Document:

SEVERANCE AGREEMENT, MUTUAL RELEASE AND CONSULTING AGREEMENT

      THIS SEVERANCE AGREEMENT, MUTUAL RELEASE AND CONSULTING AGREEMENT (the
"Agreement") is entered into by and between Allen J. Rothman, residing at 582
7th Street, Brooklyn, New York, 11215 ("Rothman"), and US Energy Systems, Inc.,
a Delaware corporation, having an office at One North Lexington Avenue, White
Plains, New York 10601 (the "Company"). In consideration of the mutual promises,
benefits, covenants and agreements hereinafter set forth and for good and
valuable consideration, the sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, Rothman and the Company (collectively, the
"Parties") hereto agree as follows:

      1. Termination of Employment. The Company and Rothman agree that the
Employment Agreement (as defined) and each party's obligations to the other
thereunder shall, except as otherwise expressly provided herein, terminate and
be of no further force or effect as of 11:59 PM New York City time on the day
preceding the Effective Date (as defined). The term "Employment Agreement" means
that the employment agreement dated as of August 20, 2001 between the Parties,
as amended through the Execution Date (as defined). The term "Execution Date"
means the date this Agreement is fully executed by the Parties. Rothman
acknowledges that he has resigned all positions with the Company and its
subsidiaries effective as of the Effective Date.

      2. Benefits, Options, Restricted Stock.

                  (a) The parties agree that the Company shall, at its sole cost
and expense continue to provide Rothman's health care benefits as offered by the
Company as of the Execution Date until such time as Rothman's health care
benefits with Countryside (as defined) are effective, but in no event shall such
obligation extend more than six months after the Execution Date. Rothman will
use all reasonable efforts to cause his Countryside benefits to become effective
as quickly as possible. Rothman hereby waives any and all rights under COBRA and
will execute such other documents and instruments as the Company deems
appropriate to effect such waiver.

                  (b) The Parties have agreed that all of Rothman's options to
acquire Company common stock (other than options that have previously expired),
all of which are vested, will continue to be exercisable and will expire on the
terms and conditions set forth in the agreement, instrument and/or plan
governing same.

                  (c) Rothman has received a grant of unvested restricted stock
units of the Company ("RSU's") entitling him, upon satisfaction of the terms and
conditions of his Officer's Restricted Stock Unit Award Agreement (the "RSU
Agreement"), to 108,696 shares of Company common stock. The Parties acknowledge
and agree that notwithstanding anything to the contrary in the RSU Agreement,
all of the RSU's will vest fully effective January 1, 2005, and subject to
Rothman's compliance with Section 5 of the RSU Agreement, if and to the extent
applicable, and the Company's 2000 Executive Incentive Compensation Plan, the
Company will cause the underlying shares of Common Stock to be delivered to
Rothman. The Company will take promptly all commercially reasonable actions
required to permit the transfer by Rothman of the shares of Common Stock
underlying the RSU's, subject to applicable law and regulations.

                                      -1-
<PAGE>

      3. No Other Severance Obligations.

            (a) Rothman agrees that as of the Effective Date, the Company will
have no further obligations pursuant to Sections 2 through 6 of the Employment
Agreement.

            (b) Rothman agrees that he shall not make any claim for unemployment
benefits with the New York State Department of Labor or any other governmental
authority with respect to the termination of his relationship with the Company.

            (c) Rothman agrees that, except to the extent otherwise expressly
provided by this Agreement, he will at the conclusion of the Consulting Period
(as defined) return to the Company all of the Company's tangible assets that
Rothman used in connection with the performance of his duties under the
Employment Agreement and under this Agreement, including without limitation,
cell phones, computers and personal digital assistants.

      4. Release. In consideration for the payments and other benefits set forth
in, among other things, Section 2 herein, Rothman hereby releases and forever
discharges the Company, and each and every entity controlling, controlled by or
under common control with the Company, and all affiliates, predecessors in
interest, and divisions of the foregoing, and each of their respective officers,
directors, shareholders, agents, members, managers, employees, attorneys,
representatives, successors and assigns (together with the Company, the
"Releasees") from any and all manner of claims, cross-claims, demands, causes of
action, obligations, damages or liabilities whatsoever of every kind and nature,
at law or in equity, known or unknown, and whether or not discoverable, which he
has, had or may have for any period prior to and including the date hereof,
including, but not limited to, any claim for alleged violation of Title VII of
the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act of 1967, as amended, the Older Workers Benefit Protection Act of 1990, the
Family and Medical Leave Act, the Americans With Disabilities Act, the Fair
Labor Standards Act, the Employment Retirement Security Act of 1974, the New
York State Human Rights Law (NYS Executive Law ss.296, et seq.), the New York
City Administrative Code, and the New York State Labor Law, as each may have
been amended from time to time, and all other matters arising out of any
federal, state or local law, rule or regulation, and any and all claims for
attorney's fees, costs and disbursements, and for any and all other common law
claims, whether in contract, tort or otherwise. Nothing contained in this
paragraph 4 shall prevent Rothman from enforcing the terms of this Agreement.
The release by Rothman herein does not include the release of any claims (i)
arising after the Effective Date to the extent such claims relate to the
Company's 401(K) plan in which Rothman participated or (ii) relating to
Rothman's right to indemnification and advancement of expenses, if any, under
the Company's by-laws, as amended, or the Delaware General Corporation Law.

                                      -2-
<PAGE>

      5. No Claims by the Company. The Company represents and warrants that it
has not filed any claim against Rothman as of the date of it has executed this
Agreement. The Company and its subsidiaries, successors and assigns, release and
forever discharge Rothman from and against any and all claims, suits, actions,
causes of action, judgments, damages, expenses, debts, obligations, promises,
covenants, agreements, contracts, endorsements, controversies or demands of any
nature whatsoever, whether at law, admiralty or in equity, whether known or
unknown, suspected or unsuspected, whether held directly or obtained by
subrogation, assignment or otherwise, against Rothman that the Company had, now
has or hereinafter may have for, upon or by reason of, any matter, cause or
thing whatsoever, arising out of the Rothman's employment with the Company,
except for Rothman's gross negligence, malfeasance, violation of law or
intentional misconduct (collectively, "Gross Negligence"). Nothing contained in
this Section 5 shall prevent the Company from enforcing the terms of this
Agreement.

      6. No Claims by Rothman. Rothman represents and warrants that he has not
filed any claim against the Company or any of the Releasees as of the date he
has executed this Agreement. If Rothman files or participates in any legal or
administrative proceeding based on claims that he has released herein, the
Company's obligation to perform any of its obligations or promises referred to
herein shall be waived, and the Company shall be entitled to cease payments
under this Agreement, recover the full amount of all payments provided to
Rothman hereunder, and seek attorney's fees, costs and disbursements and any
other relief, whether monetary or equitable.

      7. Acknowledgement. Rothman represents and acknowledges that he has
carefully read and fully understands all of the terms and provisions of this
Agreement and is knowingly and voluntarily entering into this Agreement without
coercion.

      8. No Age Discrimination. As required by the Age Discrimination in
Employment Act and the Older Workers Benefit Protection Act of 1990, Rothman
acknowledges that he has been advised of his right to consult with an attorney
before signing this Agreement and has had at least twenty-one (21) days in which
to consider the terms set forth in this Agreement. Rothman understands that this
Agreement may be revoked by him within seven (7) days after the day of execution
(the "Revocation Period"), that this Agreement shall not become effective or
enforceable until the day after the Revocation Period has passed. The term
"Effective Date" shall mean the day after the Revocation Period has passed.

      9. Successors; Entire Agreement. This Agreement shall be binding upon and
inure to the benefit of the Parties and their personal representatives,
successors, and assigns; provided, however, that none of the rights or
obligations of Rothman hereunder may be assigned by him. There are no
representations, agreements, arrangements or understandings, oral or written,
between the Parties relating to the subject matter of this Agreement which are
not fully expressed herein. No modification or waiver of any provision of this
Agreement shall be effective unless it is in writing and signed by the Parties.

                                      -3-
<PAGE>

      10. Invalidity. If any provision of this Agreement shall be held invalid
or unenforceable by competent authority, such provision shall be construed to be
limited or reduced so as to be enforceable to the maximum extent compatible with
the law as it shall then appear. The total invalidity or unenforceability of any
particular provision shall not affect the other provisions hereof.

      11. Non Disparagement.

            (a) Rothman shall refrain from making any disparaging statements,
either oral or written, about any Releasee.

            (b) The Company shall refrain from making any disparaging
statements, either oral or written, about Rothman.

            (c) Nothing in this Section 11 shall require any Party to commit an
unlawful act.

            (d) Nothing in this Section 11 shall restrict Rothman from taking
any actions or making any statements in his capacity and in furtherance of his
duties as an employee of Countryside Power Income Fund and/or any entity related
thereto (collectively "Countryside"); provided, however, that Rothman shall be
subject to the limitations imposed by the Disciplinary Rules (as defined) and in
addition, shall not make any disparaging comments about the personnel (including
the directors and/or officers) of the Company its subsidiaries, affiliates andor
any one or more of the foregoing.

      12. Confidentiality. Rothman recognizes and acknowledges that, in
connection with his employment with the Company and in connection with his
consulting arrangement with the Company provided for herein, he has had and will
have access to Confidential Information (as such term is defined in the
Employment Agreement and including within such term, the type of information
contemplated by the Employment Agreement though he obtains such information in
his capacity as a consultant to the Company). Rothman agrees for the five years
beginning with the end of the Consulting Period, Rothman shall not disclose any
Confidential Information to any person or entity, except that disclosure of
Confidential Information will be permitted: (a) to the Company and its advisors;
(b) if such Confidential Information has previously become available to the
public through no fault of Rothman; (c) if required by law or any court or
governmental agency or body, provided that in any such case covered by this
clause (c) Rothman shall provide the Company, in advance of any such disclosure,
with prompt notice of such requirement(s) and shall cooperate fully with the
Company to the extent it may seek to limit such disclosure; (d) if expressly
consented to in writing by the Company; and (e) to Countryside or its
affiliates, solely in connection with the Development Agreement dated April 8,
2004 among the Company, Cinergy Solutions, Inc. and Countryside US Power, Inc.
as in effect as of the Effective Date (the "Development Agreement"). The
foregoing does not constitute nor shall it be construed as a waiver or release
of Rothman's obligations under the Disciplinary Rules.

                                      -4-
<PAGE>

      13. Consulting Arrangement. (a) Starting on the Effective Date, Rothman or
an entity he controls (and, if an entity is to render such services, subject to
the entity's execution of a written agreement in form and substance reasonably
satisfactory to the Company and the entity) will provide consulting services to
the Company for a period of six months (the "Initial Consulting Period"),
subject to earlier termination as provided in Section 13(d). The Initial
Consulting Period will extend (as so extended, the "Additional Consulting
Period" and together with the Initial Consulting Period, the "Consulting
Period") automatically on a month-to-month basis unless either Rothman or the
Company gives notice of non-renewal at least ten days prior to the expiration of
the Initial Consulting Period or the Additional Consulting Period, as the case
may be. Prior to the Effective Date, Rothman will inform the Company whether he
personally or his entity will be providing such consulting services to the
Company (all references hereinafter to "Rothman" will include Rothman's entity
as well as him personally). Under this consulting arrangement, Rothman will
advise management on various matters respecting the Company, its subsidiaries
and affiliates and will assist with its dealings with outside counsel. Rothman
shall only be obligated to work on projects and matters (i) specifically
assigned to him in writing by the Company or its representatives, (ii) that are,
in Rothman's reasonable judgment, within his area of competence and that do not
and will not conflict with his ability to represent Countryside and (iii) that
do not exceed the time and scope requirements contemplated by this Agreement.
Rothman shall not be held liable for the services he performs under this
consulting arrangement except as a result of his Gross Negligence. The Company
will provide Rothman with suitable office space at the Company's offices (as and
where located from time to time) for the performance of his duties hereunder. To
the extent that these services are to be performed by an entity, Rothman
represents and warrants that the performance by such entity of the consulting
services contemplated hereby will not violate any applicable law or regulation.

            (b) Rothman will be available to perform consulting services from
time to time during the Consulting Period on a basis as reasonably requested by
the Company and has agreed to be reasonably available to the Company by
telephone and in person through such period, subject to Rothman's primary
obligations to Countryside. The Company acknowledges and agrees that if the
Company and Countryside are both involved in a transaction or dispute requiring
legal representation, the Company will retain separate legal counsel and will
not rely on Rothman for legal advice, except to the extent such advice was
rendered prior to the Effective Date.

            (c) In consideration for the consulting services to be provided, the
Company will pay Rothman $6,000 per month, payable in advance on the first
business day of each month. The Company will not provide any benefits to
Rothman, except for the extension of existing health insurance as provided in
Section 2(a) and except as contemplated by Section 13(e).

            (d) Either Rothman or the Company may terminate the Initial
Consulting Period for any reason or for no reason on 30 days prior written
notice, but if the Company terminates, other than for Rothman's material breach,
it will pay Rothman on the effective date of such termination the entire unpaid
balance of the consulting fees for the Initial Consulting Period.

                                      -5-
<PAGE>

            (e) The Company will indemnify and hold Rothman harmless for any
third party claim (other than claims asserted by Countryside or its affiliates
and provided that Rothman notifies the Company promptly of any such claim after
he becomes aware of same) arising and asserted against him during the Consulting
Period for which he otherwise would have been covered by the Company's officers'
and directors' liability insurance had he remained an employee of the Company;
provided, however, that the Company shall have no obligation to indemnify
Rothman if the Insurance (as defined) has been obtained. The Company will, for
not more than six years following the end of the Consulting Period, take all
commercially reasonable actions necessary to ensure that Rothman will continue
to be covered under the Company's officers' and directors' liability policy for
acts or omissions occurring prior to the Effective Date. The Company will use
commercially reasonable efforts to obtain a rider (the "Rider") to its officer's
and director's liability insurance in form and content reasonably acceptable to
Rothman and the Company (the "Insurance") covering Rothman for services he
renders during the Consulting Period (which coverage shall continue for three
years following the conclusion of the Consulting Period), for which Rothman
shall be a beneficiary and which the Parties agree shall not cost the Company
more than $5,000 per year; provided, however, that if the cost of the Rider in
any year shall exceed $5,000, Rothman shall be entitled at his option and
expense to make up such shortfall so as to continue such coverage or agree to
modifications of such Rider which do not adversely impact the Company to bring
its cost within $5,000. The Parties will act reasonably to enforce the Company's
and Rothman's rights under the Rider.

      14. Counterparts. This Agreement may be signed in counterparts, which
taken together shall constitute one and the same instrument.

      15. Remedies. The Parties shall be entitled to all remedies available at
law or in equity to enforce the terms of this Agreement, including but not
limited to, reasonable attorney's fees incurred in connection with any action or
proceeding commenced to enforce the terms of this Agreement, if such party
prevails in such action or proceeding.

      16. Governing Law; Headings; Construction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to its choice of law principles. The headings contained in this
Agreement are for reference purposes only and shall affect in any way the
meaning or interpretation of this Agreement. This Agreement shall be construed
according to its fair meaning, the language used shall be deemed the language
chosen by the Parties to express their mutual intent, and no presumption or rule
of strict construction shall be applied against any party.

                                      -6-
<PAGE>

      17. Continuing Obligation. The Company acknowledges and agrees that
Rothman will be employed by Countryside even though the Company and Countryside
may from time to time have adverse interests, and that the fact of such
employment alone does not and will not constitute any violation by Rothman of
any fiduciary duties owed by Rothman to the Company or of the Disciplinary
Rules, as defined below. Rothman agrees that he will not represent Countryside
in any legal capacity in any dispute or negotiation involving the Company or its
subsidiaries arising from or related to events or transactions (including
proposed transactions) occurring or proposed prior to the Effective Date or
during the Consulting Period. The foregoing limitation on Rothman does not
include his working on any future transaction involving Countryside that will
not have been consummated prior to the Effective Date (other than that portion
of such transaction that might involve negotiations with the Company), and the
Company further acknowledges and agrees that Rothman may pursue any business
opportunity in any capacity except as he may be limited by Section 12 hereof and
the second sentence of this Section 17. For the avoidance of doubt, the parties
agree that Rothman may represent Countryside respecting the proposed transaction
regarding the Projects (as such term is defined in the letter dated November 29,
2004 between the Company and the Countryside Power Income Fund) provided he will
not represent Countryside in connection with any negotiation or dispute with the
Company relating to the Projects. Notwithstanding anything to the contrary in
this Agreement, including without limitation, Sections 11 and 12 hereof, and
except as otherwise provided in the first three sentences of this Section 17,
this Agreement and the provisions hereof shall not constitute a waiver or
release of Rothman's obligations to the Company, its subsidiaries or affiliates,
or any one or more of the foregoing imposed pursuant to the Disciplinary Rules
in connection with his employment with the Company through the Effective Date
and/or as a consultant through the end of the Consulting Period. The term
"Disciplinary Rules" shall mean and refer to the provisions set forth in 22
NYCRR ss.1200.1 through ss. 1200.46, as amended from time to time.

IN WITNESS WHEREOF, the undersigned have hereunto signed this Agreement as of
the date set forth below.

                                      /s/ Allen J. Rothman
                                      -------------------------------------
Dated: December 9, 2004                   Allen J. Rothman

Dated: December 9, 2004               US ENERGY SYSTEMS, INC.

                                      By: /s/ Henry N. Schneider
                                          ---------------------------------
                                          Henry N. Schneider, Interim President

                                      -7-
<PAGE>

STATE OF NEW YORK      )
                       : ss
COUNTY OF WESTCHESTER  )

On the 9th day of December, 2004, before me, the undersigned, a Notary Public in
and for said State, personally appeared Allen J. Rothman, personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

                                  /s/ Nadine Soomaroo [Notary stamp omitted]
                                  ------------------------------------------
                                  Notary Public

STATE OF NEW YORK      )
                       : ss
COUNTY OF WESTCHESTER  )

On the 9th day of December, 2004, before me, the undersigned, a Notary Public in
and for said State, personally appeared Henry N. Schneider, personally known to
me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

                                  /s/ Nadine Soomaroo [Notary stamp omitted]
                                  ------------------------------------------
                                  Notary Public

                                      -8-PROMISSORY NOTE
                               ---------------

$7,000,000.00                                         Fort Lauderdale, Florida
                                                               December 20, 2004

      The  undersigned,   AGU  ENTERTAINMENT   CORP.,  a  Colorado   corporation
(hereinafter  called  "Maker" or  "Borrower"),  promises  to pay to the order of
CHARLEY  ZECHES,  in her  capacity  as  Trustee  of LAKES  HOLDING  TRUST  under
Agreement  dated July 27, 2001  (hereinafter,  together with any holder  hereof,
called "Payee" or "Lender"),  at her office at 3200 West Oakland Park Boulevard,
Fort Lauderdale,  Florida  33311-1245,  or at such other place as Payee may from
time to time  designate,  the principal sum of Seven Million and 00/100  Dollars
($7,000,000.00),  together  with  interest  thereon  from the date hereof at the
interest rate set forth below, which sums are to be repaid as follows:

      This Note shall bear interest at a fixed interest rate of six and one half
percent (6.5%) per annum.  Payments of interest only shall be due and payable on
a  monthly  basis,  with the first  payment  due and  payable  on the 1st day of
January,  2005, with monthly payments of interest due and payable on the 1st day
of each month  thereafter until December 20, 2005 (the "Maturity Date") on which
date the entire  principal  balance of the Note,  together  with all accrued and
unpaid  interest  thereon  and all other  applicable  changes  should be due and
payable in full. A principal payment in the amount of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) shall be due and payable on June 20, 2005.

      Maker has deposited into an interest  bearing  escrow account  established
with Payee (the "Tax and Interest  Escrow  Account") the amount of  $150,000.00,
which shall be used to pay the next three  monthly  interest  payments due under
this Note and the excess,  if any, shall be held by Payee and applied to pay any
real estate taxes due in connection with the Real Property.  Maker shall deposit
into the Tax and Interest Escrow Account,  additional  quarterly  prepayments of
interest  and  estimated  real estate  taxes,  to be applied as described in the
previous sentence,  each in the amount of $145,000,  on March 20, 2005, June 20,
2005 and September 20, 2005.  Payee will remit from the Tax and Interest  Escrow
Account, the payment of real estate taxes, however,  prior thereto, Maker shall,
if the amount in such Tax and Interest  Escrow Account  allocated to real estate
taxes is  deficient,  pay the  shortfall  to Payee  immediately  upon receipt of
notice  of such  deficiency  from  Payee.  All  interest  earned  in the Tax and
Interest  Escrow  Account  shall be  allocated to the benefit of and be the sole
property of Maker.  Maker has furnished  Payee with its FEIN in connection  with
the  establishment of the Tax and Interest Escrow Account.  The Tax and Interest
Escrow Account shall be held in accordance with the terms and provisions of that
certain Mortgage Deed and Security Agreement executed by Maker in favor of Payee
of even date herewith.

      Interest  charged  under  this Note  shall be  computed  on the basis of a
360-day year for the actual number of days elapsed. All payments hereunder shall
be made in such coin or currency of the United  States of America as at the time
of payment  shall be legal  tender for the payment of public and private  debts,
and shall be applied  first to interest  and lawful  charges and  expenses  then
accrued and then to principal.

<PAGE>

      In order to compensate  Payee for loss and expense  occasioned by handling
delinquent  payments,  which  include,  but  are not  limited  to,  the  cost of
processing and collecting  delinquencies,  Maker shall pay to Payee, in addition
to any interest or other sums payable under this Note, a service charge equal to
five percent  (5%) of the amount of any payment  received by Payee ten (10) days
or more after the due date thereof.

      The  outstanding  principal  balance of this Note or any  portion  thereof
shall be  convertible,  at any time, at the sole option of Payee into the common
stock, no par value, of Maker (the "Conversion Shares") at a conversion price of
$2.50 per share.  The  Conversion  Shares  shall be  restricted  securities,  in
accordance  with  applicable  securities  laws,  and  shall  include  "piggyback
registration"  rights, in accordance with that certain Stock Purchase  Agreement
by and between Maker and Payee of even date  herewith.  Additionally,  upon five
(5) days prior written notice  ("Prepayment  Notice") to Payee, this Note may be
prepaid  in full by Maker at any time  during  the term of this Note in the sole
discretion of Maker,  without any prepayment  penalty.  Such  Prepayment  Notice
shall not preclude Payee's  conversion  option, as described above, if exercised
prior to the later of: (i) the date of Payee's  receipt  of such  prepayment  or
(ii) the date of Payee's receipt of the Prepayment Notice.

      From and after the date upon which any  payment of  principal  or interest
hereunder  becomes due and payable (whether by acceleration or otherwise) if the
same is not timely paid, or upon the  occurrence of any other default under this
Note or any  default  under  any of the  Loan  Documents  (as  defined  herein),
interest  shall be payable on all sums  outstanding  hereunder at the lesser of:
(i) the maximum  rate  permitted  by  applicable  law or (ii) 18% per annum (the
"Default Rate"),  and shall be due and payable ON DEMAND.  Any judgment obtained
by Payee  against  Maker as to any  amounts  due under this Note shall also bear
interest at the Default Rate.

      This  Note is  secured  by  certain  security  documents  encumbering  the
property described therein, including, without limitation, the following:

      A. Mortgage Deed and Security Agreement. B. UCC-1 Financing Statements.
      C.   Associated    affidavits,    disclosures   and   miscellaneous   loan
      documentation.

This Note,  all documents  listed  above,  and any other  documents  executed in
connection with this Note, are hereinafter collectively referred to as the "Loan
Documents".

<PAGE>

      In the event of the  continuation  of any  default  in the  payment of any
interest,  principal  or  escrows  under this Note for a period of ten (10) days
after such  payment  becomes due, or upon the  occurrence  of any other event of
default  under  the  terms  and  provisions  of  this  Note  or any of the  Loan
Documents,  or any other  documents  delivered to Payee in connection  with this
Note,  or any other  obligation  of Maker to Payee,  then Payee may  declare the
entire unpaid principal  amount  outstanding  hereunder,  together with interest
accrued thereon and any other lawful charges accrued hereunder,  immediately due
and payable.

      Maker and any endorsers,  sureties, guarantors, and all others who are, or
at some future date may become, liable for the payments required hereunder grant
a continuing first lien security interest in and to, and authorize Payee, in its
sole discretion at any time after an event of default  hereunder,  in such order
as Payee  may  elect,  to apply to the  payment  of  obligations  due and  owing
hereunder,  or to the  payment  of any and  all  indebtedness,  liabilities  and
obligations of such parties to Payee, whether now existing or hereafter created,
any and all monies,  general or specific  deposits,  or collateral of whatsoever
nature of any of the above noted parties,  now or hereafter in the possession of
Payee. All property  described in this paragraph above,  along with all property
secured by the Loan  Documents,  including  all  proceeds  thereof and rights in
connection therewith, together with additions and substitutions, are hereinafter
collectively referred to as the "Collateral".

      Additions to, releases,  reductions,  or exchanges of or substitutions for
the  Collateral,  payments on account of this Note, or increases of the same, or
other loans made partially or wholly upon the Collateral,  may from time to time
be made without  affecting the provisions of this Note or the liabilities of any
party  hereto.  If any of the  Collateral  is  personal  property,  Payee  shall
exercise  reasonable  care in the custody and  preservation of the Collateral in
its  possession,  and shall be deemed to have  exercised  reasonable  care if it
takes such action for that purpose as Maker shall reasonably request in writing,
but no  omission to comply with any request of Maker shall of itself be deemed a
failure to exercise  reasonable care. Payee shall not be bound to take any steps
necessary to preserve any rights in the Collateral  against prior  parties,  and
Maker shall take all  necessary  steps for such  purposes.  Payee or its nominee
need not collect  interest on or principal of any  Collateral or give any notice
with respect thereto.

      In the event Payee deems itself  insecure or upon the  happening of any of
the following events,  each of which shall constitute a default  hereunder,  all
sums due hereunder  shall thereupon or thereafter,  at Payee's  option,  without
notice or demand, become immediately due and payable: (a) failure of any Obligor
(which term shall mean and  include  each Maker,  endorser,  surety,  guarantor,
general  partner  of Maker or other  party  liable for  payment  of or  pledging
collateral  or security  under this Note) to pay any sum due hereunder or due by
any  Obligor  to Payee  under any other  promissory  note or under any  security
instrument or written  obligation of any kind now existing or hereafter created;
(b)  occurrence  of default  (other  than a default  relating to any payment due
hereunder)  under any of the Loan  Documents  or any  other  loan  agreement  or
security  instrument now or hereafter in effect which, by its terms, covers this
Note or the indebtedness evidenced hereby, provided, however, if such default by
its nature can be cured,  then  Borrower  shall have a period of 30 days  ("Cure
Period") after Borrower  receives  notice of such default to cure the same and a
default  shall not be deemed to exist during the Cure Period;  provided  further
that if Borrower  commences to cure such  failure  during the Cure Period and is
diligently,  and in good faith,  attempting to effect such cure, the Cure Period
shall be extended for so long as Borrower shall diligently  pursue completion of
such Cure,  up to a maximum of 90 days;  (c)  filing of any  petition  under the
Bankruptcy  Code or any  similar  federal or state  statute  by or  against  any
Obligor or the insolvency of any Obligor;  (d) making of a general assignment by
any Obligor for the benefit of creditors, appointment of or taking possession by
a receiver,  trustee or custodian or similar official for any Obligor or for any
assets of any such Obligor or  institution by or against any Obligor of any kind
of insolvency  proceedings or any  proceeding for  dissolution or liquidation of
any Obligor; (e) entry of a judgment against any Obligor,

<PAGE>

which  results in the filing of a lien  against any of the  collateral  securing
this Note, which lien is not released or terminated within 30 days of the filing
thereof;  (f) material  falsity in any certificate,  statement,  representation,
warranty or audit at any time  furnished to Payee by or on behalf of any Obligor
pursuant to or in  connection  with this Note,  the Loan  Documents  or any loan
agreement or security agreements now or hereafter in effect which, by its terms,
covers this Note or the indebtedness evidenced hereby or otherwise including any
omission to disclose any substantial contingent or liquidated liabilities or any
material  adverse change in any facts disclosed by any  certificate,  statement,
representation,  warranty or audit furnished to Payee;  (h) issuance of any writ
of  attachment  or writ  of  garnishment  or  filing  of any  lien  against  any
Collateral  or the  property of any  Obligor;  (i) taking of  possession  of any
material Collateral or of any substantial part of the property of any Obligor at
the  instance  of any  governmental  authority;  (j)  dissolution,  termination,
merger, consolidation,  or reorganization of any Obligor; (k) assignment or sale
by any  Obligor of any equity in any  Collateral  securing  payment of this Note
without the prior written  consent of Payee;  (l)  cancellation  of any guaranty
with  respect  hereto  without  the prior  written  consent  of  Payee;  (m) the
determination  by Payee that a material adverse change has occurred with respect
to the  property  encumbered  by the  Loan  Documents  (financial,  physical  or
otherwise) or in the  financial  condition of any Obligor from the condition set
forth  in the  most  recent  financial  statements  of such  Obligor  heretofore
furnished  to Payee or from the  condition of such  Obligor as  heretofore  most
recently  disclosed  to Payee in any manner;  or (n)  occurrence  of any default
under any guaranty executed in connection with this Note or under any obligation
of Maker or of any Obligor to Payee.

      Payee shall have all of the rights and  remedies of a creditor,  mortgagee
and secured party under all applicable law.  Without  limiting the generality of
the  foregoing,  upon the  occurrence  of any default  hereunder or in the event
Payee, at any time, deems itself insecure, Payee may, at its option, and without
notice or demand (i) declare the entire unpaid  principal  and accrued  interest
accelerated  and due and  payable  at  once,  together  with  any and all  other
liabilities  of Maker or any of such  liabilities  selected  by Payee;  and (ii)
set-off  against  this Note all monies  owed by Payee in any  capacity to Maker,
whether or not due, and also set-off  against all other  liabilities of Maker to
Payee all monies  owed by Payee in any  capacity  to Maker,  and Payee  shall be
deemed  to have  exercised  such  right of  set-off,  and to have  made a charge
against any such money immediately upon the occurrence of such default, although
made or entered on the books subsequent  thereto.  To the extent that any of the
Collateral  is personal  property and Payee elects to proceed with respect to it
in accordance with the Uniform  Commercial Code then,  unless that collateral is
perishable  or  threatens  to  decline  speedily  in  value,  or  is  of a  type
customarily sold on a recognized market, Payee will give Maker reasonable notice
of the time and place of any public or private sale thereof.  The requirement of
reasonable  notice shall be met if such notice is, at the option of Payee,  hand
delivered,  sent via expedited courier, or mailed, postage pre-paid to Maker, at
the  address  given to Payee by  Maker,  or at any  other  address  shown on the
records  of Payee  at  least  five  (5)  days  before  the  time of  sale.  Upon
disposition  of any Collateral  after the  occurrence of any default  hereunder,
Maker  shall be and shall  remain  liable for any  deficiency;  and Payee  shall
account to Maker for any surplus, but Payee shall have the right to apply all or
part of such surplus (or to hold the same as reserve)  against any and all other
liabilities of Maker to Payee.

<PAGE>

      Payee may,  at any time,  whether  or not this Note is due:  (i) pledge or
transfer  this Note and its interest in the  Collateral,  and the pledgee or the
transferee shall, for all purposes, stand in the place of Payee and have all the
rights of Payee set forth  herein;  (ii)  transfer  the whole or any part of the
Collateral  into the name of itself or its nominee;  (iii) vote the  Collateral;
(iv) notify  Maker to make  payment to Payee of any amounts due or to become due
thereon;  (v) demand, sue for, collect,  or make any compromise or settlement it
deems  desirable  with  reference to the  Collateral;  (vi) take  possession  or
control of any proceeds of the  Collateral;  and (vii) exercise all other rights
necessary or required, in Payee's discretion,  in order to protect its interests
hereunder.

      In no event shall Payee be entitled to unearned or  unaccrued  interest or
other  charges or rebates,  except as may be  authorized  by law, and should any
interest or other charges paid by Maker or other parties  liable for the payment
of this Note result in the  computation  or earning of interest in excess of the
maximum rate of interest that is legally  permitted  under  applicable law, then
any and all such excess shall be and the same is hereby waived by Payee, and any
and all such  excess  shall be  automatically  credited  against  and reduce the
balance  due under  this  indebtedness,  and the  portion of said  excess  which
exceeds the balance due under this indebtedness, shall be paid by Payee to Maker
and parties liable for the payment of this Note.  Payee may, in determining  the
maximum rate permitted  under  applicable law in effect from time to time,  take
advantage of (i) the maximum  rate of interest  permitted  under  Florida law or
federal law,  whichever is higher,  including  any laws  regarding  parity among
lenders;  and (ii) any other law, rule or regulation in effect from time to time
available to Payee, which exempts Payee from any limit upon the rate of interest
it may charge,  or grants to Payee the right to charge a higher rate of interest
than that permitted by Chapter 687, Florida Statutes.  In determining whether or
not the  interest  paid or payable  under any specific  contingency  exceeds the
highest  lawful  rate,  Payee  shall,  to the  maximum  extent  permitted  under
applicable law (a) characterize any non-principal  payment as an expense, fee or
premium  rather than as  interest,  (b) exclude  voluntary  prepayments  and the
effects  thereof,  and (c) "spread" the total amount of interest  throughout the
maximum term of the  obligation so that the interest rate is uniform  throughout
the entire term of the obligation.

      The  provisions  of this Note and the Loan  Documents  shall be  construed
according to the internal  laws (and not the laws of  conflicts) of the State of
Florida;  except as set forth  above,  if Federal law would allow the payment of
interest  hereunder  at a higher  maximum  rate than would be  applicable  under
Florida law, in which case such Federal law shall apply to the  determination of
the highest applicable lawful rate of interest hereunder.

<PAGE>

      No  delay  or  omission  on the part of  Payee  in  exercising  any  right
hereunder  shall  operate as a waiver of such right or of any other rights under
this  Note.  Presentment,  demand,  protest,  notice of  dishonor  and all other
notices are hereby waived by Maker.  Maker  promises and agrees to pay all costs
of collection and attorneys'  fees,  which shall include  reasonable  attorneys'
fees in  connection  with any  suit,  out of  court,  in trial,  on  appeal,  in
bankruptcy proceedings or otherwise, incurred or paid by Payee in enforcing this
Note or preserving  any right or interest of Payee set forth herein.  Any notice
to Maker shall be  sufficiently  served for all  purposes if placed in the mail,
postage prepaid, addressed to, or left upon the premises at the address of Maker
as provided to Payee.

      This Note is not assumable  without Payee's prior written  consent,  which
consent may be granted by Payee or denied by Payee, in Payee's sole and absolute
discretion.

      Maker agrees that Broward  County,  Florida  shall be the proper venue for
any and all  legal  proceedings  arising  out of  this  Note or any of the  Loan
Documents.

      WAIVER  OF TRIAL BY JURY.  MAKER  AND PAYEE  HEREBY  MUTUALLY,  KNOWINGLY,
WILLINGLY AND VOLUNTARILY  WAIVE THEIR RIGHT TO TRIAL BY JURY AND NO PARTY,  NOR
ANY ASSIGNEE,  SUCCESSOR,  HEIR, OR LEGAL  REPRESENTATIVE OF THE PARTIES (ALL OF
WHOM ARE  HEREINAFTER  REFERRED TO AS THE "PARTIES")  SHALL SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING,  COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEEDING BASED
UPON OR  ARISING  OUT OF THIS  NOTE OR THE  LOAN  DOCUMENTS,  OR ANY  INSTRUMENT
EVIDENCING,  SECURING,  OR RELATING TO THE  INDEBTEDNESS  AND OTHER  OBLIGATIONS
EVIDENCED  HEREBY OR ANY RELATED  AGREEMENT OR INSTRUMENT,  ANY OTHER COLLATERAL
FOR THE  INDEBTEDNESS  EVIDENCED  HEREBY  OR ANY  COURSE  OF  ACTION,  COURSE OF
DEALING,  STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS RELATING TO THE LOAN
OR TO THIS NOTE. THE PARTIES ALSO WAIVE ANY RIGHT TO  CONSOLIDATE  ANY ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED,  WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED
BY THE  PARTIES.  THE WAIVER  CONTAINED  HEREIN IS  IRREVOCABLE,  CONSTITUTES  A
KNOWING AND VOLUNTARY WAIVER,  AND SHALL BE SUBJECT TO NO EXCEPTIONS.  PAYEE HAS
IN NO WAY  AGREED  WITH OR  REPRESENTED  TO MAKER OR ANY  OTHER  PARTY  THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

      THE  PROPER  FLORIDA  DOCUMENTARY  STAMP TAX HAS BEEN PAID AND THE  PROPER
DOCUMENTARY STAMPS HAVE BEEN AFFIXED TO THE MORTGAGE DEED AND SECURITY AGREEMENT
SECURING THIS PROMISSORY NOTE.

<PAGE>

                                          AGU ENTERTAINMENT  CORP., a Colorado
                                          corporation

                                          By:  /s/ David Levy
                                             -----------------------------
                                                 David Levy, President

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