2005 SERIES B SECURED CONVERTIBLE NOTE DUE

EXHIBIT 10.5

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

2005 SERIES B SECURED CONVERTIBLE NOTE DUE [____________], 2010

OF

UNITED ENERGY CORPORATION

Issuance Date: [___________], 2005

This note (“Note”) is one of a duly authorized issue of Notes of United Energy Corporation, a corporation duly organized and existing under the laws of the State of Nevada (the “Company”), designated as the Company's 2005 Series B Secured Convertible Notes Due [____________], 2010 (“Maturity Date”) in an aggregate principal amount (when taken together with the original principal amounts of all other Notes) of $[____________] (together, the “Notes”).

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of [_________________________] or its registered assigns or successors-in-interest (“Holder”) the principal sum of $[__________], together with all accrued but unpaid interest thereon, if any, on the Maturity Date, to the extent such principal amount and interest has not been repaid or converted into the Company's Common Stock, $0.01 par value per share (the “Common Stock”), in accordance with the terms hereof. Interest on the unpaid and unconverted principal balance hereof shall accrue at the rate of six percent (6%) per annum from the date of original issuance hereof (the “Issuance Date”). Payments on the Note shall be made in accordance with Section 1 hereof. Interest on this Note shall accrue daily commencing on the Issuance Date and shall be computed on the basis of a 360-day year, 30-day months and actual days elapsed and shall be payable in accordance with Section 1 hereof. Notwithstanding anything contained herein, this Note shall bear interest on the due and unpaid Principal Amount from and after the occurrence and during the continuance of an Event of Default at the rate (the “Default Rate”) equal to the lower of thirteen percent (13%) per annum or the highest rate permitted by law. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs, then to unpaid interest and fees and any remaining amount to principal.

Except as otherwise provided herein, all payments of principal and interest on this Note shall be made in lawful money of the United States of America by wire transfer of immediately available funds to such account as the Holder may from time to time designate by written notice in accordance with the provisions of this Note or by Company check. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day.

Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Purchase Agreement dated on or about March 18, 2005 pursuant to which the Notes are subject to issuance (the “Purchase Agreement”). For purposes hereof the following terms shall have the meanings ascribed to them below:

“ Approved Stock Plan ” shall mean any employee benefit plan, stock incentive plan or other similar plan or arrangement which has been approved by the Board of Directors of the Company or any authorized committee thereof, pursuant to which the Company's securities may be issued to any employee, officer, consultant or director for services provided to the Company.

“ Bankruptcy Event ” means any of the following events: (a) the Company commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company; (b) there is commenced against the Company any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) the Company makes a general assignment for the benefit of creditors; (f) the Company fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) the Company, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“ Business Day ” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

“ Change in Control Transaction ” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own fifty percent (50%) or more of the voting power, or corresponding voting equity interests, of the surviving corporation after such event (including without limitation any “going private” transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act for twenty percent (20%) or more of the Company's Common Stock), (ii) any person (as defined in Section 13(d) of the

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Exchange Act), together with its affiliates and associates (as such terms are defined in Rule 405 under the Act), beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act without regard to the 60-day exercise period) in excess of fifty percent (50%) of the Company's voting power, (iii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company's Board of Directors on the date thereof, (iv) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

“ Conversion Price ” shall equal [the Conversion Price of the Preferred Stock as of the date of issuance of this Note] (which Conversion Price shall be subject to adjustment as set forth herein).

“ Convertible Securities ” means any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

“ Effective Date ” means the date on which a Registration Statement covering all the Underlying Shares and other Registrable Securities (as defined in the Registration Rights Agreement) is declared effective by the SEC.

“ Effective Registration ” shall mean (i) the resale of all Registrable Securities (as defined in the Registration Rights Agreement) is covered by an effective registration statement in accordance with the terms of the Registration Rights Agreement which registration statement is not subject to any suspension or stop order; (ii) the resale of such Registrable Securities may be effected pursuant to a current and deliverable prospectus that is not subject at the time to any blackout or similar circumstance; and (iii) the requisite number of shares of Common Stock shall have been duly authorized and reserved for issuance as required by the terms of the Purchase Agreement and this Note.

“ Excluded Issuances ” shall mean shares of Common Stock (a) deemed to have been issued by the Company in connection with an Approved Stock Plan (regardless of the applicable exercise or conversion price); (b) deemed to have been issued upon issuance of the Notes or the Warrants, issued upon conversion of the Notes or exercise of the Warrants or otherwise issued in connection with the transactions contemplated in the Purchase Agreement (including any securities of the Company issued or issuable to the Collateral Agent or any of its affiliates in connection with consulting services to be provided to the Company); (c) issued upon exercise of Options or Convertible Securities which are outstanding on the date immediately preceding the Issuance Date, provided that such issuance of shares of Common Stock upon exercise of such Options or Convertible Securities is made pursuant to the terms of such Options or Convertible Securities in effect on the date immediately preceding the Issuance Date, such Options or Convertible Securities are not amended after the date immediately preceding the Issuance Date other than with respect to Options originally issued pursuant to an Approved Stock Plan and the purchase or exercise price provided for in any such Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any such Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock does not change at any time after the Issuance Date; (d) issued to the public

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pursuant to an underwritten offering registered pursuant to the Securities Act (but in all events excluding offerings pursuant to "equity lines" or similar products); (e) issued pursuant to a Strategic Financing; or (f) issued or deemed to be issued by the Company with the prior approval of the Required Holders.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

“ Issuance Date ” shall mean the date of this Note.

“ Options ” shall mean any rights, warrants or options to subscribe for or purchase common stock or Convertible Securities of the Company.

“ Payment Date ” shall mean the first Trading Day of each January, April, July and October. The first Payment Date under this Note shall be the first Trading Day of July 2004.

“ Principal Amount ” shall refer to (i) the original principal amount of this Note, plus (ii) all accrued but unpaid interest hereunder and any default payments owing under the Agreements but not previously paid or added to the Principal Amount, less (iii) all amounts of principal previously repaid or converted.

“ Principal Market ” shall mean a principal market or exchange on which the Common Stock is then listed for trading.

“ Registration Statement ” shall have the meaning set forth in the Registration Rights Agreement.

“ Required Holders ” means the Holders of not less than 50% in aggregate principal amount of the Notes then outstanding exclusive of any Notes then owned by either the Company or any of its Affiliates.

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Shareholder Approval ” means the approval of the stockholders of the Company at a duly convened meeting of stockholders of the Company, for the issuance of all Securities as defined in the Purchase Agreement.

“ Strategic Financing ” shall mean the issuance of Common Stock or Options or Convertible Securities of the Company in connection with any acquisition by the Company, by whatever means, of any business, assets or technologies, or to any strategic investor, vendor, customer, lease or similar arrangement, the primary purpose of which is not to raise equity capital.

“ Trading Day ” shall mean a day on which there is trading on the Principal Market.

The following terms and conditions shall apply to this Note:

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(a)    Interest Only Payments . On each Payment Date beginning three months from the issuance date and continuing through and including [_________], 2010 and continuing on each three month anniversary thereafter, the Company shall pay to the Holder all interest accrued but unpaid as of such Payment Date on the entire Principal Amount of this Note (“Interest Amount”), in accordance with this Section 1.

(b)    Quarterly Payments . On each such Payment Date, the Company shall repay one-twentieth (1/20) of the original Principal Amount, together with interest accrued but unpaid on that Payment Date (collectively, “Quarterly Amount”), in accordance with this Section 1.

(c)    Cash or Common Stock . Subject to the terms hereof, at the election of the holder, the Company shall satisfy payment of the Interest Amount in full on each of the Payment Dates either in cash or in shares of Common Stock (but not both). The holder shall notify the Company of its election to be paid in cash ten days prior to the Payment Date. Failing such notice, the Interest Amount shall be paid in Shares of Common Stock. If the Company is required to pay any Interest Amount in cash on a Payment Date, then on such Payment Date the Company shall pay to the Holder an amount equal to such Interest Amount in satisfaction of such obligation. If the Interest Amount is required to be paid in shares of Common Stock, the number of such shares to be issued for such Payment Date shall be the number determined by dividing (x) the Interest Amount by (y) the Conversion Price as of such Payment Date. Such shares shall be issued and delivered within ten (10) Trading Days following such Payment Date and shall be duly authorized, validly issued, fully paid, non-assessable and free and clear of all encumbrances. If any Holder does not receive the requisite number of shares of Common Stock in the form required above within such five Trading Day period, the Holder shall have the option of either (a) requiring the Company to issue and deliver all or a portion of such shares of Common Stock, or (b) canceling such election to pay such Interest Amount in Common Stock (in whole or in part), in which case the Company shall immediately pay in cash the full such Interest Amount due hereunder or such portion as the Holder specifies is to be paid in cash instead of Common Stock.

(d)    No Payment in Stock . Notwithstanding anything to the contrary herein, the Company shall be prohibited from paying the Interest Amount in shares of Common Stock (and must deliver cash in respect thereof) on the applicable Payment Date if (i) at any time on or after the issuance date there fails to exist, on the applicable Payment Date, an Effective Registration, or (ii) the Company at any time is subject to any Bankruptcy Event, unless otherwise waived in writing by the Holder in whole or in part at the Holder’s option.

(e)    Ownership/Issuance Limitations . Notwithstanding anything to the contrary herein, the Company shall be prohibited from paying the Interest Amount in shares of Common Stock (and must deliver cash in respect thereof) on the applicable Payment Date to the extent, and only to the extent, that such payment in shares of Common Stock would result in the Holder hereof exceeding the limitations contained in Section 10 below. In such event, then the Company on the Payment Date shall pay such portion of the Interest Amount in shares of Common Stock as may be effected without exceeding such limitations, and at the option of the Holder either the Payment Date for the balance of the Interest Amount shall be extended until such time as such stock payment can be made without violating Section 10, or such balance shall be paid in cash.

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(f)           Certain Additional Payments by the Company . Any payment by the Company to the Holder hereunder, whether for principal, interest or otherwise, shall not be subject to any deduction, withholding or offset for any reason whatsoever except to the extent required by law, and the Company represents that to its best knowledge no deduction, withholding or offset is so required for any tax or any other reason.

Section 2 .         Senior Position/Subsequent Debt . The Notes are and shall be senior to all other indebtedness of the Company. So long as any Principal Amount of Notes is outstanding, the Company shall not directly or indirectly, without the consent of the Required Holders, incur or permit to exist any indebtedness which is senior to the Notes, or incur, assume or permit to exist any lien, mortgage, security interest or encumbrance (other than statutory liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof) on any of its assets, except for capital leases, financing for equipment and purchase money security interests.

(a) Conversion Right . Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at such Holder's option, at any time, to convert the outstanding Principal Amount under this Note in whole or in part (provided that in no event shall a conversion pursuant to this Section 3(a) be for less than the lower of (i) the remaining Principal Amount and all accrued and unpaid interest, or (ii) $50,000.00) at the then applicable Conversion Price by delivering to the Company a fully executed notice of conversion in the form of conversion notice attached hereto as Exhibit A (the “Conversion Notice”), which may be initially transmitted by facsimile (provided the original Conversion Notice and this Note is delivered to the Company within 3 Trading Days following such facsimile transmission). Notwithstanding anything to the contrary herein, this Note and the outstanding Principal Amount and all accrued but unpaid interest hereunder shall not be convertible into Common Stock to the extent that such conversion would result in the Holder hereof exceeding the limitations contained in, or otherwise violating the provisions of, Section 10 below. For clarification purposes, any partial conversions of the outstanding Principal Amount under this Note pursuant to this Section 3(a) shall not affect the Company’s obligation to repay the Quarterly Amount as it relates to the remaining Principal Amount as provided in Section 1 above.

(i)    Conversion Date Procedures. Upon conversion of this Note pursuant to Section 3(a) above, the outstanding Principal Amount hereunder shall be converted into such number of fully paid, validly issued and non-assessable shares of Common Stock, free of any liens, claims and encumbrances as is determined by dividing the outstanding Principal Amount being converted by the Conversion Price. The date of any Conversion Notice hereunder shall be referred to herein as the “Conversion Date”. If a conversion under this Note cannot be effected in full in accordance with the terms hereof, or if the Holder is converting less than all of the outstanding Principal Amount hereunder pursuant to a Conversion Notice, the Company shall

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promptly deliver to the Holder (but no later than ten Trading Days after the Conversion Date) a Note (containing the same terms as the Note herein) for such outstanding Principal Amount as has not been converted if this Note has been surrendered to the Company for partial conversion. The Holder shall surrender this Note to the Company within 3 Trading Days of any conversion, in whole or in part. The Company shall return a Note of lesser principal amount, having taken the conversion amount out of the face amount of the surrender Note, if any.

(ii)     Stock Certificates or DWAC. Providing that an Effective Registration Statement is effective, or providing the Conversion Notice is dated more than two (2) years after the Issuance Date (provided the Holder is not then deemed an affiliate of the Company in the case of reliance on the 2-year holding period), the Company will deliver to the Holder not later