inc.

                                    Sched. I-1

<PAGE>

                                   SCHEDULE II

                      INTELLECTUAL PROPERTY AND LICENSES

None

                                   Sched. II-1

<PAGE>

                                  SCHEDULE III

                                    LOCATIONS

LOCATION

                              Description of Location (State if Location
                              (i) contains Rolling Stock, other Equipment,
                              Fixtures,
                              Goods or Inventory,
                              (ii)  is  chief  place  of   business   and  chief
                              executive   office,   or  (iii)  contains  Records
                              concerning   Accounts  and  originals  of  Chattel
                              Paper)

108 Village Square, #327

Somers, New York 10589

                                   Sched. III-1

<PAGE>

                                   Sched. IV-1

                                   SCHEDULE IV

   PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND
                             COMMODITIES ACCOUNTS

Promissory Notes:

American United     Kraft Rt.          $500,000 dated  Promissory Note is
Global, Inc.                           September 2005  secured by shares
                                                       of Zoltan Kiss in
                                                       Kraft Rt.
American United     Kraft Rt.          $1,000,000      Promissory Note is
Global, Inc.                           dated March     secured by shares
                                       2006            of Zoltan Kiss in
                                                       Kraft Rt.

Securities and Other Instruments:

Name and Address
of Institution
Maintaining Account           Account Number          Type of Account
-------------------           --------------          ---------------

 TRANSACTION PARTY   DEBTOR OR ISSUER      AMOUNT      SECURITY AGREEMENTS
American United     Informedix,        104,000 shares  None
Global, Inc.        Inc.(1)            of common
                                       stock

                                       options to
                                       purchase
                                       50,000 shares
                                       of common
                                       stock at $0.50
                                       per share
American United     Spongetech         716,667 shares  None
Global, Inc.        Delivery Systems,  of common stock
                    Inc. (1)
American United     ScanTeck Medical,  125,000 shares  None
Global, Inc.        Inc. (1)           of common stock

(1)  Securities  will be  disposed of by the  Company in  consideration  for the
forgiveness of debt prior to closing.

                                  Sched. III-1

<PAGE>

                                 SCHEDULE V

                          UCC-1 FINANCING STATEMENTS

Filing of UCC Financing Statements with the State of Delaware

                                   Sched. V-1

<PAGE>

                                   SCHEDULE VI

                             COMMERCIAL TORT CLAIMS

None

                                    Exh. A-1

<PAGE>

                                                                       EXHIBIT A

                             ASSIGNMENT FOR SECURITY

                       [TRADEMARKS] [PATENTS] [COPYRIGHTS]

      WHEREAS,  ______________________________  (the  "Assignor")  [has adopted,
used and is using,  and holds all  right,  title  and  interest  in and to,  the
trademarks and service marks listed on the annexed Schedule 1A, which trademarks
and service marks are  registered or applied for in the United States Patent and
Trademark Office (the "Trademarks")] [holds all right, title and interest in the
letter  patents,  design  patents  and  utility  patents  listed on the  annexed
Schedule 1A, which patents are issued or applied for in the United States Patent
and Trademark  Office (the "Patents")]  [holds all right,  title and interest in
the  copyrights  listed  on  the  annexed  Schedule  1A,  which  copyrights  are
registered in the United States Copyright Office (the "Copyrights")];

      WHEREAS,  the Assignor has entered into a Security Agreement,  dated as of
May __, 2006 (as amended,  restated or otherwise  modified from time to time the
"Security Agreement"), in favor of Smithfield Fiduciary LLC, as collateral agent
for certain purchasers (the "Assignee");

      WHEREAS,  pursuant to the Security Agreement, the Assignor has assigned to
the  Assignee  and  granted to the  Assignee  for the  benefit of the Buyers (as
defined in the Security  Agreement) a continuing security interest in all right,
title and interest of the Assignor  in, to and under the  [Trademarks,  together
with,  among other  things,  the  good-will  of the business  symbolized  by the
Trademarks]  [Patents]  [Copyrights]  and  the  applications  and  registrations
thereof, and all proceeds thereof,  including,  without limitation,  any and all
causes of action which may exist by reason of  infringement  thereof and any and
all damages  arising  from past,  present  and future  violations  thereof  (the
"Collateral"),  to  secure  the  payment,  performance  and  observance  of  the
"Obligations" (as defined in the Security Agreement);

      NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby  acknowledged,  the Assignor does hereby pledge,
convey, sell, assign,  transfer and set over unto the Assignee and grants to the
Assignee  for the benefit of the Buyers a  continuing  security  interest in the
Collateral to secure the prompt payment,  performance and for the benefit of the
Buyers observance of the Obligations.

      The Assignor does hereby  further  acknowledge  and affirm that the rights
and remedies of the Assignee with respect to the  Collateral  are more fully set
forth in the Security  Agreement,  the terms and  provisions of which are hereby
incorporated herein by reference as if fully set forth herein.

<PAGE>

      IN WITNESS  WHEREOF,  the Assignor has caused this  Assignment  to be duly
executed by its officer thereunto duly authorized as of _____________, 20__

                                    [GRANTORS]

                                    By:____________________________
                                       Name:
                                       Title:

<PAGE>

STATE OF ____________
                        ss.:
COUNTY OF __________

      On this  ____ day of  _______________,  20__,  before me  personally  came
________________,  to me known  to be the  person  who  executed  the  foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
________________       of       _______________________________________,       a
____________________,  and that s/he  executed the  foregoing  instrument in the
firm  name  of   _______________________________________,   and  that  s/he  had
authority  to sign the same,  and s/he  acknowledged  to me that he executed the
same as the act  and  deed of said  firm  for  the  uses  and  purposes  therein
mentioned.

                                    Exh. A-3

<PAGE>

                     SCHEDULE 1A TO ASSIGNMENT FOR SECURITY

[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________EXECUTION VERSION

                                   GUARANTY

            GUARANTY,  dated as of June 14, 2006 made by each of the undersigned
(each  a  "GUARANTOR",  and  collectively,  the  "GUARANTORS  "),  in  favor  of
Smithfield Fiduciary LLC, in its capacity as collateral agent (in such capacity,
the "COLLATERAL AGENT") for the Buyers referred to below.

                            W I T N E S S E T H :

            WHEREAS, American United Global, Inc. (the "COMPANY") and each party
listed  as a  "Buyer"  on the  Schedule  of Buyers  attached  to the  Securities
Purchase Agreement referred to below (collectively, the "BUYERS") are parties to
that certain Securities Purchase  Agreement,  dated as of even date herewith (as
amended,  restated or  otherwise  modified  from time to time,  the  "SECURITIES
PURCHASE  AGREEMENT"),  pursuant to which the Company shall be required to sell,
and the Buyers shall purchase or have the right to purchase,  the Notes referred
to below;

            WHEREAS, it is a condition precedent to the Buyers entering into the
Securities  Purchase  Agreement that the  Guarantors  execute and deliver to the
Collateral  Agent a guaranty  guaranteeing all of the obligations of the Company
under the  Securities  Purchase  Agreement,  the Notes referred to below and the
Transaction  Documents (as defined in the  Securities  Purchase  Agreement,  the
"TRANSACTION DOCUMENTS"); and

            WHEREAS,  the  Guarantors  have  determined  that  their  execution,
delivery and performance of this Guaranty directly  benefit,  and are within the
corporate purposes and in the best interests of, each Guarantor.

            NOW, THEREFORE,  in consideration of the premises and the agreements
herein  and in order to induce  the  Buyers  to  perform  under  the  Securities
Purchase Agreement, each Guarantor hereby agrees with each Buyer as follows:

            SECTION 1.  Definitions.  Reference is hereby made to the Securities
Purchase Agreement and the "Notes" issued pursuant thereto (as such Notes may be
amended,  restated,  replaced  or  otherwise  modified  from  time  to  time  in
accordance with the terms thereof, collectively, the "NOTES") for a statement of
the terms  thereof.  All terms used in this  Guaranty,  which are defined in the
Securities  Purchase  Agreement or the Notes and not otherwise  defined  herein,
shall have the same meanings herein as set forth therein.

<PAGE>

            SECTION 2. Guaranty. The Guarantors,  jointly and severally,  hereby
unconditionally and irrevocably,  guaranty the punctual payment, as and when due
and payable, by stated maturity or otherwise,  of all Obligations of the Company
from time to time owing by it in respect of the Securities  Purchase  Agreement,
the Notes and the other Transaction  Documents,  including,  without limitation,
all interest that accrues after the commencement of any Insolvency Proceeding of
the Company or any  Guarantor,  whether or not the  payment of such  interest is
unenforceable  or is not  allowable  due to the  existence  of  such  Insolvency
Proceeding), and all fees, commissions, expense reimbursements, indemnifications
and  all  other  amounts  due or to  become  due  under  any of the  Transaction
Documents (such  obligations,  to the extent not paid by the Company,  being the
"GUARANTEED  OBLIGATIONS"),  and agrees to pay any and all  expenses  (including
reasonable  counsel fees and  expenses)  reasonably  incurred by the  Collateral
Agent in  enforcing  any  rights  under  this  Guaranty.  Without  limiting  the
generality of the foregoing,  each Guarantor's  liability hereunder shall extend
to all amounts that constitute  part of the Guaranteed  Obligations and would be
owed by the  Company  to the  Collateral  Agent  under the  Securities  Purchase
Agreement  and the Notes but for the fact  that  they are  unenforceable  or not
allowable  due  to the  existence  of an  Insolvency  Proceeding  involving  any
Guarantor or the Company (collectively, each a "TRANSACTION PARTY").

      SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments.

      (a) The  Guarantors,  jointly and severally,  guaranty that the Guaranteed
Obligations  will  be  paid  strictly  in  accordance  with  the  terms  of  the
Transaction  Documents,  regardless  of any  law,  regulation  or  order  now or
hereafter  in  effect in any  jurisdiction  affecting  any of such  terms or the
rights of the Collateral  Agent with respect  thereto.  The  obligations of each
Guarantor under this Guaranty are independent of the Guaranteed Obligations, and
a separate action or actions may be brought and prosecuted against any Guarantor
to enforce  such  obligations,  irrespective  of  whether  any action is brought
against any Transaction  Party or whether any Transaction Party is joined in any
such action or actions. The liability of any Guarantor under this Guaranty shall
be irrevocable,  absolute and unconditional  irrespective of, and each Guarantor
hereby  irrevocably  waives, to the extent permitted by law, any defenses it may
now or hereafter have in any way relating to, any or all of the following:

            (i) any  lack  of  validity  or  enforceability  of any  Transaction
Document or any agreement or instrument relating thereto;

            (ii) any change in the time,  manner or place of  payment  of, or in
any  other  term of,  all or any of the  Guaranteed  Obligations,  or any  other
amendment  or  waiver  of or any  consent  to  departure  from  any  Transaction
Document,   including,  without  limitation,  any  increase  in  the  Guaranteed
Obligations resulting from the extension of additional credit to any Transaction
Party or otherwise;

            (iii)  any  taking,  exchange,  release  or  non-perfection  of  any
Collateral,  or any  taking,  release  or  amendment  or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;

            (iv) any change,  restructuring  or  termination  of the  corporate,
limited  liability  company  or  partnership   structure  or  existence  of  any
Transaction Party; or

            (v) any other circumstance (including any statute of limitations) or
any existence of or reliance on any  representation by the Collateral Agent that
might  otherwise  constitute  a defense  available  to, or a  discharge  of, any
Transaction Party or any other guarantor or surety.

This Guaranty shall  continue to be effective or be reinstated,  as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the  Collateral  Agent or any other Person upon
the  insolvency,  bankruptcy  or  reorganization  of any  Transaction  Party  or
otherwise, all as though such payment had not been made.

                                      -2-
<PAGE>

      (b) This  Guaranty is a  continuing  guaranty and shall (i) remain in full
force and effect until the  indefeasible  cash payment in full of the Guaranteed
Obligations  (other than inchoate  indemnity  obligations) and all other amounts
payable  under this Guaranty and shall not terminate for any reason prior to the
respective  date of Maturity of each Security (other than payment in full of the
Securities) and (ii) be binding upon the Guarantor and its respective successors
and assigns.  This Guaranty  shall inure to the benefit of and be enforceable by
the Collateral Agent and their successors,  and permitted pledgees,  transferees
and assigns.  Without  limiting the  generality of the foregoing  sentence,  any
Buyer may pledge,  assign or otherwise transfer all or any portion of its rights
and obligations  under and subject to the terms of any  Transaction  Document to
any other Person,  and such other Person shall thereupon  become vested with all
the benefits in respect  thereof  granted to such Buyer herein or otherwise,  in
each case as provided in the Securities Purchase Agreement.

      SECTION 4.  Waivers.  To the extent  permitted  by  applicable  law,  each
Guarantor  hereby waives  promptness,  diligence,  notice of acceptance  and any
other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any  requirement  that the  Collateral  Agent  exhaust any right or take any
action against any Transaction Party or any other Person or any Collateral.  The
Guarantor  acknowledges  that it will receive direct and indirect  benefits from
the financing arrangements  contemplated herein and that the waiver set forth in
this  Section  4 is  knowingly  made  in  contemplation  of such  benefits.  The
Guarantors hereby waive any right to revoke this Guaranty, and acknowledges that
this Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

      SECTION 5.  Subrogation.  No Guarantor may exercise any rights that it may
now or hereafter  acquire against any  Transaction  Party or any other guarantor
that  arise from the  existence,  payment,  performance  or  enforcement  of any
Guarantor's obligations under this Guaranty,  including, without limitation, any
right   of   subrogation,    reimbursement,    exoneration,    contribution   or
indemnification  and any  right to  participate  in any  claim or  remedy of the
Collateral  Agent against any  Transaction  Party or any other  guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract,  statute or common law, including,  without  limitation,  the right to
take or receive from any Transaction  Party or any other guarantor,  directly or
indirectly,  in cash or other  property  or by set-off  or in any other  manner,
payment or security solely on account of such claim, remedy or right, unless and
until  all  of  the  Guaranteed   Obligations  (other  than  inchoate  indemnity
obligations)  and all other  amounts  payable  under  this  Guaranty  shall have
indefeasibly  been  paid in full in  cash.  If any  amount  shall be paid to the
Guarantor in violation of the immediately  preceding  sentence at any time prior
to the later of the payment in full in cash of the  Guaranteed  Obligations  and
all other  amounts  payable  under this  Guaranty,  such amount shall be held in
trust for the benefit of the Collateral Agent and shall forthwith be paid to the
Collateral  Agent to be credited and applied to the Guaranteed  Obligations  and
all other amounts payable under this Guaranty,  whether matured or unmatured, in
accordance  with  the  terms  of the  Transaction  Document,  or to be  held  as
Collateral  for any Guaranteed  Obligations or other amounts  payable under this
Guaranty  thereafter  arising.  If (a) any  Guarantor  shall make payment to the
Collateral Agent of all or any part of the Guaranteed  Obligations,  and (b) all
of the Guaranteed  Obligations (other than inchoate  indemnity  obligations) and
all other amounts payable under this Guaranty shall indefeasibly be paid in full
in cash, the  Collateral  Agent will, at such  Guarantor's  request and expense,
execute and deliver to such Guarantor  appropriate  documents,  without recourse
and without  representation  or warranty,  necessary to evidence the transfer by
subrogation  to such  Guarantor  of an  interest in the  Guaranteed  Obligations
resulting from such payment by such Guarantor.

                                      -3-
<PAGE>

      SECTION 6.  Representations,  Warranties  and  Covenants.  Each  Guarantor
hereby represents and warrants as follows:

      (a) The  Guarantor  (i) is a  corporation,  limited  liability  company or
limited partnership duly organized,  validly existing and in good standing under
the laws of the  jurisdiction of its  organization as set forth on the signature
pages hereof, (ii) has all requisite power and authority to conduct its business
as now conducted and as presently  contemplated  and to execute and deliver this
Guaranty and each other Transaction  Document to which the Guarantor is a party,
and to consummate the transactions  contemplated hereby and thereby and (iii) is
duly  qualified to do business and is in good standing in each  jurisdiction  in
which  the  character  of the  properties  owned or leased by it or in which the
transaction of its business makes such qualification  necessary except where the
failure to be so qualified would not result in a Material Adverse Effect.

      (b) The  execution,  delivery  and  performance  by the  Guarantor of this
Guaranty and each other  Transaction  Document to which the Guarantor is a party
(i) have been duly authorized by all necessary action,  (ii) do not and will not
contravene its charter or by-laws,  its limited  liability  company or operating
agreement  or its  certificate  of  partnership  or  partnership  agreement,  as
applicable,  or any applicable law or any contractual restriction binding on the
Guarantor or its properties,  (iii) do not and will not result in or require the
creation of any lien (other than pursuant to any  Transaction  Document) upon or
with  respect to any of its  properties,  and (iv) do not and will not result in
any default, noncompliance,  suspension,  revocation,  impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to it or its operations or any of its properties.

      (c) No  authorization  or approval or other action by, and no notice to or
filing with, any  governmental  authority is required in connection with the due
execution,  delivery and performance by the Guarantor of this Guaranty or any of
the other Transaction Documents to which the Guarantor is a party.

      (d) Each of this Guaranty and the other Transaction Documents to which the
Guarantor is or will be a party,  when  delivered,  will be, a legal,  valid and
binding  obligation  of the  Guarantor,  enforceable  against the  Guarantor  in
accordance  with its terms,  except as may be limited by applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent conveyance,  suretyship or
other similar laws and equitable  principles  (regardless of whether enforcement
is sought in equity or at law).

      (e)  There is no  pending  or,  to the best  knowledge  of the  Guarantor,
threatened  action,  suit or proceeding against the Guarantor or to which any of
the  properties  of  the  Guarantor  is  subject,  before  any  court  or  other
governmental authority or any arbitrator that (i) if adversely determined, could
reasonably be expected to have a Material Adverse Effect or (ii) relates to this
Guaranty or any of the other  Transaction  Documents to which the Guarantor is a
party or any transaction contemplated hereby or thereby.

                                      -4-
<PAGE>

      (f) The Guarantor (i) has read and understands the terms and conditions of
the Securities Purchase Agreement and the other Transaction Documents,  and (ii)
now has and will  continue to have  independent  means of obtaining  information
concerning  the affairs,  financial  condition  and business of the  Transaction
Parties,  and has no need of, or right to obtain  from any Buyer,  any credit or
other information concerning the affairs, financial condition or business of the
Transaction Parties that may come under the control of any Buyer.

      (g) The Guarantor  covenants and agrees that until  indefeasible  full and
final  payment of the  Guaranteed  Obligations,  it will comply with each of the
covenants  (except to the extent  applicable only to a public company) which are
set forth in Section 4 of the Securities  Purchase Agreement as if the Guarantor
were a party thereto.

      SECTION  7.  Right  of  Set-off.   Upon  the  occurrence  and  during  the
continuance of any Event of Default, any Buyer may, and is hereby authorized to,
at any time and from time to time,  without notice to the  Guarantors  (any such
notice  being  expressly  waived by each  Guarantor)  and to the fullest  extent
permitted by law,  set-off and apply any and all  deposits  (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by any Buyer to or for the credit or the account of any Guarantor
against any and all  obligations  of the  Guarantors  now or hereafter  existing
under this Guaranty or any other Transaction  Document,  irrespective of whether
or not any Buyer  shall have made any demand  under this  Guaranty  or any other
Transaction  Document  and  although  such  obligations  may  be  contingent  or
unmatured. Each Buyer agrees to notify the relevant Guarantor promptly after any
such set-off and  application  made by such Buyer,  provided that the failure to
give such notice shall not affect the validity of such set-off and  application.
The rights of the Collateral Agent under this Section 7 are in addition to other
rights and remedies  (including,  without  limitation,  other rights of set-off)
which the Collateral Agent may have under this Guaranty or any other Transaction
Document in law or otherwise.

      SECTION 8. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed,  telecopied or delivered,  if
to any  Guarantor,  to it at its address set forth on the signature page hereto,
or if to any Buyer,  to it at its address set forth in the  Securities  Purchase
Agreement;  or as to  either  such  Person  at such  other  address  as shall be
designated by such Person in a written notice to such other Person  complying as
to  delivery  with the  terms of this  Section  8. All such  notices  and  other
communications  shall be effective  (i) if mailed (by  certified  mail,  postage
prepaid and return  receipt  requested),  when  received or three  Business Days
after deposited in the mails,  whichever occurs first; (ii) if telecopied,  when
transmitted  and  confirmation  is received,  provided same is on a Business Day
and,  if not, on the next  Business  Day; or (iii) if  delivered  by hand,  upon
delivery,  provided  same is on a Business Day and, if not, on the next Business
Day.

                                      -5-
<PAGE>

      SECTION 9.  CONSENT TO  JURISDICTION;  SERVICE OF PROCESS  AND VENUE.  ANY
LEGAL  ACTION  OR  PROCEEDING  WITH  RESPECT  TO  THIS  GUARANTY  OR  ANY  OTHER
TRANSACTION  DOCUMENT  MAY BE  BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR OF THE UNITED STATES  DISTRICT  COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK,  AND, BY EXECUTION  AND DELIVERY OF THIS  AGREEMENT,  EACH
GUARANTOR HEREBY IRREVOCABLY  ACCEPTS IN RESPECT OF ITS PROPERTY,  GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GUARANTOR HEREBY
IRREVOCABLY  APPOINTS  THE  SECRETARY  OF STATE OF THE  STATE OF NEW YORK AS ITS
AGENT FOR  SERVICE OF PROCESS IN RESPECT OF ANY SUCH  ACTION OR  PROCEEDING  AND
FURTHER  IRREVOCABLY  CONSENTS  TO  THE  SERVICE  OF  PROCESS  OUT OF ANY OF THE
AFOREMENTIONED  COURTS AND IN ANY SUCH  ACTION OR  PROCEEDING  BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,  AT ITS ADDRESS
FOR NOTICES AS SET FORTH ON THE  SIGNATURE  PAGE HERETO AND TO THE  SECRETARY OF
STATE OF THE STATE OF NEW YORK,  SUCH SERVICE TO BECOME  EFFECTIVE TEN (10) DAYS
AFTER SUCH  MAILING.  NOTHING  HEREIN SHALL  AFFECT THE RIGHT OF THE  COLLATERAL
AGENT TO SERVICE OF PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR TO COMMENCE
LEGAL  PROCEEDINGS  OR OTHERWISE  PROCEED  AGAINST  EACH  GUARANTOR IN ANY OTHER
JURISDICTION.  ANY GUARANTOR  HEREBY  EXPRESSLY AND IRREVOCABLY  WAIVES,  TO THE
FULLEST  EXTENT  PERMITTED BY LAW, ANY  OBJECTION  WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE  JURISDICTION OR LAYING OF VENUE OF ANY SUCH  LITIGATION  BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN  INCONVENIENT  FORUM.  TO THE  EXTENT  THAT ANY  GUARANTOR  HAS OR
HEREAFTER  MAY ACQUIRE ANY IMMUNITY FROM  JURISDICTION  OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,  ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT  IN AID OF  EXECUTION  OR  OTHERWISE)  WITH  RESPECT TO ITSELF OR ITS
PROPERTY,  EACH GUARANTOR HEREBY  IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS.

      SECTION 10. WAIVER OF JURY TRIAL,  ETC. EACH  GUARANTOR  HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR  COUNTERCLAIM  CONCERNING
ANY RIGHTS UNDER THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS,  OR UNDER ANY
AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR
WHICH IN THE FUTURE MAY BE DELIVERED IN  CONNECTION  HEREWITH OR  THEREWITH,  OR
ARISING  FROM ANY  FINANCING  RELATIONSHIP  EXISTING  IN  CONNECTION  WITH  THIS
GUARANTY OR THE OTHER  TRANSACTION  DOCUMENTS,  AND AGREES THAT ANY SUCH ACTION,
PROCEEDING OR COUNTERCLAIM  SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
EACH GUARANTOR CERTIFIES THAT NO OFFICER,  REPRESENTATIVE,  AGENT OR ATTORNEY OF
ANY BUYER HAS REPRESENTED,  EXPRESSLY OR OTHERWISE, THAT ANY BUYER WOULD NOT, IN
THE  EVENT OF ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM,  SEEK TO  ENFORCE  THE
FOREGOING WAIVERS.  EACH GUARANTOR HEREBY  ACKNOWLEDGES THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS AGREEMENT.

                                      -6-
<PAGE>

      SECTION 11. Taxes.

      (a) All  payments  made by any  Guarantor  hereunder  or under  any  other
Transaction  Document  shall  be  made  in  accordance  with  the  terms  of the
Securities  Purchase Agreement and shall be made without set-off,  counterclaim,
deduction or other  defense.  All such payments  shall be made free and clear of
and  without  deduction  for any  present  or future  taxes ,  levies,  imposts,
deductions,  charges or withholdings,  and all liabilities with respect thereto,
excluding franchise taxes and taxes,  levies,  imposts,  deductions,  charges or
withholdings,  and all  liabilities  with  respect  thereto,  imposed on the net
income  of the  Collateral  Agent by the  jurisdiction  in which  such  Buyer is
organized or where it has its  principal  lending  office (all such  nonexcluded
taxes,  levies,  imposts,  deductions,  charges,  withholdings  and liabilities,
collectively or  individually,  "Taxes").  If any Guarantor shall be required to
deduct or to  withhold  any  Taxes  from or in  respect  of any  amount  payable
hereunder or under any other Transaction Document;

            (i) the amount so payable shall be increased to the extent necessary
so that after making all required  deductions and withholdings  (including Taxes
on amounts  payable to the  Collateral  Agent  pursuant  to this  sentence)  the
Collateral Agent receive an amount equal to the sum they would have received had
no such deduction or withholding been made,

            (ii) such Guarantor shall make such deduction or withholding,

            (iii) such Guarantor  shall pay the full amount deducted or withheld
to the relevant taxation authority in accordance with applicable law, and

            (iv) as promptly as possible  thereafter,  such Guarantor shall send
the  Collateral  Agent an official  receipt  (or, if an official  receipt is not
available,  such other  documentation as shall be satisfactory to the Collateral
Agent, as the case may be) showing  payment.  In addition,  but excluding taxes,
charges,   levies  imposts,   deductions  and  withholdings  excluded  from  the
definition of Taxes,  such Guarantor  agrees to pay any present or future taxes,
charges or similar  levies which arise from any payment  made  hereunder or from
the  execution,  delivery,  performance,  recordation or filing of, or otherwise
with respect to, this Agreement or any other Transaction Document other than any
present or future  stamp or  documentary  taxes or any other  excise or property
taxes,  charges or similar  levies that arise from any payment made hereunder or
from the execution,  delivery or registration  of, or otherwise with respect to,
this Agreement or any other Transaction Document (collectively, "OTHER TAXES").

      (b) Each Guarantor hereby,  jointly and severally,  indemnifies and agrees
to hold the  Collateral  Agent  harmless  from and against  Taxes or Other Taxes
(including,  without  limitation,  any  Taxes  or  Other  Taxes  imposed  by any
jurisdiction on amounts payable under this Section 11) paid by any Buyer and any
liability  (including  penalties,  interest and expenses  for  nonpayment,  late
payment or otherwise) arising therefrom or with respect thereto,  whether or not
such  Taxes  or  Other  Taxes  were   correctly   or  legally   asserted.   This
indemnification  shall be paid  within 30 days from the date on which such Buyer
makes written demand therefor, which demand shall identify the nature and amount
of Taxes or Other Taxes.

                                      -7-
<PAGE>

      (c) If any Guarantor  fails to perform any of its  obligations  under this
Section  11,  such  Guarantor  shall,  jointly  and  severally,   indemnify  the
Collateral Agent for any taxes, interest or penalties that may become payable as
a result of any such  failure.  The  obligations  of each  Guarantor  under this
Section 11 shall survive the termination of this Guaranty and the payment of the
Obligations and all other amounts payable hereunder.

      SECTION 12. Miscellaneous.

      (a) Each Guarantor will make each payment hereunder in lawful money of the
United States of America and in  immediately  available  funds to the Collateral
Agent,  at such  address  specified by such Buyer from time to time by notice to
the Guarantor.

      (b) No  amendment  or  waiver of any  provision  of this  Guaranty  and no
consent  to any  departure  by any  Guarantor  therefrom  shall in any  event be
effective  unless the same shall be in writing and signed by each  Guarantor and
each  Buyer,  and then such  waiver or consent  shall be  effective  only in the
specific instance and for the specific purpose for which given.

      (c) No  failure  on the  part of any  Buyer to  exercise,  and no delay in
exercising,  any right hereunder or under any other  Transaction  Document shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
right hereunder or under any Transaction  Document preclude any other or further
exercise  thereof or the exercise of any other right. The rights and remedies of
the Collateral Agent provided herein and in the other Transaction  Documents are
cumulative  and are in addition to, and not exclusive of, any rights or remedies
provided  by law.  The  rights of the  Collateral  Agent  under any  Transaction
Document  against any party  thereto are not  conditional  or  contingent on any
attempt by the Collateral  Agent to exercise any of their rights under any other
Transaction Document against such party or against any other Person.

      (d) Any provision of this Guaranty that is prohibited or  unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or  enforceability of such provision
in any other jurisdiction.

      (e)  This  Guaranty  shall  (i) be  binding  on  each  Guarantor  and  its
respective  successors and assigns, and (ii) inure, together with all rights and
remedies of the  Collateral  Agent  hereunder,  to the benefit of the Collateral
Agent and their respective successors, transferees and assigns. Without limiting
the generality of clause (ii) of the immediately  preceding sentence,  any Buyer
may assign or otherwise transfer its rights and obligations under the Securities
Purchase  Agreement or any other Transaction  Document to any other Person,  and
such other  Person  shall  thereupon  become  vested with all of the benefits in
respect  thereof  granted to the  Collateral  Agent  herein or  otherwise.  Each
Guarantor  agrees that each  participant  shall be  entitled to the  benefits of
Section 11 with respect to its  participation  in any portion of the Notes as if
it was a Buyer. None of the rights or obligations of any Guarantor hereunder may
be assigned or otherwise  transferred  without the prior written consent of each
Buyer.

                                      -8-
<PAGE>

      (f) This Guaranty  reflects the entire  understanding  of the  transaction
contemplated  hereby and shall not be  contradicted  or  qualified  by any other
agreement, oral or written, entered into before the date hereof.

      (g) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

      (H) THIS GUARANTY AND THE OTHER  TRANSACTION  DOCUMENTS  (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER  TRANSACTION  DOCUMENT) SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE  WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS  MADE AND TO BE PERFORMED  THEREIN  WITHOUT  REGARD TO CONFLICT OF LAW
PRINCIPLES.

              [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      -9-
<PAGE>

      IN WITNESS WHEREOF,  the Guarantor has caused this Guaranty to be executed
by an officer thereunto duly authorized, as of the date first above written.

                                    GUARANTORS:

                                    KRAFT ELEKTRONIKAI ZARTKORUEN MUKODO
                                    RESZVENYTARSASAG

                                    By:
                                       ---------------------------------
                                    Name:
                                    Title:
                                    Address:    H-112 Budapest
                                                Koerberki ut 36
                                    Registration No.:  01-10-044503
                                    Telecopy:
                                    Jurisdiction of Formation: Republic of
                                    Hungary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]