Document:

Exhibit 10

Exhibit 10.5

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of March 12, 2001, by and among A Time To Grow, Inc., a corporation duly incorporated and existing under the laws of the State of Texas (the "Company"), and the Investor as named on the signature page hereto (hereinafter referred to as "Investor").

RECITALS:

WHEREAS, pursuant to the Company's offering ("Offering") of up to $6,000,000  excluding any funds paid upon exercise of the Warrants, of Common Stock of the Company pursuant to the Investment Agreement between the Company and the Investor, the Company has agreed to sell and the Investor has agreed to purchase, from time to time as provided in the Investment Agreement, shares of the Company's Common Stock for a maximum aggregate offering amount of $6,000,000;

WHEREAS, under the terms of the Investment Agreement, the Company has agreed to issue to the Investor Commitment Warrants and, from time to time, Purchase Warrants, each defined in the Investment Agreement, to purchase a number of shares of Common Stock, exercisable for five (5) years from their dates of issuance (collectively, the “Warrants”); and

WHEREAS, pursuant to the terms of the Investment Agreement, the Company has agreed to provide the Investor with certain registration rights with respect to the Common Stock to be issued in the Offering and the Common Stock issuable upon exercise of the Warrants as set forth in this Agreement. 

TERMS:

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.

Certain Definitions.  As used in this Agreement (including the Recitals above), the following terms shall have the following meanings (such meanings to be equally applicable to both singular and plural forms of the terms defined):

“Business Day” shall have the meaning set forth in the Investment Agreement.

“Closing Bid Price” shall have the meaning set forth in the Investment Agreement.”

“Common Stock” shall mean the common stock, par value $0.0001, of the Company.

“Due Date” shall mean the date that is one hundred twenty (120) days after the date of this Agreement.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Filing Deadline” shall mean the date that is forty-five (45) days after the date of this Agreement.

"Holder" shall mean Investor, and any other person or entity owning or having the right to acquire Registerable Securities or any permitted assignee;

“Put” shall have the meaning as set forth in the Investment Agreement.

"Register," "Registered," and "Registration" shall mean and refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule, and the declaration or ordering of effectiveness of such registration statement or document.

“Securities Act” shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Investor” shall have the meaning set forth in the preamble to this Agreement.

“Warrant Shares” shall mean shares of Common Stock issuable upon exercise of any Warrant.

2.

Required Registration. 

2.1

Registerable Securities.  “Registerable Securities” shall mean those shares of the Common Stock of the Company together with any capital stock issued in replacement of, in exchange for or otherwise in respect of such Common Stock, that are: (i) issuable or issued to the Investor pursuant to the Investment Agreement, and (ii) issuable or issued upon exercise of the Warrants; provided, however, that notwithstanding the above, the following shall not be considered Registerable Securities:

Any Common Stock which would otherwise be deemed to be Registerable Securities, if and to the extent that those shares of Common Stock may be resold in a public transaction without volume limitations or other material restrictions without registration under the Securities Act, including without limitation, pursuant to Rule 144 under the Securities Act; and

2.2

Filing of Initial Registration Statement.  The Company shall, by the Filing Deadline, file a registration statement ("Registration Statement") on Form S-3 (or other suitable form, at the Company's discretion, but subject to the reasonable approval of Investor), covering the resale of a number of shares of Common Stock as Registerable Securities equal to at least 2,000,000 shares of Common Stock and shall cover, to the extent allowed by applicable law, such indeterminate number of additional shares of Common Stock that may be issued or become issuable as Registerable Securities by the Company pursuant to Rule 416 of the Securities Act.  In the event that the Company has not filed the Registration Statement by the Filing Deadline, then the Company shall pay to Investor an amount equal to $500, in cash, for each Business Day after the Filing Deadline until such Registration Statement is filed, payable within ten (10) Business Days following the end of each calendar month in which such payments accrue.

2.3

Registration Effective Date.  The Company shall use its best efforts to have the Registration Statement declared effective by the SEC (the date of such effectiveness is referred to herein as the “Effective Date”) by the Due Date.

2.4

Shelf Registration.  The Registration Statement shall be prepared as a "shelf" registration statement under Rule 415, and shall be maintained effective until all Registerable Securities are resold pursuant to the Registration Statement.

2.5

Supplemental Registration Statement.  Anytime the Registration Statement does not cover a sufficient number of shares of Common Stock to cover all outstanding Registerable Securities, the Company shall promptly prepare and file with the SEC such Supplemental Registration Statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all such Registerable Securities and shall use its best efforts to cause such Supplemental Registration Statement to be declared effective as soon as possible.

3.

Obligations of the Company.  Whenever required under this Agreement to effect the registration of any Registerable Securities, the Company shall, as expeditiously as possible:

(a)  Prepare and file with the Securities and Exchange Commission (“SEC”) a Registration Statement with respect to such Registerable Securities and use its best efforts to cause such Registration Statement to become effective and to remain effective until all Registerable Securities are resold pursuant to such Registration Statement, notwithstanding any Termination or Automatic Termination (as each is defined in the Investment Agreement) of the Investment Agreement.

(b)  Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement (“Amended Registration Statement”) or prepare and file any additional registration statement (“Additional Registration Statement,” together with the Amended Registration Statement, “Supplemental Registration Statements”) as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Supplemental Registration Statements or such prior registration statement and to cover the resale of all Registerable Securities.

(c)  Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registerable Securities owned by them.

(d)  Use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of the jurisdictions in which the Holders are located, of such other jurisdictions as shall be reasonably requested by the Holders of the Registerable Securities covered by such Registration Statement and of all other jurisdictions where legally required, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e)  As promptly as practicable after becoming aware of such event, notify each Holder of Registerable Securities of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, use its best efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Holder as such Holder may reasonably request.

(f)  Provide Holders with notice of the date that a Registration Statement or any Supplemental Registration Statement registering the resale of the Registerable Securities is declared effective by the SEC, and the date or dates when the Registration Statement is no longer effective.

(g)  Provide Holders and their representatives the opportunity and a reasonable amount of time, based upon reasonable notice delivered by the Company, to conduct a reasonable due diligence inquiry of Company’s pertinent financial and other records and make available its officers and directors for questions regarding such information as it relates to information contained in the Registration Statement.

(h)  Provide Holders and their representatives the opportunity to review the Registration Statement and all amendments or supplements thereto prior to their filing with the SEC by giving the Holder at least ten (10) business days advance written prior to such filing.

(i)  Provide each Holder with prompt notice of the issuance by the SEC or any state securities commission or agency of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceeding for such purpose.  The Company shall use its best efforts to prevent the issuance of any stop order and, if any is issued, to obtain the removal thereof at the earliest possible date.

(j)  Use its best efforts to list the Registerable Securities covered by the Registration Statement with all securities exchanges or markets on which the Common Stock is then listed and prepare and file any required filing with the NASD, American Stock Exchange, NYSE and any other exchange or market on which the Common Stock is listed.

4.

Piggyback Registration.  If anytime prior to the date that the Registration Statement is declared effective or during any Ineffective Period (as defined in the Investment Agreement) the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration relating solely for the sale of securities to participants in a Company stock plan or a registration on Form S-4 promulgated under the Securities Act or any successor or similar form registering stock issuable upon a reclassification, upon a business combination involving an exchange of securities or upon an exchange offer for securities of the issuer or another entity), the Company shall, at such time, promptly give each Holder written notice of such registration (a “Piggyback Registration Statement”).  Upon the written request of each Holder given by fax within ten (10) days after mailing of such notice by the Company, the Company shall cause to be included in such registration statement under the Securities Act all of the Registerable Securities that each such Holder has requested to be registered (“Piggyback Registration”) to the extent such inclusion does not violate the registration rights of any other security holder of the company granted prior to the date hereof; provided, however, that nothing herein shall prevent the Company from withdrawing or abandoning such registration statement prior to its effectiveness.

5.

Limitation on Obligations to Register under a Piggyback Registration.  In the case of a Piggyback Registration pursuant to an underwritten public offering by the Company, if the managing underwriter determines and advises in writing that the inclusion in the related Piggyback Registration Statement of all Registerable Securities proposed to be included would interfere with the successful marketing of the securities proposed to be registered by the Company, then the number of such Registerable Securities to be included in such Piggyback Registration Statement, to the extent any such Registerable Securities may be included in such Piggyback Registration Statement, shall be allocated among all Holders who had requested Piggyback Registration pursuant to the terms hereof, in the proportion that the number of Registerable Securities which each such Holder seeks to register bears to the total number of Registerable Securities sought to be included by all Holders. If required by the managing underwriter of such an underwritten public offering, the Holders shall enter into an agreement limiting the number of Registerable Securities to be included in such Piggyback Registration Statement and the terms, if any, regarding the future sale of such Registerable Securities.

6.

Dispute as to Registerable Securities.  In the event the Company believes that shares sought to be registered under Section 2 or Section 4 by Holders do not constitute “Registerable Securities” by virtue of Section 2.1 of this Agreement, and the status of those shares as Registerable Securities is disputed, the Company shall provide, at its expense, an Opinion of Counsel, reasonably acceptable to the Holders of the Securities at issue (and satisfactory to the Company’s transfer agent to permit the sale and transfer), that those securities may be sold immediately, without volume limitation or other material restrictions, without registration under the Securities Act, by virtue of Rule 144 or similar provisions.

7.

Furnish Information.  At the Company’s request, each Holder shall furnish to the Company such information regarding Holder, the Registerable Securities held by it, and the intended method of disposition of such securities to the extent required to effect the registration of its Registerable Securities or to determine that registration is not required pursuant to Rule 144 or other applicable provision of the Securities Act.  The Company shall include all information provided by such Holder pursuant hereto in the Registration Statement, substantially in the form supplied, except to the extent such information is not permitted by law.

8.

Expenses.  All expenses, other than commissions and fees and expenses of counsel to the selling Holders, incurred in connection with registrations, filings or qualifications pursuant hereto, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company, shall be borne by the Company.

9.

Indemnification.  In the event any Registerable Securities are included in a Registration Statement under this Agreement:

(a) 

To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the officers, directors, partners, legal counsel, and accountants of each Holder, any underwriter (as defined in the Securities Act, or as deemed by the Securities Exchange Commission, or as indicated in a registration statement) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of Section 15 of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements or omissions: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, and the Company will reimburse each such Holder, officer or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, officer, director, underwriter or controlling person; provided however, that the above shall not relieve the Company from any other liabilities which it might otherwise have.

(b) 

Each Holder of any securities included in such registration being effected shall indemnify and hold harmless the Company, its directors and officers, each underwriter and each other person, if any, who controls (within the meaning of the Securities Act) the Company or such other indemnified party, against any liability, joint or several, to which any such indemnified party may become subject under the Securities Act or any other statute or at common law, insofar as such liability (or actions in respect thereof) arises out of or is based upon any omission or alleged omission by such Holder to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or final prospectus, amendment or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by such Holder specifically for use therein.  Such Holder shall reimburse any indemnified party for any legal fees incurred in investigating or defending any such liability; provided, however, that such Holder’s obligations hereunder shall be limited to an amount equal to the proceeds to such Holder of the securities sold in any such registration; and provided further, that no Holder shall be required to indemnify any party against any liability arising from any untrue or misleading statement or omission contained in any preliminary prospectus if such deficiency is corrected in the final prospectus or for any liability which arises out of the failure of such party to deliver a prospectus as required by the Securities Act.

(c)

Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume, the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 9.

(d)

In the event that the indemnity provided in paragraphs (a) and/or (b) of this Section 9 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree to contribute to the aggregate claims, losses, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively “Losses”) to which the Company and one or more of the Holders may be subject in such proportion as is appropriate to reflect the relative fault of the Company and the Holders in connection with the statements or omissions which resulted in such Losses.  Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or by the Holders.  The Company and the Holders agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation that does not take account of the equitable considerations referred to above.  Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  For purposes of this Section 9, each person who controls a Holder of Registerable Securities within the meaning of either the Securities Act or the Exchange Act and each director, officer, partner, employee and agent of a Holder shall have the same rights to contribution as such holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each director and officer of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).

(e)

The obligations of the Company and Holders under this Section 9 shall survive the resale, if any, of the Common Stock, the completion of any offering of Registerable Securities in a Registration Statement under this Agreement, and otherwise.

10.

Reports Under Exchange Act.  With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to:

(a)

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

(b)

use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act.

11.

Amendment of Registration Rights.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the written consent of each Holder affected thereby.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder, and the Company.

12.

Notices.  All notices required or permitted under this Agreement shall be made in writing signed by the party making the same, shall specify the section under this Agreement pursuant to which it is given, and shall be addressed if to:

The Company at: 6524 San Felipe, Suite 252, Houston, Texas 77057; 

(or at such other location as directed by the Company in writing) 

The Holders at Goldbridge Capital, LLC., 1249 Blalock Road, Suite 150, Houston, Texas, 77055 or their last address as shown on the records of the Company.  Any notice, except as otherwise provided in this Agreement, shall be made by fax and shall be deemed given at the time of transmission of the fax.

13.

Termination.  This Agreement shall terminate on the date all Registerable Securities cease to exist (as that term is defined in Section 2.1 hereof); but without prejudice to (i) the parties' rights and obligations arising from breaches of this Agreement occurring prior to such termination (ii) other indemnification obligations under this Agreement.

14.

Assignment.  No assignment, transfer or delegation, whether by operation of law or otherwise, of any rights or obligations under this Agreement by the Company or any Holder, respectively, shall be made without the prior written consent of the majority in interest of the Holders or the Company, respectively; provided that the rights of a Holder may be transferred to a subsequent holder of the Holder's Registerable Securities (provided such transferee shall provide to the Company, together with or prior to such transferee's request to have such Registerable Securities included in a Registration, a writing executed by such transferee agreeing to be bound as a Holder by the terms of this Agreement), and the Company hereby agrees to file an amended registration statement including such transferee or a selling security holder thereunder; and provided further that the Company may transfer its rights and obligations under this Agreement to a purchaser of all or a substantial portion of its business if the obligations of the Company under this Agreement are assumed in connection with such transfer, either by merger or other operation of law (which may include without limitation a transaction whereby the Registerable Securities are converted into securities of the successor in interest) or by specific assumption executed by the transferee.

15.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made in and wholly to be performed in that jurisdiction, except for matters arising under the Securities Act or the Exchange Act, which matters shall be construed and interpreted in accordance with such laws.  Any dispute arising out of or relating to this Agreement or the breach, termination or validity hereof shall be finally settled by the federal or state courts located in Harris County, Texas.

16.

Execution in Counterparts Permitted.  This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one (1) instrument.

17.

Specific Performance.  The Holder shall be entitled to the remedy of specific performance in the event of the Company’s breach of this Agreement, the parties agreeing that a remedy at law would be inadequate.

18.

Indemnity.  Each party shall indemnify each other party against any and all claims, damages (including reasonable attorney’s fees), and expenses arising out of the first party’s breach of any of the terms of this Agreement.

19.

Entire Agreement; Written Amendments Required.  This Agreement, including the Exhibits attached hereto, the Investment Agreement, the Common Stock certificates,  and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.  Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of March 12, 2001.

A Time To Grow, Inc.

By: 

//s//  Jonathan
Gilchrist

          

 Gilchrist, President

           
Address:            1207 Wisterwood

                                    
Houston, Texas 77043

 

 

INVESTOR:

Goldbridge Capital, LLC 

By:
//s// James W. Carroll

                                                                       
James W. Carroll, President

 

Address:

1240 Blalock Road, Suite 150

Houston, Texas 77057

Telephone: (713) 266-3700

Facsimile:  (713) 266-3701EXHIBIT 4.1

                                  FORM OF NOTE

# ____________

                           AMERICAN UNITED GLOBAL, INC
                    7.5% CONVERTIBLE SECURED PROMISSORY NOTE
                              DUE ___________, 2007

$______________                                             ________, 2002

     FOR VALUE  RECEIVED,  the  undersigned,  AMERICAN  UNITED  GLOBAL,  INC., a
Delaware  corporation  with  an  office  at  11108  NE  106th  Place,  Kirkland,
Washington, 98033 ("AUGI"), promises to pay to _________________________ with an
address at_____________________________  ("Holder"), on ___________, 2007 except
as otherwise  provided  herein (the "Maturity  Date"),  the principal  amount of
($____________  ) Dollars in lawful  money of the United  States of America  the
"Principal") together with all accrued interest.

     Each Note has been issued as part of a rights  offering (the  "Offering")by
AUGI to its  shareholders  who hold at least 100 shares of AUGI common  stock on
________, 2002 (the "Record Date"). Pursuant to the Offering every 100 shares of
AUGI  common  stock  entitled  the  shareholder  thereof to receive one right to
purchase a Unit in the principal amount of $666. This Note is one of a series of
notes  (collectively  the  "Notes"),  all with the same terms and  conditions as
those set forth herein, which may be issued by AUGI pursuant to the Offering for
up to the aggregate principal amount of Three Million Dollars  ($3,000,000).  To
participate in the Offering  shareholders  were require to exercise their rights
during a period of fifteen (15) days from __________,  2002 and to 5:00 p.m. New
York time, on ________, 2002.

     The Note is convertible into AUGI's common stock, par value $0.01 per share
(the "Common  Stock"),  all as set forth below.  The Note bears simple  interest
("Interest") at the annual rate of seven and one-half  percent  (7.5%),  payable
quarterly, in cash, or at AUGI's option in common stock, until the Principal and
all accrued Interest thereon  (collectively the "Obligations")  shall be paid in
full.

1.       Interest.
         --------

     AUGI will pay Interest on the first day of each  January,  April,  July and
October (the "Interest Payment Dates") commencing on __________,  200_. Interest
on the Note will accrue from the most  recent  date to which  interest  has been
paid or, if no  interest  has been paid,  from the date of delivery of the Note.
Interest  will be  computed  on the  basis of a  360-day  year of  twelve 30 day
months.

2.       Method of Payment.
         -----------------

     AUGI  will pay the  Principal  due  under  the Note in money of the  United
States that at the time of payment is legal tender for the payment of public and
private  debts.  AUGI may,  however,  pay  Principal  and Interest by its check,
subject to collection, payable in such money.

     In the  event  that AUGI  pays the  Interest  due under the Notes in common
stock,  the price at which the  repayment  will be the  greater  of $0.50 or the
ten-day  average closing price of the common stock, as reported on the OTCBB (or
other exchange),  prior to the date of payment. Interest on the Note will accrue
from the date of delivery of the Note.  Holder must  surrender this Note to AUGI
to collect Principal payments.

3.       Conversion.
         ----------

     (a) Holder's  right to Convert.  Holder  shall have the right,  at any time
commencing  on July 31,  2003 until the close of business  on the  business  day
preceding the day the  Obligations  are paid in full, if not earlier  prepaid by
AUGI, to cause the  conversion of all or any portion of the Principal and unpaid
Interest,  if any,  outstanding  at the time such  conversion  is effected  (the
"Convertible   Obligations")  into  shares  of  Common  Stock  (the  "Conversion
Shares"). The price for conversion, subject to adjustment as provided in SECTION
4 below,  shall be fifty cents per share,  so that every dollar of Principal and
Interest,  if any,  due  under  the Note,  at the time of  conversion,  shall be
convertible into two (2) shares of Common Stock.

     (b) Manner of  Conversion.  Holder may  exercise  his  conversion  right by
giving  notice  thereof  to AUGI  setting  forth the  amount of the  Convertible
Obligations to be converted. Within 15 days after the giving of such notice AUGI
shall  issue  the  number  of  Conversion  Shares  into  which  the  Convertible
Obligations  are to be converted in  accordance  with the  conversion  price and
deliver to Holder a certificate  or  certificates  therefore,  registered in his
name, representing such Shares against delivery to AUGI of this Note marked paid
in full. If only a portion of the Convertible  Obligations  then  outstanding is
converted,   AUGI  shall   deliver  to  Holder,   together  with  the  aforesaid
certificate(s),  a new promissory note, in form and substance  identical to this
Note,  except that the principal  amount thereof shall equal that portion of the
Obligations then outstanding which has not been converted.

                                        1
<PAGE>

     (c) Taxes on Shares Issued.  The issue of stock certificates on conversions
of this Note  shall be made  without  charge to Holder for any tax in respect of
such  issue.  AUGI shall not,  however,  be required to pay any tax which may be
payable in respect of any transfer  involved in the issue and delivery of Common
Stock in any name other than that of Holder,  and AUGI shall not be  required to
issue or deliver any  certificates  representing  such Common  Stock  unless and
until the person or persons requesting the issue thereof shall have paid to AUGI
the amount of such tax or shall have  established  to the  satisfaction  of AUGI
that such tax has been paid.

     (d) Covenants of AUGI  Relating to  Conversion.  AUGI  covenants and agrees
that from and after the date hereof and until the date of  repayment  in full of
the Obligations:

          (i)  it  shall  provide,  free  from  preemptive  rights,  out  of its
               authorized but unissued shares,  sufficient shares to provide for
               the  conversion  of this  Note from time to time as the Notes are
               presented for conversion; and

          (ii) all shares which may be issued upon  conversion of this Note will
               upon issue be validly issued, fully paid and non-assessable, free
               from all  taxes,  liens and  charges  with  respect  to the issue
               thereof,  and will not be subject to the preemptive rights of any
               stockholder of AUGI.

4.       Adjustment in Conversion Price.
         ------------------------------

     (a) Adjustment for Change in Capital Stock. Except as provided in PARAGRAPH
4 (h) below,  if AUGI shall (i)  declare a dividend  on its  outstanding  Common
Stock in shares of its capital  stock,  (ii)  subdivide its  outstanding  Common
Stock,  (iii)  combine its  outstanding  Common  Stock into a smaller  number of
shares, or (iv) issue any shares of its capital stock by reclassification of its
Common  Stock  (including  any  such   reclassification  in  connection  with  a
consolidation  or merger in which AUGI is the continuing  corporation),  then in
each such  case the  conversion  privilege  and the  conversion  price in effect
immediately  prior  to such  action  shall  be  adjusted  so that if the Note is
thereafter converted,  Holder may receive the number and kind of shares which he
would have owned immediately  following such action if he had converted the Note
immediately  prior to such action.  Such adjustment  shall be made  successively
whenever  such an event shall  occur.  The  adjustment  shall  become  effective
immediately  after the record date in the case of a dividend or distribution and
immediately  after the effective date in the case of a subdivision,  combination
or reclassification.

     (b) Action to Permit  Valid  Issuance of Common  Stock.  Before  taking any
action which would cause an adjustment  reducing the conversion  price below the
then par value,  if any, of the shares of Common Stock issuable upon  conversion
of the Notes,  the  Company  will take all  corporate  action  which may, in the
opinion of its  counsel,  be necessary in order that the Company may validly and
legally issue shares of such Common Stock at such adjusted conversion price.

     (c) Minimum  Adjustment.  No  adjustment in the  conversion  price shall be
required if such adjustment is less than 1% of the existing  conversion price at
the time of such determination; provided, however, that any adjustments which by
reason of this  PARAGRAPH  4 (F) are not  required  to be made  shall be carried
forward and taken into account in any subsequent  adjustment.  All  calculations
under  this  SECTION  4  shall  be made to the  nearest  cent or to the  nearest
one-hundredth of a share, as the case may be.

     (d)  Deferral  of  Adjustment.  In any case in which  this  SECTION 4 shall
require that an adjustment  in the  conversion  price be made  effective as of a
record date for a specified  event,  if the Note shall have been converted after
such  record  date AUGI may elect to defer  until the  occurrence  of such event
issuing to Holder the shares,  if any,  issuable upon such  conversion  over and
above the shares,  if any,  issuable  upon such  conversion  on the basis of the
conversion price in effect prior to such  adjustment;  provided,  however,  that
AUGI  shall  deliver  to  Holder  a due  bill or  other  appropriate  instrument
evidencing  Holder's right to receive such additional shares upon the occurrence
of the event requiring such adjustment.

                                       2
<PAGE>

     (e)  When  No  Adjustment  Required.  No  adjustment  need  be  made  for a
transaction  referred  to in  PARAGRAPH  4 (A)above  if Holder is  permitted  to
participate in the transaction on a basis no less favorable than any other party
and at a level which would preserve Holder's percentage equity  participation in
the Common Stock upon  conversion of the Note.  No  adjustment  need be made for
sales of Common Stock pursuant to a Company plan for  reinvestment  of dividends
or interest,  the granting of options and/or the exercise of options outstanding
under any of AUGI's  currently  existing stock option plans, the exercise of any
other of AUGI's  currently  outstanding  options,  or any  currently  authorized
warrants, whether or not outstanding.

     (f) Notice of Adjustment.  Whenever the conversion price is adjusted,  AUGI
shall  promptly  mail to  Holder  a notice  of the  adjustment  together  with a
certificate  from AUGI's Chief  Financial  Officer briefly stating (i) the facts
requiring the adjustment,  (ii) the adjusted  conversion price and the manner of
computing  it,  and the date on which such  adjustment  becomes  effective.  The
certificate  shall be evidence that the adjustment is correct,  absent  manifest
error.

     (g) Notice of Certain Transactions. If (i) AUGI takes any action that would
require an adjustment  in the  conversion  price  pursuant to this SECTION 4; or
(ii) there is a liquidation or dissolution of AUGI,  AUGI shall mail to Holder a
notice stating the proposed  record date for a distribution or effective date of
a  reclassification,  consolidation,  merger,  transfer,  lease,  liquidation or
dissolution.  AUGI  shall  mail the  notice at least 15 days  before  such date.
Failure to mail the notice or any defect in it shall not affect the  validity of
the transaction.

     (h)  Reorganization of Company.  If AUGI and/or the holders of Common Stock
are  parties  to a  merger,  consolidation  or a  transaction  in which (i) AUGI
transfers or leases  substantially all of its assets;  (ii) AUGI reclassifies or
changes its outstanding Common Stock; or (iii) the Common Stock is exchanged for
securities,  cash or other assets; the person who is the transferee or lessee of
such assets or is  obligated to deliver  such  securities,  cash or other assets
shall  assume the terms of this Note.  If the issuer of  securities  deliverable
upon  conversion  of the Note is an affiliate of the  surviving,  transferee  or
lessee  corporation,  that issuer shall join in such assumption.  The assumption
agreement shall provide that the Holder may convert the Convertible  Obligations
into the kind and amount of securities, cash or other assets which he would have
owned immediately after the consolidation,  merger,  transfer, lease or exchange
if he had  converted  the Note  immediately  before  the  effective  date of the
transaction.  The assumption agreement shall provide for adjustments which shall
be as nearly  equivalent as may be practical to the adjustments  provided for in
this  SECTION 4. The  successor  company  shall mail to Holder a notice  briefly
describing the assumption agreement. If this Paragraph applies,  PARAGRAPH 4 (A)
above does not apply.

     (i) AUGI  Determination  Final. Any determination that AUGI or its Board of
Directors must make pursuant to SECTION 3 or this SECTION 4 shall be conclusive,
absent manifest error.

5.       Representations and Warranties of AUGI.
         ---------------------------------------

     AUGI represents and warrants that it: (i) is a corporation  duly organized,
validly  existing and in good  standing  under the laws of the State of Delaware
and has all requisite  corporate power to carry on its business as now conducted
and to own its  properties  and  assets  it now  owns;  (ii) has full  power and
authority to execute and deliver this Note,  and that the execution and delivery
of this Note will not result in the breach of or default under,  with or without
the  giving  of  notice  and/or  the  passage  of  time,  any  other  agreement,
arrangement or indenture to which it is a party or by which it may be bound,  or
the violation of any law, statute, rule, decree,  judgment or regulation binding
upon it; and (iii) has taken and will take all acts required,  including but not
limited to authorizing the signatory  hereof on its behalf to execute this Note,
so that upon the execution and delivery of this Note,  it shall  constitute  the
valid and legally binding  obligation of AUGI enforceable in accordance with the
terms thereof.

6.       Defaults and Remedies.
         ---------------------

     (a) Events of Default.  The  occurrence  or existence of any one or more of
the following events or conditions  (regardless of the reasons  therefore) shall
constitute an "Event of Default" hereunder:

          (i)  AUGI shall fail to make any payment of Principal or Interest when
               due and payable or declared due and payable pursuant to the terms
               hereof and such failure  shall remain  uncured for a period of 30
               days after notice thereof has been given by Holder to AUGI;

          (ii) AUGI shall fail at any time to be in material compliance with any
               of the  covenants  set forth in Paragraph 3 (d) of this Note,  or
               shall  fail at any  time  to be in  material  compliance  with or
               neglect to perform, keep or observe any of the provisions of this
               Note to be complied with, performed, kept or observed by AUGI and
               such failure  shall remain  uncured for a period of 30 days after
               notice thereof has been given by Holder or the Agent to AUGI;

                                       3
<PAGE>

          (iii)A case or proceeding shall have been commenced  against AUGI in a
               court having competent  jurisdiction seeking a decree or order in
               respect of AUGI, (A) under Title 11 of the United States Code, as
               now  constituted or hereafter  amended,  or any other  applicable
               federal,  state or foreign  bankruptcy  or other similar law; (B)
               appointing a custodian, receiver,  liquidator,  assignee, trustee
               or  sequestrator  (or similar  official) of AUGI, or (C) ordering
               the  winding-up or  liquidation of the affairs of AUGI, or any of
               its  subsidiaries,  and  such  case or  proceeding  shall  remain
               unstayed or undismissed  for a period of 90  consecutive  days or
               such  court  shall  enter a decree or order  granting  the relief
               sought in such case or proceeding; or

          (iv) AUGI,  or any of its  subsidiaries,  if  any,  shall  (A)  file a
               petition seeking relief under Title 11 of the United States Code,
               as now constituted or hereafter amended,  or any other applicable
               federal, state or foreign bankruptcy or other similar law; or (B)
               consent to the  institution of  proceedings  thereunder or to the
               filing  of any  such  petition  or to the  appointment  of or the
               taking  of  possession  by  a  custodian,  receiver,  liquidator,
               assignee,  trustee or sequestrator (or similar official) of AUGI,
               or  any  of  its   subsidiaries,   or  any  of  their  respective
               properties.

     (b)  Remedies.  Upon the  occurrence  of an event of Default  specified  in
Paragraphs  6 (iii)  and (iv)  above,  all  Obligations  then  remaining  unpaid
hereunder shall  immediately  become due and payable  without  notice.  Upon the
occurrence  of any  other  Event of  Default,  the  holders  of at least  51% in
principal  amount of the Notes may  thereafter,  at their option  immediately by
notice  to  AUGI,  declare  all  Obligations  then  remaining  unpaid  hereunder
immediately  due and  payable,  whereupon  the same shall  forthwith  mature and
become  due  and  payable,  without  any  further  notice  to AUGI  and  without
presentment,  demand,  protest  or notice of  protest,  all of which are  hereby
waived by AUGI. Upon a declaration of acceleration,  the entire Obligations then
remaining unpaid hereunder shall become immediately due and payable in full plus
all  reasonable  costs and expenses of the  collection  and  enforcement of this
Note, including reasonable  attorney's fees and expenses,  all of which shall be
added to the amount due under this Note.  The  rights,  powers,  privileges  and
remedies of Holder pursuant to the terms hereof are cumulative and not exclusive
of any other rights, powers, privileges and remedies which Holder may have under
this Note or any other instrument or agreement.

7.      AUGI's Right to Prepay.
         -----------------------

     AUGI may prepay  this Note or any  portion  thereof at any time on not less
than 10 day's notice to Holder together with accrued  Interest to the date fixed
for repayment.

8.      Limitation of Liability.
         -----------------------

     A director,  officer,  employee or stockholder,  as such, of AUGI shall not
have any liability for any  obligations of AUGI under this Note or for any claim
based on, in respect or by reason of such obligations or their creation. Holder,
by accepting this Note,  waives and releases all such liability.  The waiver and
release are part of the consideration for the issuance of this Note.

9.      Reservation of Shares
         ---------------------

     AUGI shall at all times reserve and keep  available  out of its  authorized
but  unissued  stock,  for the purpose of  effecting  the issuance of stock upon
conversion  of this  Note,  such  number of shares as shall from time to time be
sufficient  to effect the issuance of shares of Common Stock upon  conversion of
this Note.

10.      Miscellaneous.
         -------------

     (a) Effect of Forbearance. No forbearance,  indulgence, delay or failure to
exercise any right or remedy by Holder with  respect to this Note shall  operate
as a waiver or as an acquiescence in any default.

     (b) Effect of Single or  Partial  Exercise  of Right.  No single or partial
exercise of any right or remedy by Holder  shall  preclude  any other or further
exercise thereof or any exercise of any other right or remedy by Holder.

     (c) Governing  Law. This Note shall be construed and enforced in accordance
with,  and the rights of the parties  shall be governed by, the internal laws of
the State of Delaware  applicable to contracts made and to be performed entirely
within such State.

     (d) Headings.  The headings and captions of the various  paragraphs  herein
are for  convenience  of  reference  only and shall in no way  modify any of the
terms or provisions of this Note.

                                       4
<PAGE>

     (e)  Loss,  Theft,  Destruction  or  Mutilation.  Upon  receipt  by AUGI of
evidence reasonably satisfactory to it of loss, theft, destruction or mutilation
of this Note,  AUGI shall make and deliver or caused to be made and delivered to
Holder a new Note of like tenor in lieu of this Note.

     (f) Modification of Note or Waiver of Terms Thereof Relating to Holder.  No
modification  or waiver of any of the provisions of this Note shall be effective
unless in writing  and signed by Holder and AUGI and then only to the extent set
forth in such writing,  nor shall any such  modification or waiver be applicable
except in the  specific  instance  for  which it is given.  This Note may not be
discharged orally but only in writing duly executed by Holder.

     (g) Notice. All offers,  acceptances,  notices, requests, demands and other
communications  under  this Note shall be in writing  and,  except as  otherwise
provided  herein,  shall be deemed to have been  given  only when  delivered  in
person,  via  facsimile  transmission  if receipt  thereof is  confirmed  by the
recipient,  or, if mailed,  when mailed by certified or registered mail prepaid,
to the parties at their  respective  addresses first set forth above, or at such
other address as may be given in writing in future by either party to the other.
(h)  Successors  and  Assigns.  This  Note  shall  be  binding  upon  AUGI,  its
successors,  assigns and  transferees,  and shall inure to the benefit of and be
enforceable by Holder and its successors and assigns.

     (i) Severability. If one or more of the provisions or portions of this Note
shall be deemed by any court or quasi-judicial  authority to be invalid, illegal
or unenforceable in any respect, the invalidity,  illegality or unenforceability
of the remaining  provisions,  or portions of provisions  contained herein shall
not in any way be  affected  or  impaired  thereby,  so long as this Note  still
expresses  the intent of the  parties.  If the intent of the  parties  cannot be
preserved,  this  Agreement  shall either be  renegotiated  or rendered null and
void.

     IN WITNESS WHEREOF,  AUGI has caused this Note to be executed on its behalf
by an officer thereunto duly authorized as of the date set forth above.

                                       American United Global, Inc.

                                       By:
                                            ------------------------------------
                                            Robert M. Rubin, President
                                            and Chief Executive Officer

ATTEST:
         -----------------------------
         David M. Barnes
         Chief Financial Officer

                                       5

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