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                                                                    EXHIBIT 10.6

                          REGISTRATION RIGHTS AGREEMENT

        THIS REGISTRATION RIGHTS AGREEMENT, is entered into as of October 20,
1999 by and between AUCTION-SALES.COM, INC. (the "Company") and those parties
whose signatures are listed on Schedule A hereto, as such schedule may be
amended and supplemented from time to time ("Holders"), in connection with a
private placement by the Company of up to 60 units (the "Units"), each Unit
consisting of a $50,000.00 unsecured subordinate convertible promissory note
(the "Note") and a warrant to purchase up to 16,667 shares of the Company's
common stock, $.001 par value per share, at an exercise price of $8.00 per share
(the "Warrant"). Collectively, the Notes, the Warrants and the Units are
sometimes collectively referred to hereinafter as the "Securities" and the
Common Stock and shares of Common Stock underlying, or convertible for, the
Warrants is sometimes collectively referred to herein as the "Holders Shares."

        1. Piggy Back Registration Rights. Following the effective date of the
Company's initial public offering registered under the Securities Act of 1933,
as amended (the "IPO"), except for the registration of securities underlying an
employee benefit plan or issued in a transaction pursuant to Rule 145 of the
Securities Act of 1933, as amended (the "Securities Act"), if the Company
proposes to make a registered offering of its Common Stock (an "Offering"), the
Company will give prompt written notice to each Holder of its intention to do so
and of each Holder's rights under this Section 1. Except as otherwise provided
for herein, upon the written request of any Holder made within 10 days after the
receipt of any such notice (which request shall specify the number of Holders
Shares intended to be disposed of by each Holder), the Company will include all
Holders Shares that the Company has been requested to include by each Holder;
provided, that if at any time after giving written notice under this Section 1
the Company shall determine for any reason not to proceed with the proposed
Offering, the Company may, at its election, give notice of such determination to
each Holder and thereupon shall be relieved of its obligations to each Holder
with respect to such proposed Offering under this Section 1. Except as otherwise
provided for herein, each Holder shall be entitled to withdraw its request for
the inclusion of Holders Shares in an Offering and withdraw from the Offering at
any time before the time that the Registration Statement is declared effective
by the Securities and Exchange Commission (the "SEC") and the Offering has
commenced.

        2. Continuous Offering. If the Company intends to effect a continuous
offering pursuant to Rule 415 of the Securities Act pursuant to a registration
statement on Form S-3 or any successor form (a "Continuous Offering"), the
Company will give written notice thereof to each Holder and include in such
Offering all of the Holders Shares which each Holder elects to include in such
Offering. During the period in which a Registration Statement with respect to a
Continuous Offering is effective, if any Holder desires to sell Holders Shares
in a transaction covered by such Registration Statement, it shall give notice to
the Company of the proposed date of such sale at least 30 days before such
proposed date of sale, and the Company shall take all actions necessary to
permit such sale. Within 15 days of receipt of notice of a proposed sale by

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any Holder, the Company will advise such Holder either that it has no objection
to such a registered sale or that such a registered sale should be delayed for
up to three months on the basis either that the Company is involved in a
confidential proposed transaction or negotiations therefor (which have been
previously disclosed to the Company's Board of Directors) which would require
the Company to make or amend any public filings under the securities laws at
that time, or that such sale would have a material adverse effect upon the
Company's ability to access the capital markets. If the Company has not objected
to such proposed registered sale as permitted in this Section 2 within such 15
day period, the Company shall take all actions necessary to permit such sale on
the proposed date of sale pursuant to such Registration Statement.

        3. Underwritten Offerings. In the case of an underwritten Offering
initiated by the Company under this Section 3, including underwritten Offerings
effected as part of a Continuous Offering, the underwriter(s) and the managing
underwriter shall be selected by the Company. If the managing underwriter
advises the Company in writing that, in its opinion, the number of Holders
Shares and securities of the Company, if any, being sold exceeds the number that
can be sold in such Offering, so as to be likely to have an adverse effect on
the price at which the Company can sell securities for its own account, then
there shall be included in such Offering (and in the Registration Statement)
first, securities of the Company being sold for its own account, and second, the
maximum number of Holders Shares (allotted on a pro rata basis between the
requesting Holders based upon the number of shares each Holder desires to sell
and the percentage of outstanding shares each holds or will hold upon conversion
or exchange) requested to be included in such Offering which, in the opinion of
such managing underwriter, can be sold without such an adverse effect on such
price.

        4. Expenses. The Company shall bear all expenses of registration in
connection with any election by a Holder to register Holders Shares pursuant to
Sections 1-3.

        5. Demand Registration Rights. Following the 12th calendar month from
the effective date of the Company's initial public offering registered under the
Securities Act, Holders, except as set forth herein, shall be entitled to
dispose of any or all of the Holders Shares then held by them in accordance with
the provisions of this Section 5.

           (a) Requests by Holders. Upon the receipt by the Company of written
notice from Holders holding in excess of 50%of the aggregate Holders Shares of
their intent to sell all or part of their Holders Shares in an Offering subject
to this Section 5 at least 60 days before such proposed date of sale, and
specifying both the number of Holders Shares to be sold and the intended method
of disposition, the Company will use its best efforts to register such Holders
Shares so as to permit, as soon as practicable, the requested sale of Holders
Shares. Within 15 days of receipt of notice of a proposed sale by Holders, the
Company will advise Holders either that it has no objection to such a registered
sale or that such a registered sale should be delayed for up to three months on
the basis that the Company is involved in a confidential proposed transaction or
negotiations (which have been previously disclosed to the Company's Board of

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Directors) which would not permit the Company to make or amend any public
filings under the securities laws at that time. If the Company has not objected
to such proposed registered sale as permitted in this Section 5(a) within such
15 day period, the Company shall take all actions necessary to permit such sale
on the proposed date of sale pursuant to such Registration Statement. If, at any
time after giving 60 days written notice under this Section 5(a), Holders
holding in excess of 50% of the aggregate Holders Shares shall notify the
Company in writing that they have determined for any reason not to proceed with
the proposed Offering, then the Company shall terminate such Offering, but
Holders so choosing not to proceed shall be jointly and severally responsible
for any expenses incurred by the Company from the date that notice is received
by the Company of Holders request for Demand Registration (as defined below)
until the date that notice of Holder's determination not to proceed with the
proposed Offering is received. Such an aborted request to register shares shall
not constitute a Demand Registration.

           (b) Selection of Underwriters. If Holders specify in the notice
delivered to the Company pursuant to this Section 5 that they intend to sell
Holders Shares in an underwritten Offering pursuant to this Section 5, Holders
shall be entitled to select the underwriter(s) and managing underwriter. If the
Company issues and sells securities of the same class as the Holders Shares
contemporaneously with any Offering pursuant to this Section 5, the Company
shall (i) sell such securities to the underwriter(s) selected by Holders
pursuant to this Section 5 on the same terms and conditions as apply to Holders
and (ii) execute and deliver a copy of the underwriting agreement relating to
such Offering. If the managing underwriter advises Holders and the Company in
writing that, in its opinion, the number of securities requested to be included
in such Offering exceeds the number that can be sold in such Offering, so as to
be likely to have an adverse effect on the price at which the Holders Shares or
securities being offered by the Company can be sold, then there shall be
included in such Offering (and in the Registration Statement relating to such
Offering) first, the maximum number of Holders Shares requested to be included
in such Offering by Holders and second, the maximum number of securities, if
any, proposed to be sold by the Company for its own account or for the account
of any other holder of the Company's securities, which in the opinion of the
managing underwriter can be sold without having such adverse effect.

           (c) Registration on Form S-3. Holders shall have the right to require
the Company to register any or all of its shares on Form S-3, or any successor
form (or on Form S-1, or any successor forms, if Form S-3, or any successor form
is not available).

           (d) Limitation on Requests and Payment of Registration Expenses.
Holder shall be entitled to register Holders Shares pursuant to the provisions
of this Section 5 twice (each a "Demand Registration"). The Company shall not be
required to register Holders Shares in accordance with the provisions of Section
5(a) if there is outstanding at the time of the request an effective
Registration Statement for a Continuous Offering and Holders can dispose of
their Holders Shares in accordance with Section 2, or if Holders can sell all of
their Holders Shares pursuant to Rule 144 of the Securities Act within any three
month period. The Company will pay all registration expenses (except
underwriting discounts and selling commissions) in connection

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with the Offering of the Holders Shares requested by Holders pursuant to this
Section 5 for the first Demand Registration, but Holders shall pay all expenses
for a second Demand Registration.

        6. The Company's Duties. If and whenever the Company is required to
permit Holders to effect any Offering as provided in Sections 1-5, the Company
covenants and agrees that it will, as expeditiously as possible (but not later
than sixty (60) days after receipt of a request from Holders to include Holders
Shares in a given Offering):

           (a) prepare all offering documents in accordance with all applicable
requirements of the Securities Act, including, if requested by Holder and if
permitted by the rules and regulations of the SEC, a Registration Statement
pursuant to Rule 415 of the Securities Act or any successor rule of the SEC,
with respect to such Offering to permit the disposition of the Holders Shares by
Holders in accordance with the intended method of disposition (and, in the case
of an underwritten Offering, consistent in form, substance, and scope with
customary practice for the offering of securities of corporations by nationally
recognized investment banking firms);

           (b) file with the SEC a Registration Statement required to permit the
disposition thereof; provided, that before filing any such Registration
Statement (including any documents incorporated by reference therein), the
Company will furnish to counsel(s) designated by Holders and to the
underwriter(s), if any, copies of all such Registration Statements, which
Registration Statements shall be subject to the review of such counsel(s) and
the underwriter(s), if any, and, where feasible, the Company shall make such
changes in such Registration Statements as are reasonably requested by such
counsel(s) or underwriter(s); and

           (c) use its reasonable efforts to have such Registration Statement
declared effective by, and obtain all approvals from the SEC to the extent
necessary to permit the Offering; provided, however, that the Company may
discontinue any Offering that is being effected pursuant to Sections 1-3 at any
time before the effective date of the related Registration Statement;

           (d) thereafter, prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective (if filed pursuant to
Rule 415) and cause the Registration Statement to be supplemented by any
required supplement, and as so supplemented to be filed, if required, with the
SEC during the period ending on the later of (A) such time as all of the Holders
Shares covered by such Registration Statement have been disposed of in
accordance with the intended method of disposition set forth in such
Registration Statement, (B) such time as all of the Holders Shares may be sold
pursuant to Rule 144 of the Securities Act, or (C) so long as a dealer is
required to deliver a Prospectus in connection with the Offering;

           (e) furnish to Holders and to the underwriter(s), if any, such number
of copies of the Registration Statement or Prospectus contained therein
(including each amendment and

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supplement thereto) as they may reasonably request in order to facilitate the
disposition of the Holders Shares included in such Offering;

           (f) register or qualify, or cooperate with Holders, the
underwriter(s), if any, and their respective counsel in registering or
qualifying, all Holders Shares covered by the Registration Statement for offer
and sale under the applicable securities or blue sky laws of such jurisdictions
as Holders and the underwriter(s), if any, shall reasonably request in writing,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable Holders and the underwriter(s), if any, to consummate the
disposition in such jurisdictions of the Common Stock covered by the
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any tax in any such jurisdiction where it is not then so subject;

           (g) use its reasonable efforts to cause such Common Stock covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Holders and
the underwriter(s), if any, to consummate the disposition of such Common Stock;

           (h) cooperate reasonably with any managing underwriter to effect the
sale of any Holders Shares, including but not limited to attendance of the
Company's executive officers at any planned "road show" presentations;

           (i) notify Holders and the underwriter(s), if any, at any time when
the Registration Statement 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 not misleading in light of the circumstances then
existing, and at the request of any Holder or any underwriter, prepare and
furnish to such Person(s), such reasonable number of copies of any amendment or
supplement to the Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Common Stock, such Prospectus shall not
include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and to deliver to
purchasers of any other securities of the Company included in the Offering
copies of such Prospectus as so amended or supplemented;

           (j) keep Holders informed of the Company's best estimates of the
earliest date on which the Registration Statement will become effective, and
promptly notify Holders of (A) the effectiveness of such Registration Statement,
(B) a request by the SEC for an amendment or supplement to such Registration
Statement, (C) the issuance by the SEC of an order suspending the effectiveness
of the Registration Statement, or of the threat of a proceeding for that
purpose, and (D) the suspension of the qualification of any securities included
in the Registration Statement for sale in any jurisdiction or the initiation or
threat of any proceeding for that purpose;

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           (k) comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the Registration Statement in
accordance with the intended method of distribution of the Holders thereof set
forth in such Registration Statement;

           (l) use its reasonable efforts to list the securities proposed to be
sold in such Offering on the Nasdaq National Market, or on such other securities
exchange or over the counter trading market on which the Common Stock is then
listed, not later than the closing of the Offering contemplated thereby;

           (m) enter into such customary agreements (including but not limited
to an underwriting agreement in customary form) and take such other reasonable
actions as Holders or the underwriter(s), if any, reasonably request in order to
expedite or facilitate the disposition of such Common Stock;

           (n) obtain such "cold comfort" letter(s) from the Company's
independent public accountants, in customary form and covering matters of the
type customarily covered by "cold comfort" letter(s), as Holders or the
underwriter(s), if any, shall reasonably request; and

           (o) upon prior notice, make available for reasonable inspection by
any underwriter(s) participating in any disposition to be effected pursuant to
the Registration Statement and by any attorney, accountant, or other agent
retained by any such Person(s), its financial and other records, pertinent
corporate documents and properties of the Company, and such opportunities to
discuss the business of the Company with its officers, directors, and employees
and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinions of such underwriters'
respective counsels, to conduct a reasonable investigation; provided, that any
records, information, or documents that are designated by the Company in writing
as confidential shall be kept confidential by each such Person, unless
disclosure of such records, information, or documents is required by law, by
judicial or administrative order, or in order to defend a claim asserted against
such Person in connection with such Offering.

        7. Information from Holder.

           (a) Information. The Company may require Holders to furnish it with
such information regarding Holders and regarding the method of distribution as
is pertinent to the disclosure requirements relating to the Offering of such
Common Stock as the Company may from time to time reasonably request in writing.

           (b) Use of Registration Statement Upon Notice of Defects. Holders
agree, and shall cause underwriter(s), if any, acting on their behalf to agree,
that upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 6(i), they will immediately discontinue the use
of the Registration Statement and Prospectus covering such Common Stock until
the receipt by Holders and any such underwriter(s) of the copies of the

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supplemented or amended Registration Statement or Prospectus contemplated by
such clause and, if so directed by the Company, Holders will deliver and cause
each underwriter, if any, to deliver to the Company all copies, other than
permanent file copies then in the possession of Holders or any such underwriter,
of the Registration Statement and Prospectus covering such Common Stock at the
time of receipt of such notice.

        8. Resales; Reports Under Exchange Act. In order to permit Holders to
sell the Holders Shares, if they so desire, pursuant to any applicable resale
exemption under the Securities Act, the Company will:

           (a) comply with all rules and regulations of the SEC in connection
with the use of any such resale exemption;

           (b) make and keep available adequate and current public information
regarding the Company;

           (c) file with the SEC in a timely manner, all reports and other
documents required to be filed under the Securities Act and the Securities
Exchange Act of 1934, as amended;

           (d) furnish to Holders, upon request, copies of annual reports
required to be filed under the Exchange Act; and

           (e) furnish to Holders, upon request, with (A) a copy of the most
recent quarterly report of the Company and such other reports and documents
filed by the Company with the SEC and (B) such other information as may be
reasonably requested to permit Holders pursuant to any applicable resale
exemption under the Securities Act, if any.

        9. Indemnification. The obligations of indemnification of the Parties
set forth in this Section 9 shall be in addition to any liability which any
Party may otherwise have to any other party.

           (a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, Holders, each Person
who participates as an underwriter in an Offering, each officer, director,
employee or agent of such an underwriter, and each Person who controls (within
the meaning of the Securities Act) such an underwriter against any and all
losses, claims, damages, liabilities, expenses, joint or several, including
without limitation reasonable legal or other expenses incurred in connection
with investigating or defending against any loss, claim, damage, or liability,
or action or proceeding (whether commenced or threatened) in respect thereof,
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement relating to such Offering, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under

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which they were made, except insofar as the same are (i) made in reliance on and
in conformity with any information about Holders or any underwriter furnished in
writing to the Company by Holders or any underwriter specifically for inclusion
in the Registration Statement relating to such Offering or (ii) the result of
the fact that Holders or any underwriter sold Common Stock subject to an
Offering to a Person to whom there was not sent or given, at or before the
written configuration of such sale, a copy of the final Prospectus, if the
Company has previously furnished copies thereof to Holders or underwriter and
such final Registration Statement or Prospectus corrected such untrue statement
or alleged untrue statement or omission or alleged omission.

           (b) Indemnification by Holders. Each Holder, jointly and severally,
agrees to indemnify and hold harmless, to the fullest extent permitted by law,
the Company, its officers, directors, employees, and agents, each Person who
participates as an underwriter in an Offering, each officer, director, employee
or agent of such an underwriter, and each Person who controls (within the
meaning of the Securities Act) the Company and such underwriter against any and
all losses, claims, damages, liabilities, and expenses, joint or several,
including without limitation reasonable legal or other expenses incurred in
connection with investigating or defending against any loss, claim, damage, or
liability, or action or proceeding (whether commenced or threatened) in respect
thereof, caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement relating to such Offering
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, but only to the extent
that such untrue statement or omission is made in reliance on and in conformity
with any information furnished in writing by Holders concerning Holders to the
Company specifically for inclusion in the Registration Statement relating to
such Offering.

           (c) Notices of Claims; Procedures. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 9, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided, that the
failure of the indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section 9, except
to the extent that the indemnifying party is actually materially prejudiced by
such failure to give notice. If any such action is brought against an
indemnified party (unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim) the indemnifying party will be entitled to participate
in and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that any Person entitled to indemnification hereunder shall have the
right to

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employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such Person unless
(A) the indemnifying party has agreed to pay such fees or expenses or (B) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (C) in the reasonable
judgment of any such Person based upon advice of its counsel, a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include, as an
unconditional term thereof, the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. An indemnifying party who is not entitled to or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel in each jurisdiction for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels.

           (d) Contribution. If the indemnification provided for this in this
Section 9 from the indemnifying party is unavailable to an indemnified party
hereunder (other than pursuant to the terms hereof) in respect of any losses,
claims, damages, liabilities, or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions that resulted in such losses,
claims, damages, liabilities, or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such action. The
amount paid or payable by a Party as a result of the losses, claims, damages,
liabilities, and expense referred to above shall be deemed to include, subject
to the limitations set forth in this Section 9(d) any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding. The Parties agree that it would not be just and equitable if
contributions pursuant to this Section 9(d) were determined by a pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to above. No Person guilty of fraudulent
misrepresentation shall be entitled to contribution from any Person who was not

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guilty of such fraudulent misrepresentation.

            (e) This Section 9 shall apply to each Registration Statement filed
by the Company pursuant to this Agreement that includes Holders Shares.

        10. Miscellaneous.

            (a) Amendments and Waivers. This Agreement may be amended, and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent of Holders to such amendment, action or omission to act.

            (b) Successors, Assigns and Transferees. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns.

            (c) Notices. Any notice, request, demand, consent, approval or other
communication permitted or required to be given to any of the parties hereunder
shall be deemed given when received, shall be in writing, and shall be delivered
in person or sent by certified mail, postage prepaid, or by private courier
service or by telecopy or telex, to such party at its address set forth below or
at such other address as such party may hereunder furnish in writing to the
other parties.

            (d) Entire Agreement. This Agreement, and the exhibits hereto,
constitute the entire agreement among the Parties and supersedes any prior
understandings, agreements or representations by or among the Parties, written
or oral, that may have related in any way to the subject matter hereof.

            (e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of such Party's rights, interests or obligations hereunder without the prior
written approval of the other Party.

            (f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

            (g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

            (h) Governing Law. This Agreement shall be governed by, construed,
interpreted and enforced in accordance with the internal substantive laws of the
State of California applicable to agreements to be made and performed solely
within such State, without

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giving effect to any conflicts or choice of law principles which otherwise might
be applicable.

            (i) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of any State having jurisdiction over the Parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in equity.

            (j) Waiver of Jury Trial. To the fullest extent permitted by
applicable law, the Parties hereby irrevocably and expressly waive all right to
a trial by jury in any action, proceeding, counterclaim (whether based upon
contract, tort or otherwise) arising out of or relating to this Agreement, or
other documents entered in connection herewith or the transactions contemplated
hereby.

            (k) Forum Designation. Any action or proceeding against any of the
parties hereto relating in any way to this Agreement or the subject matter
hereof shall be brought and enforced exclusively in the competent courts of
California, and the parties hereto consent to the exclusive jurisdiction of such
courts in respect of such action or proceeding.

            (l) Authorization. By executing this Agreement, the Company and
Holders hereby respectively represent that they have all requisite legal power
and capacity to execute and deliver this Agreement and to perform his
obligations under this Agreement.

            (m) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected thereby, and in lieu of such
illegal, invalid, or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be legal, valid and enforceable.

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        The foregoing Registration Rights Agreement is hereby executed as of the
date first written above.

                                            AUCTION-SALES.COM, INC.

                                            By:
                                                -------------------------------
                                                Name:  Zahid Rafiq
                                                Title:  Chief Executive Officer

                                       12<PAGE>   1
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR
AN OPINION OF COUNSEL (WHO MAY BE COUNSEL TO THE COMPANY) THAT SUCH
REGISTRATIONS IS NOT REQUIRED.

                                 MYO DIAGNOSTICS, INC.

                       10% CONVERTIBLE NOTE DUE AUGUST 13, 2000

                        $40,000.00 Dated as of July 31, 1998

FOR VALUE RECEIVED, the undersigned, MYO DIAGNOSTICS, INC., a corporation duly
organized and existing under the laws of the State of California (the principal
amount of Forty Thousand and no/100 Dollars ($40,000.00) on August 13, 2000, and
to pay interest on the unpaid principal amount hereof at the rate of ten percent
(10%) per annum from the date hereof until paid.  Interest shall be payable
semi-annually on June 30 and December 31 of each year, commencing December 31,
1998.  Both principal and interest thereon are payable in lawful money of the
United States of American at the principal office of the Company. This note is
one of a series of notes of the Company, dated various dates, of the same title
and due dated in the aggregate principal amount of $167,000.00 (the "Notes").

ARTICLE ONE

PREPAYMENT

Section 1.01  Optional Prepayment.  This Note may be prepaid by the Company in
whole or in part at any time without premium or penalty.  Any such prepayment
shall be accompanied by interest to the date of prepayment.

Section 1.02  Notice of Prepayment.  The Company shall give the Holder of this
Note written notice of each prepayment hereof not less than 30 days prior to the
prepayment date, specify such prepayment date, the principal amount to be
prepaid, and the date the right to convert this Note or any portion hereof shall
terminate pursuant to Section 2.01 hereof.  Upon the giving of any such notice
of prepayment, the principal amount of this Note specified in such notice,
together with interest thereon, shall, subject to Section 2.01 hereof, become
due and payable on the prepayment date.

Section 1.03  Allocation of Prepayments.  In the event of the prepayment of less
than all of the outstanding Notes pursuant to Section 1.01 hereof, the Company
shall allocate the principal amount so to be prepaid among the holders of Notes
in proportion to the respective principal amount of such Notes not theretofore
prepaid or converted, of which they shall be holders.

ARTICLE TWO

CONVERSION

Section 2.01  Conversion Right.  The older of this Note shall have the right, at
the Holder's option, at any time and from time to time while this Note is
outstanding, or pursuant to Section 1.02 hereof (in respect of this Note or such
portion thereof) until the close of business on the first business day next
preceding the dated fixed for prepayment (unless the Company shall default in
such prepayment) to convert all or any part of the principal amount of this Note
into fully paid and non-assessable shares of Common Stock of the Company (the
"Common Stock") at the "Initial Conversion Price" (as hereinafter defined),
subject to adjustment as provided below (such price or such price, as last
adjusted, as the case may be, being referred to herein as the "Conversion
Price").  Such conversion shall be made by the surrender of this Note to the
Company at its principal office accompanied by the Holder's written request for
conversion, specifying the principal amount hereof to be converted.  As used in
this Section 2.01, the following terms shall have the meanings indicated:

"Additional Offering" shall mean the sale by the Company after August 13, 1998,
of Common Stock or Convertible Debt Securities.

"Additional Offering Price" shall mean, (a) in the case of an Additional
Offering consisting of Common Stock, the total amount received by the Company in
connection with such Additional Offering, or (b) in the case of an Additional
Offering consisting of Convertible Debt Securities, the total amount received by
the Company as the consideration of the issuance of such Convertible Debt
Securities plus the minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard for any provision
contained therein for a subsequent adjustment of such consideration), payable to
the Company upon the conversion of such Convertible Debt Securities divided by
the aggregate number of shares of Common Stock issuable upon conversion of such
Convertible Debt Securities (as set forth in the instruments relating thereto,
without regard for any provision contained therein for a subsequent adjustment
of such number of shares).
<PAGE>   2

Convertible Debt Securities means promissory notes or similar instruments
issued by the Company which are convertible into Common Stock.
<PAGE>   3

Initial Conversion Price shall mean US $0.10 (ten cents) per share, provided,
however, that (i) in the event that the Company completes an Additional Offering
on or before September 13, 1998, for aggregate proceeds to the Company of US
$200,000.00 or more (not including in the case of an Additional Offering of
Convertible Debt Securities any additional consideration (as set forth in the
instruments relating thereto) payable to the Company upon the conversion of such
Convertible Debt Securities) at an Additional Offering Price equal to or in
excess of US $0.10 (ten cents) per share, "Initial Conversion Price" shall mean
the "Additional Offering Price", (ii) in the event that the Company completes
and Additional Offering on or before September 13, 1998, for aggregate proceeds
to the Company of US $200,000.00 or more (not including in the case of an
Additional Offering of Convertible Debt Securities any additional consideration
(as set forth in the instruments relating thereto) payable to the Company upon
the conversion of such Convertible Debt Securities) at an Additional Offering
Price of less than US $0.10 (ten cents) per share, "Initial Conversion Price"
shall mean the "Additional Offering Price", and no adjustment to the Conversion
Price shall be made under the provisions of Section 2.04 hereof with respect to
such Additional Offering, and (iii) in the event that the Company completes an
Additional Offering on or before September 13, 1998, for aggregate proceeds to
the Company of less than US $200,000.00 (not including in the case of an
Additional Offering of Convertible Debt Securities any additional consideration
(as set forth in the instruments relating thereto) payable to the Company upon
the conversion of such Convertible Debt Securities) "Initial Conversion Price"
shall mean the lesser of the Additional Offering Price and US $0.10 (ten cents)
per share, and no adjustment to the Conversion Price shall be made under the
provisions of Section 2.4 hereof with respect to such Additional Offering.

Section 2.02  Issuance of Certificates; Partial Conversion.  Promptly after
receipt of the written request referred to in Section 2.01 hereof and surrender
of this Note as aforesaid, the Company shall issue and deliver to the Holder,
registered in such Holder's name (or in such other name or names as shall be
specified in such written request), a certificate or certificates for the number
of full shares of Common Stock issuable upon conversion of this Note (or
specified portion hereof), which certificates shall bear a legend to the same
effect as the legend set forth at the beginning of this Note.  Such conversion
shall be deemed to have been effected and the Conversion Price shall be
determined as of the close of business on the date on which such written request
shall have been received by the Company, and this Note shall have been
surrendered as aforesaid, and the rights of the Holder hereof (or specified
portion thereof) shall cease and the person or persons in whose name such
certificate or certificates are to be registered shall be deemed to have become
a holder of record of the shares of Common Stock issuable upon such conversion.
Upon conversion of only a portion of this Note, the Company shall issue and
deliver to the Holder, at the expense of the Company, a new Note in the form
hereof for the unconverted portion hereof and bearing interest from the date to
which interest has been paid on such unconverted portion.

Section 2.03  Fraction Shares; Accrued Interest.  No fractional share of Common
Stock shall be issued upon conversion of this Note or any portion hereof,
<PAGE>   4

and no payment or adjustment shall be made upon any such conversion with
respect to the Common Stock issued upon such conversion.  If any fractional
interest in a share of Common Stock would, except for the provisions hereof, be
issuable upon the conversion of this note or any portion hereof, the Company
shall pay to the Holder an amount in cash equal to the current market price (as
determined by the Company in good faith) of such fractional interest.  The
company shall pay all interest on this Note or specified portion hereof
surrendered for conversion accrued to the date upon which the aforementioned
written request shall have been received by the Company.

Section 2.04  Adjustment of Conversion Price.  The Conversion Price shall be
subject to adjustment from time to time as follows:

(a) Definitions.  As used in this Section 2.04, the following terms shall have
the meanings indicated:

"Options" shall mean rights, options or warrants to purchase either Common
Stock or Convertible Securities.

"Initial Date" shall mean August 13, 1998.

"Convertible Securities" shall mean any evidences of indebtedness, shares (other
than Common Stock) or other securities convertible into Common Stock.

"Other Securities" shall mean any securities of the company other than Common
Stock and any other securities which the holder of a Note at any time shall be
entitled to receive, or shall have received, upon conversion of Note, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for, or as a distribution with respect to, Common
Stock (or other Securities).

(b) No Adjustment of Conversion Price.  No adjustment in the Conversion Price
shall be made in respect of the issuance of Additional Shares of Common Stock
unless the consideration per share for an Additional Share of common Stock
issued or deemed to be issued by the Company is less than the per share
Conversion Price in effect on the date of such issue.

(c) Deemed Issue of Additional Shares of Common Stock.

(i) Options and Convertible Securities.  In the event the Company, on or after
the Initial Date, shall issue any Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent adjustment
of such number) of Common Stock issuable upon the exercise of such Options, or
in the case of Convertible Securities and Options therefore, the shares into
which such Convertible Securities may be converted, shall be deemed to be
Additional Share of Common Stock issued as of the time of such issue, proved
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 2.04 (e)
hereof, of such Additional Shares of Common Stock would be less than the
Conversion Price in effect on the date of and immediately prior to such issue,
and provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:

(a) no further adjustment in the Conversion Price shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock, upon the
exercise of such Options or the conversion of such Convertible Securities:

(b) if such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any decrease in the consideration payable to
the Company, or increase in the number of share of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Conversion Price computed upon
the original issue thereof, and any subsequent adjustment based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such options or the rights of
conversion or exchange under such Convertible Securities;

(c) Upon the expiration of any such Options or any rights of conversion under
such Convertible Securities which shall not have been exercised, the Conversion
Price computed upon the original issue thereof, and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as if:

(x) in the case of Options for Convertible Securities or Options for Common
Stock the only Additional Share of Common Stock issued were the shares of Common
Stock actually issued upon the exercise of such Options or the conversion of
Convertible Securities and the consideration received therefor was the
consideration actually received by the Company for the issue of such Convertible
Securities which were actually converted, and
<PAGE>   5

(y) in the case of Options for Convertible Securities only the Convertible
Securities actually issued upon the exercise thereof were issued at the time of
issue of such Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have been issued was the
consideration actually received by the Company for the issue of all such
options, whether or not exercised, plus the consideration deemed to have been
received by the Company (determined pursuant to Section 2.04 (e)) upon the issue
of the Convertible Securities with respect to which such Options were actually
exercised;

(d) no readjustments pursuant to Section 2.04 (c)(I)(b) or Section 2.04
(c)(I)(c) above shall have the effect of increasing the Conversion Price by an
amount in excess of the amount of the adjustment thereof originally made in
respect of the issue of such Options or Convertible Securities; and

(e) in the case of any Options which expire by their terms not more than 30 days
after the date of issue thereof, no adjustment of the Conversion Price shall be
made until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in Section 2.04 (c)(I)(c)
above.

(i) Stock Dividends and Subdivisions.  In the event the Company at any time or
from time to time on or after the Initial Date shall pay any dividend on Common
Stock payable in common Stock, or effect a subdivision of the outstanding shares
of Common Stock into greater number of shares, Additional Share of Common Stock
shall be deemed to have been issued:

(a) in the case of any such dividend, immediately after the close of business on
the record date for the determination of holders of any class of securities
entitled to receive such dividend, or

(b) in the case of any such subdivision, at the close of business on the date
immediately prior to the date upon which such corporate action becomes
effective.

(d) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common
Stock.  Except as otherwise provided in Section 2.04 (g), in the event the
Company shall issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 2.04(c)) without
consideration or for a consideration per share less than the Conversion Price
shall be reduced, concurrently with such issue, to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the consideration per share received by the Company
for Additional Shares of Common Stock issued pursuant to Section 2.03(c)(I) and
the denominator of which shall be the Conversion Price in effect on the date of,
and immediately prior to the issuance of Additional Shares of Common Stock.

(e) Determination of Consideration.  For purposes of this Section 2.04, the
consideration received by the Company for the issue of any Addition Shares of
Common Stock shall not included interest accrued and unpaid on Convertible
Securities.  The consideration per share received by the Company for Additional
Shares of Common Stock deemed to have been issued pursuant to Section 2.04
(c)(I), relating to Option and Convertible Securities, shall be determined by
dividing:

(i) the total amount, if any, received or receivable by the Company as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained herein
for a subsequent adjustment of such consideration) payable to the Company upon
the exercise of such Options or the conversion of such Convertible Securities
and the conversion of such Convertible Securities, by

(ii) the maximum number of share of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or the conversions or the conversion or exchange of such Convertible
Securities.

(f) Adjustment of Conversion Price Upon Issuance of Other Securities.  In the
event Other securities shall be issued or shall become subject to issue upon the
conversion of any Notes (or Other Securities) of the Company (or any issuer of
Other Securities) for a consideration such as to dilute the conversion rights of
the holders of the Notes, the computations and adjustments with respect to the
Conversion Price shall be made nearly as possible in the manner so provided and
applied to determine the number of Other Securities from time to time receivable
upon the conversion hereof.

(g) Adjustment for Combinations, Reclassifications, Consolidation of Common
<PAGE>   6

Stock, Stock Dividends or Stock Subdivisions.  In the event (a) the outstanding
shares of Common Stock shall be combined, reclassified or consolidated into a
lesser number of shares of Common Stock, or (b) any Additional Shares of Common
Stock shall be deemed to have been issued pursuant to Section 2.04 (c)(ii)
relating to stock dividends and stock subdivisions, the Conversion Price in
effect immediately prior to such combination, reclassification, consolidation,
stock dividend, or stock subdivision shall, concurrently with the effectiveness
of such stock combination, reclassification, consolidation, stock dividend, or
stock subdivision be proportionately increased or decreased.

(h) Adjustment for Merger of Reorganization, etc.  In case of any consolidations
merger of the Company with or into another corporation or the conveyance of
substantially all of the assets of the company to another corporation, each Note
shall thereafter be convertible into the number of shares of stock, or other
securities, or other property, to which a holder of the number of shares of
Common Stock of the Company deliverable upon conversion of this Note would have
been entitled upon such consolidation, merger or conveyance, and appropriate
adjustment (as determined in good faith by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
of the Holder hereof, to the end that the provisions set forth herein (including
provisions with respect to changes in an other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock, or other securities, or other property
thereafter deliverable upon conversion.

Section 2.05  Notice of Adjustment.  Upon any adjustment of the Conversion
Price, the Company shall give written notice thereof to the Holder thereof,
which notice shall state the Conversion Price resulting from such adjustment and
set forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

Section 2.06  Other Notices.  In the event the Company proposes to take any
action of the type requiring an adjustment of the Conversion Price, the Company
shall give written notice thereof to the Holder of this Note, which notice shall
specify the record date, if any, with respect to any such action and the date on
which such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonable necessary to indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon conversion of the Notes.  In case
of any action which would require the fixing of a record date, such notice shall
be given at least 20 days prior to the date so fixed, and in the case of all
other action, such notice shall be given at least 30 days prior to the taking of
such proposed action.  In addition, whenever the Company proposes to declare a
dividend or distribution with respect to the Common Stock, it will give the
Holder of this Note written notice thereof at least 20 days prior to the record
date for such dividend or distribution.

Section 2.07  Reservation of Shares.  The Company will at all times reserve and
keep available, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of issue upon the conversion of
Notes, sufficient shares to provide for the conversion of all outstanding Notes.
The Company covenants that all shares of Common Stock which may be issued upon
conversion of this Note will, upon issuance by the Company in accordance with
the terms of this Note, be duly authorized, validly issued, fully paid and
non-assessable and free from any claims, liens or encumbrances with respect to
the issuance thereof, except for any restrictions on transfer imposed by
applicable securities laws.  The Company will take all such action as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or any requirement of any
national stock exchange upon which the Common Stock may be listed.

Section 2.08  Government Approvals.  If any shares of Common Stock required to
be reserved for the purpose of conversion of this Note require registration with
or approval of any governmental authority under an applicable law, or listing on
any national securities exchange, before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
cause such shares to be duly registered or approved or listed on the relevant
national securities exchange, as the case may be.

Section 2.09  Taxes  The Company will pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of Common
Stock upon conversion of this Note, provided, however, that the Company shall
not be required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the Holder of this Note.

ARTICLE FOUR

COVENANTS
<PAGE>   7

Section 4.01  Use of Proceeds.  The Company covenants that the proceeds from
the issuance of the Notes have or will be used to pay current operating expenses
of the Company, including payroll, payroll taxes, rent, compensation of William
L. Wayne or any other consultant approved by the holders of a majority in
principal amount of the Notes, and any other current operating expense approved
by William L. Wayne.

Section 4.02  Indebtedness.  The Company covenants and agrees that during the
period commencing on August 13, 1998 and ending on August 13, 1999, it will not,
so long as any principal of, or interest on, the Notes remains outstanding and
unpaid, incur any indebtedness, whether secured or unsecured, for borrowed
money, including, without limitation, any Additional Offering of Convertible
Debt Securities (as such terms are defined in Section 2.01 hereof) without the
prior written consent of the holds of at lease 50% of the principal amount of
the Notes then outstanding.

ARTICLE FIVE

EVENTS OF DEFAULT

Section 5.01  Definitions of Effect.  If any of the following events
("Events of Default") shall occur and be continuing:

(a) Default shall be made in the payment of the principal of this or any other
Note when and as the same shall become due and payable, whether at maturity or
at a date fixed for prepayment or by acceleration or otherwise; or

(b) Default shall be made in the payment of any installment of interest upon
this or any other Note when the same shall become due and payable, and such
default shall continue for a period of 5 days; or

(c) Default shall be made in the due observance or performance of any other
covenant, condition or agreement on the part of the Company to be observed or
performed pursuant to the terms hereof and such default shall continue for 30
days; or

(d) Default shall be made in any payment of principal of, or interest on, any
other indebtedness of the Company and such default shall continue for more than
the period of grace, if any, provided with respect hereto;

(e) (I) the Company shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debt, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Company shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Company any case, proceeding or other action of a nature referred to in clause
(I) above which (A) result in the entry of any order for relief or any such
adjudication or appointment or (B) remains un-dismissed, un-discharged, or un-
bonded for a period of 60 days; or (iii) there shall be commenced against the
Company any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, restraint or similar process against all or any
substantial part of its assets which result in the entry of an order for any
such relief which shall not have been vacated, discharges, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Company shall
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (I), (ii) or (iii) above;
or (v) the Company shall generally not, or shall be unable to, or shall admit in
writing an inability to, pay its debts as they become due; then, and in each and
every such case, the Holder of this Note may, by written notice to the Company
declare all sums of principal and interest then remaining unpaid on this Note
and all other amount payable hereunder, to be immediately due and payable,
whereupon the same shall immediately become due and payable.  Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.

ARTICLE SIX

MISCELLANEOUS

Section 6.01  Amendments.  This Note may only be amended in writing signed by
the Holder and the Company.

Section 6.02  Notices.  Any notice or other communication to the Holder of this
Note required or permitted hereunder shall be in writing and shall be personally
delivered or mailed, postage paid, by registered or certified mail, if the
Holder, addressed to such Holder at c/o Tullet & Tokyo Forex Ltd., 154
University Avenue, Suite 400, Toronto, Ontario M5H 3Y9, Canada or such other
<PAGE>   8

address as such Holder may designate to the Company in writing, and if to the
Company, addressee to the Company at 3760 South Robertson Blvd., Culver City, CA
90232 or to such other address as the Company may in writing designate to the
Holder.

Section 6.03  Suits for Enforcement.  In case any one or more Events of Default
shall occur and be continuing, the Holder of this Note may precede to protect
and enforce its rights by suits in equity, action at law and/or by other
appropriate proceeding, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this note or in aid
of the exercise of any power granted in this Note, or may proceed to enforce any
other legal or equitable right of the Holder of this Note.  If any holder of a
Note shall demand payment thereof or take any action in respect of an Event of
Default, the Company will forthwith give written notice to the other holders of
Notes, specifying such action and the nature of the Event of Default.

Section 6.04  Remedies Cumulative.  No remedy herein conferred upon the Holder
of this Note is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

Section 6.05  Remedies no Waived.  No course of dealing between the Company and
the Holder hereof shall operate as a waiver of any right of any Holder hereof
and no delay of the part of the Holder hereof in exercising any right hereunder
shall so operate.

Section 6.06  Successors and Assigns.  All of the covenants and agreements in
the Note contained by or on behalf of the Company shall bind its successors and
assigns, whether so expressed or not.

Section 6.07  Headings.  The headings of the section sand subsections of this
Note are inserted for convenience only and shall not be deemed to constitute a
part of this Note.

Section 6.08  Governing Law.  This Note shall be deemed to be a contract made
under the laws of the State of California and shall be construed in accordance
with such laws.

IN WITNESS WHEREOF, the undersigned, has caused this Note to be executed in
its name and on its behalf as of the day and year first above written.

                                                        MYO DIAGNOSTICS, INC.

                                                        By:
                                                              Gerald D. Appel
                                                              President

<PAGE>   9
August 26, 1998

Myo Diagnostics Inc.
3760 S. Robertson Boulevard
Culver City, CA 90232

Attention: Gerald Appel, President & Chief Executive Officer

Dear Mr. Appel:

Re:  Proposed Financing

St. James Securities Inc. ("SJS") hereby agrees to act as exclusive agent for
Myo Diagnostics Inc. (the "Corporation") in connection with a proposed offering
of equity units ("Equity Units") to be created and issued by the Corporation
pursuant to the following terms and conditions (the "Offering").

Issuer:    Myo Diagnostics Inc.

Size of Offering:Up to 1.5 million Equity Units

Purchased Securities:  Subject to adjustment and potential restrictions in
certain events, each Equity Unit shall be exercisable, for no additional
consideration, to acquire common shares ("Common Share") of the Corporation.

Agent:     St. James Securities Inc.

Price:Such price as SJS and the Corporation may agree (the "Price"),
however such price will not be less than $US1.00 per Common Share.

Closing Date:    February 26, 1999 or such other date as SJS and the
Corporation may agree (the "Closing Date").

Description of Agency: SJS agrees to purchase as principle investor no less
than 500,000 Equity Units prior to September 11, 1998.  SJS will also act, on a
"best efforts" private placement basis, as exclusive agent for an additional 1
million Equity Units.  SJS is not obliged under any circumstances to purchase in
excess of 500,000 Equity Units but may choose to do so in its sole discretion.

Due Diligence:   Prior to the filing of the (final) prospectus qualifying the
Common Shares issuable on exercise of the Equity Units, the Corporation shall
allow SJS and their representatives to conduct all due diligence investigations
which SJS may reasonably require to fulfill their obligations as underwriters
and to responsibly execute the certificate required of them in the preliminary
prospectus and the (final) prospectus.
<PAGE>   10

SJS's Fees:  7% of gross proceeds of the Offering (the "Commission"),

Compensation Option:       SJS shall also receive two hundred thousand (200,000)
compensation options, each compensation option entitling SJS to purchase one
Common Share of the Corporation at a price of $0.50 per common share at any time
prior to August 26, 2001.

Costs and Expenses: Offering costs and expenses are to be borne by the
Corporation, including the costs of SJS, its Consultant and its designated legal
counsel, all payable on the Closing Date.

If the foregoing accurately reflects your understanding of the terms of the
Offering, please execute this letter where indicated below and return a copy
(personally, by facsimile, by post or by courier) to St. James Securities Inc.,
150 York Street, Suite 1814, Toronto, Ontario, M5H 3S5, Attention: Rodger Gray,
President, prior to 9:30 a.m. September 2, 1998, whereupon this letter shall
become a binding agreement
between us.

Yours very truly,

ST. JAMES SECURITIES INC.

Per:    _________________________________
       John Illidge
       Chairman

The foregoing accurately reflects the terms of the transaction that we are to
enter into and such terms are hereby agreed to.

ACCEPTED this                         day of August, 1998.

MYO DIAGNOSTICS INC.

Per:    _________________________________
       Gerald Appel
       President and Chief Executive

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