Document:

REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 6,
2006, by and among RG Global Lifestyles, Inc., a California corporation with its
headquarters located at 30021 Tomas, Ste 200, Rancho Santa Margarita, CA 92688
(the "COMPANY"), and each of the undersigned (together with their respective
affiliates and any assignee or transferee of all of their respective rights
hereunder, the "INITIAL INVESTORS").

      WHEREAS:

      A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors (i) secured convertible
notes in the aggregate principal amount of up to Two Million Dollars
($2,000,000) (the "Notes") that are convertible into shares of the Company's
common stock (the "Common Stock"), upon the terms and subject to the limitations
and conditions set forth in such Notes and (ii) warrants (the "Warrants") to
acquire an aggregate of 4,000,000 shares of Common Stock, upon the terms and
conditions and subject to the limitations and conditions set forth in the
Warrants; and

      B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws;

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

            1. DEFINITIONS.

                  A. As used in this Agreement, the following terms shall have
the following meanings:

                    (I) "INVESTORS" means the Initial Investors and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.

                    (II) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").

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                    (III) "REGISTRABLE SECURITIES" means the Conversion Shares
issued or issuable upon conversion or otherwise pursuant to the Notes and
Additional Notes (as defined in the Securities Purchase Agreement) including,
without limitation, Damages Shares (as defined in the Notes) issued or issuable
pursuant to the Notes, shares of Common Stock issued or issuable in payment of
the Standard Liquidated Damages Amount (as defined in the Securities Purchase
Agreement), shares issued or issuable in respect of interest or in redemption of
the Notes in accordance with the terms thereof, and any shares of capital stock
issued or issuable as a dividend on or in exchange for or otherwise with respect
to any of the foregoing.

                    (IV) "REGISTRATION STATEMENT" means a registration statement
of the Company under the 1933 Act.

                  B. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities Purchase
Agreement or the Convertible Note.

            2. REGISTRATION.

                  A. MANDATORY REGISTRATION. The Company shall prepare, and, on
or prior to thirty (30) days from the date of Closing (as defined in the
Securities Purchase Agreement) (the "FILING DATE"), file with the SEC a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities, subject to the consent of the
Initial Investors, which consent will not be unreasonably withheld) covering the
resale of the Registrable Securities underlying the Notes issued or issuable
pursuant to the Securities Purchase Agreement, which Registration Statement, to
the extent allowable under the 1933 Act and the rules and regulations
promulgated thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of or otherwise pursuant to the
Notes to prevent dilution resulting from stock splits, stock dividends or
similar transactions. The number of shares of Common Stock initially included in
such Registration Statement shall be no less than an amount equal to two (2)
times the sum of the number of Conversion Shares that are then issuable upon
conversion of the Notes and Additional Notes (based on the Variable Conversion
Price as would then be in effect and assuming the Variable Conversion Price is
the Conversion Price at such time), without regard to any limitation on the
Investor's ability to convert the Notes. The Company acknowledges that the
number of shares initially included in the Registration Statement represents a
good faith estimate of the maximum number of shares issuable upon conversion of
the Notes.

                  B. UNDERWRITTEN OFFERING. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of a
majority-in-interest of the Initial Investors, shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.

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<PAGE>

                  C. PAYMENTS BY THE COMPANY. The Company shall use its best
efforts to obtain effectiveness of the Registration Statement as soon as
practicable. If (i) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not filed by the Filing Date or declared effective by the SEC on or prior to
one hundred and twenty (120) days from the date of Closing (as defined in the
Securities Purchase Agreement), or (ii) after the Registration Statement has
been declared effective by the SEC, sales of all of the Registrable Securities
cannot be made pursuant to the Registration Statement, or (iii) the Common Stock
is not listed or included for quotation on the Nasdaq National Market
("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ SMALLCAP"), the New York Stock
Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") after being so
listed or included for quotation after the date hereof, or (iv) the Common Stock
ceases to be traded on the Over-the-Counter Bulletin Board (the "OTCBB") or any
equivalent replacement exchange prior to being listed or included for quotation
on one of the aforementioned markets, then the Company will make payments to the
Investors in such amounts and at such times as shall be determined pursuant to
this Section 2(c) as partial relief for the damages to the Investors by reason
of any such delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity). The Company shall pay to each holder of the Notes or
Registrable Securities an amount equal to the then outstanding principal amount
of the Notes (and, in the case of holders of Registrable Securities, the
principal amount of Notes from which such Registrable Securities were converted)
("OUTSTANDING PRINCIPAL AMOUNT"), multiplied by the Applicable Percentage (as
defined below) times the sum of: (i) the number of months (prorated for partial
months) after the Filing Date or the end of the aforementioned one hundred and
twenty (120) day period and prior to the date the Registration Statement is
declared effective by the SEC, provided, however, that there shall be excluded
from such period any delays which are solely attributable to changes required by
the Investors in the Registration Statement with respect to information relating
to the Investors, including, without limitation, changes to the plan of
distribution, or to the failure of the Investors to conduct their review of the
Registration Statement pursuant to Section 3(h) below in a reasonably prompt
manner; (ii) the number of months (prorated for partial months) that sales of
all of the Registrable Securities cannot be made pursuant to the Registration
Statement after the Registration Statement has been declared effective
(including, without limitation, when sales cannot be made by reason of the
Company's failure to properly supplement or amend the prospectus included
therein in accordance with the terms of this Agreement, but excluding any days
during an Allowed Delay (as defined in Section 3(f)); and (iii) the number of
months (prorated for partial months) that the Common Stock is not listed or
included for quotation on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX or
that trading thereon is halted after the Registration Statement has been
declared effective. The term "APPLICABLE PERCENTAGE" means two hundredths (.02).
(For example, if the Registration Statement becomes effective one (1) month
after the end of such one hundred and twenty (120) day period, the Company would
pay $5,000 for each $250,000 of Outstanding Principal Amount. If thereafter,
sales could not be made pursuant to the Registration Statement for an additional
period of one (1) month, the Company would pay an additional $5,000 for each
$250,000 of Outstanding Principal Amount.) Such amounts shall be paid in cash
or, at the Company's option, in shares of Common Stock priced at the Conversion
Price (as defined in the Notes) on such payment date.

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<PAGE>

                  D. PIGGY-BACK REGISTRATIONS. Subject to the last sentence of
this Section 2(d), if at any time prior to the expiration of the Registration
Period (as hereinafter defined) the Company shall determine to file with the SEC
a Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option or other bona
fide, employee benefit plans), the Company shall send to each Investor who is
entitled to registration rights under this Section 2(d) written notice of such
determination and, if within fifteen (15) days after the effective date of such
notice, such Investor shall so request in writing, the Company shall include in
such Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights. No right to registration of Registrable Securities under this Section
2(d) shall be construed to limit any registration required under Section 2(a)
hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(d) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering. Notwithstanding anything to the contrary set forth herein, the
registration rights of the Investors pursuant to this Section 2(d) shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain effectiveness of any Registration Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.

                  E. ELIGIBILITY FOR FORM S-3, SB-2 OR S-1; CONVERSION TO FORM
S-3. The Company represents and warrants that it meets the requirements for the
use of Form S-3, SB-2 or S-1 for registration of the sale by the Initial
Investors and any other Investors of the Registrable Securities. The Company
agrees to file all reports required to be filed by the Company with the SEC in a
timely manner so as to remain eligible or become eligible, as the case may be,
and thereafter to maintain its eligibility, for the use of Form S-3. If the
Company is not currently eligible to use Form S-3, not later than five (5)
business days after the Company first meets the registration eligibility and
transaction requirements for the use of Form S-3 (or any successor form) for
registration of the offer and sale by the Initial Investors and any other
Investors of Registrable Securities, the Company shall file a Registration
Statement on Form S-3 (or such successor form) with respect to the Registrable
Securities covered by the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2(a) (and include in such
Registration Statement on Form S-3 the information required by Rule 429 under
the 1933 Act) or convert the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2(a) to a Form S-3 pursuant
to Rule 429 under the 1933 Act and cause such Registration Statement (or such
amendment) to be declared effective no later than thirty (30) days after filing.
In the event of a breach by the Company of the provisions of this Section 2(e),
the Company will be required to make payments pursuant to Section 2(c) hereof.

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<PAGE>

            3. OBLIGATIONS OF THE COMPANY.

      In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

                  A. The Company shall prepare promptly, and file with the SEC
not later than the Filing Date, a Registration Statement with respect to the
number of Registrable Securities provided in Section 2(a), and thereafter use
its best efforts to cause such Registration Statement relating to Registrable
Securities to become effective as soon as possible after such filing but in no
event later than one hundred and twenty (120) days from the date of Closing),
and keep the Registration Statement effective pursuant to Rule 415 at all times
until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which the Registrable
Securities (in the opinion of counsel to the Initial Investors) may be
immediately sold to the public without registration or restriction (including,
without limitation, as to volume by each holder thereof) under the 1933 Act (the
"REGISTRATION PERIOD"), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not misleading.

                  B. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statements and the prospectus used in connection with the
Registration Statements as may be necessary to keep the Registration Statements
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by the Registration Statements
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statements. In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover all of the Registrable Securities issued or issuable
upon conversion of the Notes, the Company shall amend the Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the Registrable
Securities, in each case, as soon as practicable, but in any event within
fifteen (15) days after the necessity therefor arises (based on the market price
of the Common Stock and other relevant factors on which the Company reasonably
elects to rely). The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof, but in any event within thirty (30) days after the
date on which the Company reasonably first determines (or reasonably should have
determined) the need therefor. The provisions of Section 2(c) above shall be
applicable with respect to such obligation, with the one hundred and twenty
(120) days running from the day the Company reasonably first determines (or
reasonably should have determined) the need therefor.

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<PAGE>

                  C. The Company shall furnish to each Investor whose
Registrable Securities are included in a Registration Statement and its legal
counsel (i) promptly (but in no event more than two (2) business days) after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of each Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement referred to in Section
2(a), each letter written by or on behalf of the Company to the SEC or the staff
of the SEC, and each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the Company has
sought confidential treatment), and (ii) promptly (but in no event more than two
(2) business days) after the Registration Statement is declared effective by the
SEC, such number of copies of a prospectus, including a preliminary prospectus,
and all amendments and supplements thereto and such other documents as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor. The Company will immediately
notify each Investor by facsimile of the effectiveness of each Registration
Statement or any post-effective amendment. The Company will promptly respond to
any and all comments received from the SEC (which comments shall promptly be
made available to the Investors upon request), with a view towards causing each
Registration Statement or any amendment thereto to be declared effective by the
SEC as soon as practicable, shall promptly file an acceleration request as soon
as practicable (but in no event more than two (2) business days) following the
resolution or clearance of all SEC comments or, if applicable, following
notification by the SEC that any such Registration Statement or any amendment
thereto will not be subject to review and shall, if required by SEC Rules,
promptly file with the SEC a final prospectus as soon as practicable (but in no
event more than two (2) business days) following receipt by the Company from the
SEC of an order declaring the Registration Statement effective. In the event of
a breach by the Company of the provisions of this Section 3(c), the Company will
be required to make payments pursuant to Section 2(c) hereof.

                  D. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration Statements
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its charter
or bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its shareholders.

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                  E. In the event Investors who hold a majority-in-interest of
the Registrable Securities being offered in the offering (with the approval of a
majority-in-interest of the Initial Investors) select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.

                  F. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
any Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to any Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request; provided that, for not more than ten (10) consecutive
trading days (or a total of not more than twenty (20) trading days in any twelve
(12) month period), the Company may delay the disclosure of material non-public
information concerning the Company (as well as prospectus or Registration
Statement updating) the disclosure of which at the time is not, in the good
faith opinion of the Company, in the best interests of the Company (an "ALLOWED
DELAY"); provided, further, that the Company shall promptly (i) notify the
Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such investor any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay and (ii) advise the Investors in writing to cease all
sales under such Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 3(f) with respect to the information giving rise
thereto.

                  G. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of any
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.

                  H. The Company shall permit a single firm of counsel
designated by the Initial Investors to review such Registration Statement and
all amendments and supplements thereto (as well as all requests for acceleration
or effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and not file any document in a form to which such counsel reasonably
objects and will not request acceleration of such Registration Statement without
prior notice to such counsel. The sections of such Registration Statement
covering information with respect to the Investors, the Investor's beneficial
ownership of securities of the Company or the Investors intended method of
disposition of Registrable Securities shall conform to the information provided
to the Company by each of the Investors.

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                  I. The Company shall make generally available to its security
holders as soon as practicable, but not later than one hundred and twenty (120)
days after the close of the period covered thereby, an earnings statement (in
form complying with the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.

                  J. At the request of any Investor, the Company shall furnish,
on the date that Registrable Securities are delivered to an underwriter, if any,
for sale in connection with any Registration Statement or, if such securities
are not being sold by an underwriter, on the date of effectiveness thereof (i)
an opinion, dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters, if any, and the Investors and (ii) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and
the Investors.

                  K. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Initial Investors, (iv) one firm of attorneys
and one firm of accountants or other agents retained by all other Investors, and
(v) one firm of attorneys retained by all such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company, including without limitation, records
of conversions by other holders of convertible securities issued by the Company
and the issuance of stock to such holders pursuant to the conversions
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (b) the release of such Records is ordered pursuant
to a subpoena or other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investor's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.

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<PAGE>

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

                  M. The Company shall (i) cause all the Registrable Securities
covered by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) to the extent the securities
of the same class or series are not then listed on a national securities
exchange, secure the designation and quotation, of all the Registrable
Securities covered by the Registration Statement on Nasdaq or, if not eligible
for Nasdaq, on Nasdaq SmallCap or, if not eligible for Nasdaq or Nasdaq
SmallCap, on the OTCBB and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities.

                  N. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.

                  O. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the transfer agent
for the Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an instruction in the
form attached hereto as EXHIBIT 1 and an opinion of such counsel in the form
attached hereto as EXHIBIT 2.

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                  P. At the request of the holders of a majority-in-interest of
the Registrable Securities, the Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and any prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.

                  Q. Except for shares underlying warrants as identified in
Schedule 3(q), from and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities, in excess of 250,000 shares of Common Stock, in
any Registration Statement under Section 2(a) hereof or any amendment or
supplement thereto under Section 3(b) hereof without the consent of the holders
of a majority-in-interest of the Registrable Securities.

                  R. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.

            4. OBLIGATIONS OF THE INVESTORS.

      In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:

                  A. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least three (3)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.

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

                  C. In the event Investors holding a majority-in-interest of
the Registrable Securities being registered (with the approval of the Initial
Investors) determine to engage the services of an underwriter, each Investor
agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.

                                       10
<PAGE>

                  D. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.

                  E. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements in
usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Section 5 below.

            5. EXPENSES OF REGISTRATION.

      All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, the
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel selected by the Initial Investors pursuant to
Sections 2(b) and 3(h) hereof shall be borne by the Company and shall be
included in the fees paid to counsel under the Securities Purchase Agreement for
purposes of counsel selected by the Initial Investors.

            6. INDEMNIFICATION.

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

                                       11
<PAGE>

                  A. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, (ii) the directors, officers, partners, employees, agents and each
person who controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), if any, (iii) any
underwriter (as defined in the 1933 Act) for the Investors, and (iv) the
directors, officers, partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse the Indemnified Person, promptly as such expenses are incurred and are
due and payable, for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified Person
or underwriter for such Indemnified Person expressly for use in connection with
the preparation of such Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.

                                       12
<PAGE>

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

                  C. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified Parties,
as applicable, and such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the Registration
Statement to which the Claim relates (with the approval of a
majority-in-interest of the Initial Investors), if the Investors are entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

                                       13
<PAGE>

            7. CONTRIBUTION.

      To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii)contribution (together
with any indemnification or other obligations under this Agreement) by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

            8. REPORTS UNDER THE 1934 ACT.

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

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

                  B. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

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

            9. ASSIGNMENT OF REGISTRATION RIGHTS.

      The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of Registrable Securities if:
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein, (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, and (vi) such transferee shall be an "ACCREDITED INVESTOR" as that
term defined in Rule 501 of Regulation D promulgated under the 1933 Act.

                                       14
<PAGE>

            10. AMENDMENT OF REGISTRATION RIGHTS.

      Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of the Initial
Investors (to the extent such Initial Investor still owns Registrable
Securities) and Investors who hold a majority interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.

            11. MISCELLANEOUS.

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

                  B. Any notices required or permitted to be given under the
terms hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:

                           If to the Company:

                           RG Global Lifestyles, Inc.
                           30021 Tomas, Ste 200
                           Rancho Santa Margarita, CA 92688
                           Attention:  Chief Executive Officer
                           Telephone:  (949) 888-9500
                           Facsimile:  (949) 888-9525

                                       15
<PAGE>

                           With a copy to:

                           Scott Olson, Esq.
                           766 Hoska Drive
                           Del Mar, CA 92014
                           Attention:   Scott Olson, Esq.
                           Telephone:  (310) 985-1034
                           Facsimile:   (501) 634-2648

If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement.

                           With a copy to:

                           Ballard Spahr Andrews & Ingersoll, LLP
                           1735 Market Street
                           51st Floor
                           Philadelphia, Pennsylvania  19103
                           Attention:  Gerald J. Guarcini, Esq.
                           Telephone:  215-865-8625
                           Facsimile:  215-864-8999

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

                  D. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED NEW YORK, NEW
YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT
SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

                                       16
<PAGE>

                  E. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

                  F. This Agreement, the Notes, and the Securities Purchase
Agreement (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and the
Securities Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

                  G. Subject to the requirements of Section 9 hereof, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns.

                  H. The headings in this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.

                  I. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

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

                  K. Except as otherwise provided herein, all consents and other
determinations to be made by the Investors pursuant to this Agreement shall be
made by Investors holding a majority of the Registrable Securities, determined
as if the all of the Notes then outstanding have been converted into for
Registrable Securities.

                                       17
<PAGE>

                  L. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to each Investor by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for breach of its obligations under
this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of any of the provisions under this Agreement,
that each Investor shall be entitled, in addition to all other available
remedies in law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Agreement and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any bond or
other security being required.

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

      IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.

RG GLOBAL LIFESTYLES, INC.

--------------------------------------
Louis L. Knickerbocker
Chief Executive Officer

AJW PARTNERS, LLC
By:  SMS Group, LLC

--------------------------------------
Corey S. Ribotsky
Manager

AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC

--------------------------------------
Corey S. Ribotsky
Manager

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC

------------------------------------
Corey S. Ribotsky
Manager

NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
By:  First Street Manager II, LLC

--------------------------------------
Corey S. Ribotsky
Manager

                                  Schedule 3(q)
                                  -------------

Pursuant to its engagement agreement with Ascendiant Securities LLC, the Company
has agreed to register 640,000 shares underlying warrants paid to Ascendiant
Securities in connection with this transaction.THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE
   NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
    OR ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THE NOTE NOR SUCH SHARES
     OF COMMON STOCK MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
       HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
        SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR
           AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN
                 EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

                           NEW CENTURY COMPANIES, INC.

                            SERIES A CONVERTIBLE NOTE

                                                                        $300,000

      FOR VALUE RECEIVED,  New Century Companies,  Inc., a Delaware  corporation
(the  "Company"),  promises to pay to Motivated  Minds,  LLC, an Arizona limited
liability  company,  whose address is 3116 E. Shea Boulevard,  PMB 191, Phoenix,
Arizona 85028 or  registered  assigns (the  "Holder"),  the sum of Three Hundred
Thousand  Dollars  ($300,000) in lawful money of the United States of America on
or before the Maturity  Date as defined  herein,  with all  Interest  thereon as
defined and specified herein.

      1.  INTEREST.   This  Note  shall  bear  interest  ("Interest")  equal  to
twenty-four  percent  (24%) per annum on the unpaid  principal  balance from the
Issue Date to the sixtieth  (60th) day from the Issue Date and bear  Interest at
the rate of  twenty-seven  percent (27%) per annum after the sixtieth (60th) day
from the Issue Date to the Maturity  Date.  Interest will be computed on a three
hundred sixty (360)-day  year. The Company shall pay all accrued  Interest on or
before the 15th day of each month following the Issue Date, with any accrued but
unpaid  Interest  due and payable in full on or before the  Maturity  Date.  The
Company  shall pay the Interest in cash,  provided that the Company will pay the
Interest in  restricted  Common Stock or a  combination  of cash and  Restricted
Stock if Holder  notifies the Company  within five (5) Business Days, as defined
below,  of the Interest  payment date of its decision  regarding the form of the
payment of Interest.  The Common Stock will be valued for these purposes at $.66
per share.  In no event shall the rate of  Interest  payable on this Note exceed
the maximum rate of Interest permitted to be charged under applicable law.

      2. PAYMENTS.  All payments under this Note shall first be credited against
costs and  expenses  provided  for in this  Note,  second to the  payment of any
penalties,  third to the payment of accrued and unpaid Interest, if any, and the
remainder shall be credited against principal.  All payments due hereunder shall
be payable  in legal  tender of the United  States of  America,  and in same day
funds  delivered  to Holder  by  cashier's  check,  certified  check,  bank wire
transfer or any other means of guaranteed  funds to the mailing address provided
below,  or at such other  place as Holder  shall  designate  in writing for such
purpose from time to time. If a payment under this Note  otherwise  would become
due and payable on a Saturday,  Sunday or legal  holiday  (any other day being a
"Business  Day"),  the due date of the  payment  shall be  extended  to the next
succeeding  Business Day, and Interest,  if any, shall be payable thereon during
such extension.

<PAGE>

      3.  PRE-PAYMENTS  AND MATURITY DATE. This Note shall be due and payable in
full,  including all accrued  Interest  thereon,  on May 16, 2006 (the "Maturity
Date"). At any time on or prior to the Maturity Date, the Company shall have the
right to prepay this Note, in whole or in part, on ten (10) days' advance notice
to Holder  and  subject  to the right of Holder to  convert  in  advance of such
prepayment date and provided that on such prepayment  date, the Company will pay
in  respect of the  redeemed  Note cash equal to the face  amount  plus  accrued
Interest  on the Note (or  portion  thereof)  redeemed.  At any time  after  the
Maturity  Date, the Company shall have the right to repay this Note, in whole or
in part, on ten (10) days' advance  notice to Holder and subject to the right of
Holder to convert in advance of such repayment date. The Company may prepay this
Note at any time after issuance without penalty.  The Company will pay this Note
to the  extent of the  proceeds  of the next debt or equity  financing  that the
Company closes after the Issue Date,  including but not limited to any financing
arranged by Ascendiant Securities, LLC.

      4. FEES

            4.1  Fees  and  Expenses  Paid in  Cash.  The  Company  will pay the
following  fees and  expenses in  connection  with and upon the issuance of this
Note and  funding  of the loan  represented  by the Note:  (i) a  commission  of
$15,000  to  Source  Capital  Group,  Inc.,  Attn:  Richard  Kelly,   registered
representative;  (ii) a commission  of $15,000 to  Ascendiant  Securities,  LLC,
Attn: Michael Cole,  registered  representative;  and (iii) fees and expenses of
Holder's legal counsel not to exceed $10,000.

            4.2 Fees Paid in Warrants  and  Restricted  Stock.  The Company will
issue shares and  restricted  shares of Common  Stock and Common Stock  Purchase
Warrants (the  "Warrants") in the form set forth as Exhibit A in connection with
and upon issuance of this Note as follows:  (i) 30,000  restricted shares of its
Common Stock to Holder; (ii) 454,545 Warrants to Holder; (ii) 22,727 Warrants to
Source Capital Group,  Inc.  and/or its designees;  and (iii) 22,727 Warrants to
Ascendiant Securities, LLC and/or its designees.

      5. CONVERSION OF NOTE

            5.1 Conversion of  Note/Conversion  Price. This Note is convertible,
at the option of Holder,  into shares of the Company's Common Stock (the "Common
Stock") at any time after the Issue Date and prior to the close of  business  on
the fifth (5th) Business Day preceding the Maturity Date at the rate of $.66 per
share (the "Conversion Price"),  subject to adjustment as hereinafter  provided.
The  Company  will  provide  written  notice of its intent to prepay the Note in
whole or in part prior to the Maturity Date. In such case, Holder will have five
(5)  Business  Days  following  the date on which Holder  receives  such written
notice to  determine  whether  Holder will  convert all or part of the Note into
Common Stock. No fractional shares will be issued. In lieu thereof,  the Company
will pay cash for fractional share amounts equal to the fair market value of the
Common  Stock as quoted as the closing bid price of the Common Stock on the date
of conversion.

                                      -2-
<PAGE>

            5.2  Limitation  on  Conversion  Rights.  Notwithstanding  any other
provision  of  Paragraph  5 to the  contrary,  Holder  shall not be  entitled to
convert this Note in excess of that number of shares of Common Stock which, upon
giving effect to such conversion,  would cause the aggregate number of shares of
Common Stock  beneficially  owned by Holder and its Affiliates to exceed 4.9% of
the  outstanding  shares of the Common  Stock  following  such  conversion.  For
purposes of the foregoing  provision,  the aggregate  number of shares of Common
Stock  beneficially  owned by Holder and its Affiliates shall include the number
of shares of Common  Stock  beneficially  owned and those shares  issuable  upon
conversion of this Note,  but shall exclude the number of shares of Common Stock
that would be issuable upon (i) conversion of the remaining  principal amount of
this Note  beneficially  owned by Holder and (ii)  exercise or conversion of the
unexercised or unconverted  portion of any other  securities of the Company into
Common Stock beneficially owned by Holder and its Affiliates that are subject to
a limitation on conversion or exercise analogous to the limitation  contained in
this Note,  including but not limited to a Common Stock Purchase  Warrant issued
to Holder by the Company.  For purposes of this  Paragraph,  in determining  the
number of  outstanding  shares of Common  Stock Holder may rely on the number of
outstanding shares of Common Stock as reflected in (a) the Company's most recent
Form  10-Q or  Form  10-K,  as the  case  may  be,  or (b)  more  recent  public
announcement  by the  Company  or (c) any  other  written  communication  by the
Company or its Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the reasonable written or oral request of Holder, the Company
shall  promptly  confirm orally and in writing to Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of
Common  Stock  shall be  determined  after  giving  effect  to any  conversions,
exercises  or  purchases  by Holder  since the date as of which  such  number of
outstanding  shares of Common Stock was reported.  Except as otherwise set forth
herein,  beneficial  ownership  shall be determined  in accordance  with Section
13(d) of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act").
If the foregoing  4.9%  limitation is ever reached and Holder desires to convert
this  Note or part  thereof  into  equity,  the  Company  will  acknowledge  the
conversion  in writing,  but not issue  Holder any  additional  shares of Common
Stock at that  point.  Under such  circumstances  Holder  will have the right to
receive  additional shares of Common Stock as a result of the conversion only at
such point and to the extent that its beneficial ownership  subsequently becomes
less than 4.9% and such issuance will not cause Holder's beneficial ownership to
exceed  4.9%.  Upon written  notice to this effect given by Holder,  the Company
will issue such additional shares in accordance with Paragraph 5.7, "Issuance of
Certificate."

            5.3 Adjustment Based Upon Stock Dividends,  Combination of Shares or
Recapitalization.  The Conversion  Price shall be adjusted in the event that the
Company  shall at any time (i) pay a stock  dividend on the Common  Stock;  (ii)
subdivide its  outstanding  Common Stock into a greater number of shares;  (iii)
combine its outstanding Common Stock into a smaller number of shares; (iv) issue
by  reclassification  of its Common Stock any other special capital stock of the
Company;  or  (v)  distribute  to all  holders  of  Common  Stock  evidences  of
indebtedness  or assets  (excluding  cash  dividends)  or rights or  warrants to
subscribe for Common Stock (other than those mentioned  above). No adjustment of
the Conversion Price will be required until cumulative adjustments amount to One
Dollar  ($1.00)  per Note or more.  Upon the  occurrence  of an event  requiring
adjustment of the Conversion  Price, and thereafter,  Holder,  upon surrender of
this Note for  conversion,  shall be entitled to receive the number of shares of
Common Stock or other  capital stock of the Company that Holder would have owned
or have been  entitled  to  receive  after the  happening  of any of the  events
described above had this Note been converted  immediately prior to the happening
of such event.

                                      -3-
<PAGE>

            5.4 Adjustment  Based Upon Merger or  Consolidation.  In case of any
consolidation  or merger to which the Company is a party (other than a merger in
which the  Company  is the  surviving  entity  and which  does not result in any
reclassification  of or change in the outstanding  Common Stock of the Company),
or in case of any sale or conveyance to another person,  firm, or corporation of
the  property of the Company as an entirety  or  substantially  as an  entirety,
Holder  shall  have the right to  convert  this Note into the kind and amount of
securities and property  (including  cash)  receivable upon such  consolidation,
merger,  sale or  conveyance  by Holder of the number of shares of Common  Stock
into which such Note might have been converted immediately prior thereto.

            5.5 Exercise of Conversion Privilege.

                  5.5.1 The Conversion Privilege provided for in this Note shall
be  exercisable  by Holder by written notice to the Company or its successor and
the  surrender  of this Note in  exchange  for the  number  of shares  (or other
securities  and property,  including  cash, in the event of an adjustment of the
Conversion  Price) into which this Note is convertible based upon the Conversion
Price.

                  5.5.2  Holder's  conversion  right set forth in this Paragraph
5.5 may be  exercised  at any time and from time to time but prior to payment in
full of the principal  amount of the accrued  interest on this Note.  Conversion
rights will expire at the close of  business  on the  Business  Day prior to the
Maturity Date or redemption date of this Note.

                  5.5.3  Holder may  exercise  the right to  convert  all or any
portion of the principal amount and accrued Interest on this Note by delivery of
(i) this Note and (ii) a  completed  Conversion  Notice in the form  attached as
Exhibit A on a Business Day to the Company's principal  executive offices.  Such
conversion shall be deemed to have been made  immediately  prior to the close of
business  on  the  Business  Day of  such  delivery  a  conversion  notice  (the
"Conversion  Date"),  and Holder shall be treated for all purposes as the record
holder of the shares of Common  Stock into  which this Note is  converted  as of
such date.

                  5.5.4  Upon  conversion  of the  entire  principal  amount and
accrued  Interest of this Note and the  delivery of shares of Common  Stock upon
conversion  of  this  Note,  except  as  otherwise  provided  in  Paragraph  21,
"Representations  and  Warranties  to Survive  Closing,"  the  Company  shall be
forever released from all of its obligations and liabilities under this Note.

            5.6 Corporate Status of Common Stock to be Issued.  All Common Stock
(or other  securities  in the event of an adjustment  of the  Conversion  Price)
which may be issued upon the conversion of this Note shall,  upon  issuance,  be
fully paid and nonassessable.

            5.7 Issuance of  Certificate.  Upon the conversion of this Note, the
Company shall, within five (5) Business Days of such conversion, issue to Holder
a certificate or  certificates  representing  the number of shares of the Common
Stock  (or other  securities  in the event of an  adjustment  of the  Conversion
Price) to which the conversion relates.

                                      -4-
<PAGE>

      6.  STATUS OF HOLDER OF NOTE.  This Note shall not  entitle  Holder to any
voting rights or other rights as a  shareholder  of the Company or to any rights
whatsoever except the rights herein expressed, and no dividends shall be payable
or accrue in respect of this Note or the securities issuable upon the conversion
hereof  unless and until this Note shall be  converted.  Upon the  conversion of
this Note,  Holder  shall,  to the extent  permitted by law, be deemed to be the
holder of record of the shares of Common Stock  issuable  upon such  conversion,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that the certificates  representing  such shares of Common Stock shall
not then be actually delivered.

      7. RESERVE OF SHARES OF COMMON STOCK. The Company shall reserve out of its
authorized  shares of Common  Stock,  and  other  securities  in the event of an
adjustment of the Conversion  Price, a number of shares  sufficient to enable it
to  comply  with its  obligation  to issue  shares of  Common  Stock,  and other
securities  in the event of an  adjustment  of the  Conversion  Price,  upon the
conversion of this Note.

      8. TRANSFER RESTRICTIONS; EXEMPTION FROM REGISTRATION.

            8.1 Holder is an Accredited  Investor,  as such term is defined Rule
501(a) of Regulation D under the Securities Act of 1933, as amended (the "Act").
Holder has conducted its own due diligence  regarding  this  investment  and the
Company.  Holder  understands  and can  bear  the  risks  associated  with  this
investment,  including  the loss of its  entire  investment  in the Note and the
underlying  Common  Stock..  Holder  agrees that (i) this Note and the shares of
Common Stock issuable in payment of Interest and upon  conversion  have not been
registered under the Act and may not be sold or transferred without registration
under the Act or unless an exemption from such  registration is available;  (ii)
Holder has  acquired  this Note and will  acquire  the Common  Stock for its own
account  for  investment  purposes  only and not with a view  toward  resale  or
distribution;  and (iii) if a  registration  statement  that includes the Common
Stock is not  effective  at the time  Common  Stock is  issued  to  Holder  upon
conversion under this Note, and the Common Stock is not exempt from registration
under Rule 144,  then the Common  Stock shall be  inscribed  with the  following
legend:

      THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES
LAWS.  THE  SECURITIES  HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED
FOR  SALE,  SOLD,  TRANSFERRED  OR  ASSIGNED  IN  THE  ABSENCE  OF AN  EFFECTIVE
REGISTRATION  STATEMENT FOR THE SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER'S COUNSEL,
IN A  CUSTOMARY  FORM,  THAT  REGISTRATION  IS NOT  REQUIRED  UNDER  SAID ACT OR
APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.

            8.2 If an opinion of counsel of Holder provides that registration is
not  required  for the  proposed  conversion  or  transfer  of this  Note or the
proposed  transfer of the shares of Common Stock  issuable upon  conversion  and
that the proposed  conversion or transfer in the absence of  registration  would
require the Company to take any action  including  executing and filing forms or
other  documents with the Securities and Exchange  Commission (the "SEC") or any
state securities  agency,  or delivering to Holder any form or document in order
to  establish  the right of Holder to  effectuate  the  proposed  conversion  or
transfer,  the Company agrees promptly, at its expense, to take any such action;
and provided,  further,  that the Company will reimburse  Holder in full for any
expenses  (including  but not  limited  to the  fees and  disbursements  of such
counsel,  but  excluding  brokers'  commissions)  incurred by Holder or owner of
shares  of  Common  Stock on his,  her or its  behalf  in  connection  with such
conversion or transfer of the Note or transfer of the shares of Common Stock.

                                      -5-
<PAGE>

      9. REGISTRATION RIGHTS.

            Holder of the Note or of any  Common  Stock  issued to Holder  under
this  Note  without  an  effective  Registration  Statement  under  the Act (the
"Restricted Shares") shall have the right, under the terms of and subject to the
Registration Rights Agreement between Holder and the Company attached as Exhibit
B, to cause the  Company  register  the Common  Stock  underlying  the Note (the
"Underlying  Common  Stock") or Restricted  Shares in a  Registration  Statement
under the Act filed by the Company with the Securities and Exchange Commission.

      10. RULE 144.

            The Company has  registered a class  securities  under Section 12 of
the Exchange  Act and files  reports  under  Section 13 or 15(d) of the Exchange
Act.  At the  request of Holder,  when Holder  proposes  to sell  securities  in
compliance  with Rule 144 of the SEC, the Company will (i) forthwith  furnish to
Holder a written statement of compliance with the filing requirements of the SEC
as set forth in Rule 144,  as such  rules may be  amended  from time to time and
(ii) make  available  to the public and Holder  such  information  and take such
other action as is requested by Holder to enable  Holder to make sales  pursuant
to Rule 144.

      11.  DEFAULT.  The Company  shall  perform its  obligations  and covenants
hereunder and in each and every other  agreement  between the Company and Holder
pertaining to the Indebtedness  evidenced hereby. The following provisions shall
apply upon failure of the Company so to perform.

            11.1 Event of Default.  Any of the following events shall constitute
an "Event of Default" hereunder:

                  11.1.1  Failure by the  Company to pay  principal  of the Note
when due and payable on the Maturity Date;

                  11.1.2  Failure  of the  Company  to  pay  Interest  when  due
hereunder,  which  failure  continues for a period of thirty (30) days after the
due date of the amount involved; or

                  11.1.3  Except  for Events of  Default  set forth in  Sections
11.1.1,  11.1.2, 11.1.4 and 11.1.5, failure of the Company to perform any of the
covenants,  conditions,  provisions or agreements  contained  herein,  or in any
other agreement between the Company and Holder, including but not limited to the
Common Stock Purchase Warrant and Registration  Rights Agreement,  which failure
continues  for a period of ten (10) days after  notice of default has been given
to the Company by Holder; provided, however, that if the nature of the Company's
obligation  is such that more than ten (10) days are required  for  performance,
then an Event of Default  shall not occur if the Company  commences  performance
within such ten (10) day period and thereafter diligently prosecutes the same to
completion; or

                                      -6-
<PAGE>

                  11.1.4  The  entry  of  an  order  for  relief  under  Federal
Bankruptcy Code as to the Company or entry of any order appointing a receiver or
trustee for the  Company or  approving  a petition  in  reorganization  or other
similar relief under  bankruptcy or similar laws in the United States of America
or any other competent jurisdiction,  and if such order, if involuntary,  is not
satisfied or withdrawn within sixty (60) days after entry thereof; or the filing
of a  petition  by the  Company  seeking  any of the  foregoing,  or  consenting
thereto;  or the filing of a petition to take  advantage of any debtor's act; or
making a general  assignment  for the  benefit of  creditors;  or  admitting  in
writing inability to pay debts as they mature.

            11.2  Acceleration.  Upon any Event of Default  (in  addition to any
other rights or remedies provided for under this Note), at the option of Holder,
all sums evidenced hereby, including all principal, Interest, fees and all other
amounts due hereunder,  shall become immediately due and payable. If an Event of
Default in the payment of principal or Interest  should occur and be  continuing
with respect to the Note, Holder may declare the principal,  Interest,  fees and
all other amounts due hereunder to be immediately due and payable.

            11.3 Notice by Company.  Upon the  happening of any Event of Default
specified  in this  paragraph  that is not cured within the  respective  periods
prescribed  above, the Company will give prompt written notice thereof to Holder
of this Note.

            11.4 No Waiver.  Failure of Holder to exercise any option  hereunder
shall not  constitute a waiver of the right to exercise the same in the event of
any subsequent Event of Default,  or in the event of continuance of any existing
Event of Default after demand or performance thereof.

            11.5 Default  Interest.  Default  Interest  will accrue on an unpaid
principal or Interest  due  hereunder  at the rate of thirty  percent  (30%) per
annum upon the  occurrence of any Event of Default until the Event of Default is
cured.  Default Interest shall be payable monthly basis  commencing  thirty (30)
days after the Default Interest has begun accruing.

      12. ASSIGNMENT, TRANSFER OR LOSS OF THE NOTE.

            12.1 No Holder of this Note may  assign,  transfer,  hypothecate  or
sell all or any part of this Note or in any way  alienate or  encumber  the Note
without the express  written  consent of the Company,  the granting or denial of
which shall be within the absolute  discretion  of the  Company.  Any attempt to
effect such transfer  without the consent of the Company shall be null and void.
The  Company  has not  registered  this  Note  under  the Act or the  applicable
securities laws of any state in reliance on exemptions from  registration.  Such
exemptions  depend upon the investment  intent of Holder at the time he acquires
his Note.  Holder is  acquiring  this Note for his own  account  for  investment
purposes  only and not with a view  toward  distribution  or resale of such Note
within the meaning of the Act and the applicable  securities  laws of any state.
The  Company  shall be under no duty to  register  the Note or to comply with an
exemption in connection with the sale,  transfer or other  disposition under the
applicable laws and regulations of the Act or the applicable  securities laws of
any state. The Company may require Holder to provide, at his expense, an opinion
of counsel  satisfactory to the Company to the effect that any proposed transfer
or other assignment of the Note will not result in a violation of the applicable
federal or state securities laws or any other  applicable  federal or state laws
or regulations.

                                      -7-
<PAGE>

            12.2 All expenses,  including  reasonable legal fees incurred by the
Company in connection with any permitted transfer,  assignment or pledge of this
Note will be paid by Holder requesting such transfer, assignment or pledge.

            12.3 Upon receipt of evidence reasonably satisfactory to the Company
of the loss,  theft,  destruction  or mutilation of any Note and, in the case of
any such loss,  theft or destruction of any Note,  upon delivery of an indemnity
bond in such reasonable  amount as the Company may determine (or, in the case of
any Note held by the original  Noteholder,  of an indemnity agreement reasonably
satisfactory to the Company),  or, in the case of any such mutilation,  upon the
surrender of such Note to the Company at is principal  office for  cancellation,
the Company at its expense will execute and deliver, in lieu thereof, a new Note
of like tenor,  dated the date to which interest  hereunder shall have been paid
on such lost, stolen, destroyed or mutilated Note.

            12.4 Subject to Subparagraph 12.1 above,  Holder may, at his option,
either  in  person  or by duly  authorized  attorney,  surrender  this  Note for
registration  of  transfer at the  principal  office of the  Company  and,  upon
payment of any  expenses  associated  with the  transfer,  receive  in  exchange
therefor a Note or Notes,  dated as of the date to which  interest has been paid
on the Note so  surrendered,  each in the  principal  amount  of  $1,000  or any
multiple thereof,  for the same aggregate unpaid principal amount as the Note so
surrendered  and  registered  as  payable  to such  person or  persons as may be
designated by Holder.  Every Note surrendered for registration of transfer shall
be duly  endorsed or shall be  accompanied  by a written  instrument of transfer
duly executed by Holder or his attorney duly authorized in writing.  Every Note,
so made and delivered by the Company in exchange for any Note surrendered, shall
in all other  respects  be in the same form and have the same  terms as the Note
surrendered.  No transfer of any Note shall be valid  unless made in such manner
at the principal office of the Company.

            12.5 The  Company  may treat the  person in whose  name this Note is
registered  as the owner and Holder of this Note for the  purpose  of  receiving
payment of all  principal  of and all  Interest on this Note,  and for all other
purposes  whatsoever,  whether or not such Note shall be overdue and, except for
transfers effected in accordance with this  subparagraph,  the Company shall not
be affected by notice to the contrary.

      13. NOTICES.  All notices provided for herein shall be validly given if in
writing and delivered  personally or sent by certified mail, postage prepaid, to
the office of the Company or such other  address as the Company may from time to
time designate in writing sent by certified mail, postage prepaid,  to Holder at
his  address  set forth  below or such other  address as Holder may from time to
time designate in writing to the Company by certified mail, postage prepaid.

                                      -8-
<PAGE>

      14. USURY. All Interest, Default Interest, fees, charges, goods, things in
action or any other sums or things of value,  or other  contractual  obligations
(collectively,  the "Additional  Sums") paid by the Company  hereunder,  whether
pursuant to this Note or otherwise,  with respect to the Indebtedness  evidenced
hereby,  or any  other  document  or  instrument  in any way  pertaining  to the
Indebtedness,  which, under the laws of the State of Arizona may be deemed to be
Interest with respect to such loan or  Indebtedness,  shall,  for the purpose of
any laws of the State of  California,  which may  limit  the  maximum  amount of
Interest to be charged with respect to such loan or Indebtedness,  be payable by
the Company as, and shall be deemed to be,  Interest and for such purposes only,
the agreed upon and contracted  rate of Interest shall be deemed to be increased
by the  Additional  Sums.  Notwithstanding  any  provision  of this  Note to the
contrary,  the total liability for payments in the nature of Interest under this
Note shall not exceed the limits  imposed by  applicable  law. The Company shall
not  assert a claim,  and shall  actively  resist any  attempts  to compel it to
assert a claim,  respecting  a benefit  under any  present or future  usury laws
against any Holder of this Note.

      15. BINDING EFFECT. This Note shall be binding upon the parties hereto and
their respective heirs, executors, administrators,  representatives,  successors
and permitted assigns.

      16.  COLLECTION FEES.  Except as otherwise  provided  herein,  the Company
shall pay all costs of collection,  including reasonable attorneys' fees and all
costs of suit and  preparation  for such suit (and whether at trial or appellate
level), in the event the unpaid principal amount of this Note, or any payment of
Interest  is not paid when  due,  or in the  event  Holder is made  party to any
litigation because of the existence of the Indebtedness  evidenced by this Note,
or if at any time Holder  should  incur any  attorneys'  fees in any  proceeding
under the Federal  Bankruptcy  Code (or other similar laws for the protection of
debtors  generally)  in  order  to  collect  any  Indebtedness  hereunder  or to
preserve,  protect or realize upon any security  for, or guarantee or surety of,
such Indebtedness  whether suit be brought or not, and whether through courts of
original  jurisdiction,  as well as in  courts  of  appellate  jurisdiction,  or
through a bankruptcy court or other legal proceedings.

      17.  CONSTRUCTION.  This  Note  shall  be  governed  as to  its  validity,
interpretation,  construction,  effect  and  in  all  other  respects  by and in
accordance  with the laws and  interpretations  thereof of the State of Arizona.
Unless  the  context  otherwise  requires,  the use of  terms  in  singular  and
masculine  form shall  include in all  instances  singular and plural number and
masculine, feminine and neuter gender.

      18. SEVERABILITY. In the event any one or more of the provisions contained
in this Note or any future  amendment  hereto shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note or such other
agreement,  and in lieu of each such invalid, illegal or unenforceable provision
there shall be added automatically as a part of this Note a provision as similar
in terms to such invalid,  illegal or unenforceable provision as may be possible
and be valid, legal and enforceable.

      19. ENTIRE AGREEMENT.  This Note Agreement represents the entire agreement
and understanding  between the parties  concerning the subject matter hereof and
supersede   all   prior   and   contemporaneous   agreements,    understandings,
representations and warranties with respect thereto.

                                      -9-
<PAGE>

      20. GOVERNING LAW; JURISDICTION;  JURY TRIAL. All questions concerning the
construction,  validity,  enforcement and  interpretation  of this Note shall be
governed by the internal laws of the State of Arizona,  without giving effect to
any choice of law or conflict of law  provision or rule (whether of the State of
Arizona or any other jurisdictions) that would cause the application of the laws
of any  jurisdictions  other  than  the  State of  Arizona.  Each  party  hereby
irrevocably  submits  to the  exclusive  jurisdiction  of the state and  federal
courts  sitting  in the City of  Phoenix  for the  adjudication  of any  dispute
hereunder  or in  connection  herewith  or  therewith,  or with any  transaction
contemplated  hereby or discussed herein, or in any manner arising in connection
with or related to the transactions contemplated hereby or involving the parties
hereto whether at law or equity and under any contract,  tort or any other claim
whatsoever and hereby irrevocably  waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing or faxing a copy  thereof to such party at the address for such  notices
as listed in this Note and agrees that such service  shall  constitute  good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION  CONTEMPLATED
HEREBY.

      21.    REPRESENTATIONS   AND   WARRANTIES   TO   SURVIVE   CLOSING.    All
representations,  warranties  and covenants  contained  herein shall survive the
execution  and delivery of this Note and the issuance of any  Conversion  Shares
upon the conversion hereof.

      22. HEADINGS. The headings used in this Note are used for convenience only
and are not to be considered in construing or interpreting this Note.

      23. DEFINITIONS.

      "Affiliate"  of any  specified  Person means any other Person  directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control  with  such  specified  Person.  For the  purposes  of this  definition,
"control"  when used with  respect to any  specified  Person  means the power to
direct the  management  and  policies  of such Person  directly  or  indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

      "Board of  Directors"  means,  with  respect to any  Person,  the Board of
Directors  of such Person or any  committee  of the Board of  Directors  of such
Person  duly  authorized  to act on  behalf of the  Board of  Directors  of such
Person.

      "Capital  Stock"  means,  with respect to any Person,  any and all shares,
interests,  equity  participations or other equivalents  (however designated) of
corporate stock or partnership  interests and any and all warrants,  options and
rights with respect thereto  (whether or not currently  exercisable),  including
each class of common stock and preferred stock of such Person.

                                      -10-
<PAGE>

      "GAAP" means generally accepted accounting  principles as in effect in the
United States of America as of the Issue Date.

      "Holder"  means  a  Person  in  whose  name a Note  is  registered  on the
Company's books.

      "Indebtedness" means, without duplication, with respect to any Person, (a)
all  obligations of such Person (i) in respect of borrowed money (whether or not
the  recourse of the lender is to the whole of the assets of such person or only
to a portion  thereof);  (ii) evidenced by bonds,  notes,  debentures or similar
instruments;  (iii) representing the balance deferred and unpaid of the purchase
price  of any  property  or  services  (other  than  accounts  payable  or other
obligations  arising in the  ordinary  course of  business);  (iv)  evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v) for
the payment of money relating to a capitalized  lease  obligation under GAAP; or
(vi)  evidenced  by a letter  of credit or a  reimbursement  obligation  of such
Person with  respect to any letter of credit;  (b) all net  obligations  of such
Person under interest rate swap obligations and foreign currency hedges; (c) all
liabilities of others of the kind described in the preceding  clauses (a) or (b)
that such Person has guaranteed or that are otherwise its legal  liability;  (d)
Indebtedness (as otherwise defined in this definition) of another Person secured
by lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person,  the amount of such obligations being deemed to be the lesser of
(1) the full  amount of such  obligations  so  secured,  and (2) the fair market
value of such asset,  as  determined  in good faith by the Board of Directors of
such Person,  which determination shall be evidenced by a board resolution;  and
(e) any and all deferrals,  renewals,  extensions,  refinancings  and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind  described in any of the  preceding  clauses (a), (b),
(c), (d) or this clause (e), whether or not between or among the same parties.

      "Issue Date" means the date on which the Note is originally issued.

      "Maturity Date" means May 16, 2006.

      "Person" means any individual,  corporation,  partnership,  joint venture,
trust,  estate,  unincorporated  organization  or  government  or any  agency or
political subdivision thereof.

      A  "subsidiary"  of any Person means (i) a corporation a majority of whose
Voting Stock is at the time,  directly or indirectly,  owned by such Person,  by
one or more  subsidiaries  of such  Person  or by  such  Person  and one or more
subsidiaries  of such  Person,  (ii) a  partnership  in which  such  Person or a
subsidiary of such Person is, at the date of determination, a general or limited
partner  of such  partnership,  but only if such  Person  or its  subsidiary  is
entitled  to  receive  more  than  fifty  percent  (50%) of the  assets  of such
partnership  upon its  dissolution,  or (iii) any  other  Person  (other  than a
corporation or partnership) in which such Person, directly or indirectly, at the
date of determination thereof, has (x) at least a majority ownership interest or
(y) the power to elect or direct the  election  of a majority  of  directors  or
other governing body of such Person.

      "Subsidiary" means any subsidiary of the Company.

                                      -11-
<PAGE>

      "Voting Stock" means, with respect to any Person,  securities of any class
or  classes of Capital  Stock in such  Person  entitling  the  holders  thereof,
whether  at all  times or only so long as no senior  class of stock  has  voting
power by reason of any  contingency  to vote in the  election  of members of the
Board of Directors or other governing body of such Person.

      24. MISCELLANEOUS. Except as otherwise provided herein, the Company waives
demand,  diligence,  presentment  for payment and protest,  notice of extension,
dishonor,  maturity  and  protest.  Time is of the essence  with  respect to the
performance of each and every covenant, condition, term and provision hereof.

      IN WITNESS WHEREOF, this Note has been issued on the 15th day of February,
2006.

                                    NEW CENTURY COMPANIES, INC.

                                    By   /s/ David Duquette
                                       -----------------------------------------
                                         David Duquette
                                         Chief Executive Officer

                                      -12-
<PAGE>

Mailing Address of Holder:
Motivated Minds, LLC
3116 E. Shea Boulevard, PMB 191
Phoenix, AZ  85028

Mailing Address of Company:
New Century Companies, Inc.
9835 Santa Fe Springs Road
Santa Fe Springs, CA  90670

                                      -13-
<PAGE>

                                    EXHIBIT A

                                CONVERSION NOTICE

                (To be signed only upon conversion of this Note)

TO:   NEW CENTURY COMPANIES, INC.

The  undersigned,  the registered  holder of the Series A Convertible  Note (the
"Note") of NEW CENTURY  COMPANIES,  INC. (the "Company"),  hereby surrenders the
Note for  conversion  into shares of Common  Stock of the Company  (the  "Common
Stock")  to the  extent  of  $_______  unpaid  principal  amount of the Note and
$_______ unpaid accrued  Interest due under the Note, all in accordance with the
provisions  of such  Note.  The  undersigned  requests  (i)  that a  certificate
representing shares of Common Stock,  bearing the appropriate legends, be issued
to the undersigned, and (ii) if the unpaid principal amount so converted is less
than the entire unpaid  principal amount of the Note, that a new substitute note
representing  the  portion  of  said  unpaid  principal  amount  that  is not so
converted be issued in accordance with the provisions of the Note.

--------------------------------------------------
  (Signature and name of the registered holder)

--------------------------------------------------
  Print Name

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

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