REGISTRATION RIGHTS AGREEMENT

           This Registration Rights Agreement (this "Agreement") is made and
entered into as of April 28, 2004, by and between Magic Lantern Group, Inc., a
New York corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser").

           This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof, by and between the Purchaser and the Company (the
"Securities Purchase Agreement"), and pursuant to the Note and the Warrants
referred to therein.

           The Company and the Purchaser hereby agree as follows:

           1.          Definitions. Capitalized terms used and not otherwise
defined herein that are defined in the Securities Purchase Agreement shall have
the meanings given such terms in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:

                         "Commission" means the Securities and Exchange
Commission.

                         "Common Stock" means shares of the Company's common
stock, par value $0.01 per share.

                         "Effectiveness Date" means the 105th day following the
date hereof.

                         "Effectiveness Period" shall have the meaning set forth
in Section 2(a).

                         "Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute.

                         "Filing Date" means, with respect to the Registration
Statement required to be filed hereunder, a date no later than thirty (30) days
following the date hereof and with respect to shares of Common Stock issuable to
the Holder as a result of adjustments to the Fixed Conversion Price made
pursuant to Section 3.4 of the Secured Convertible Term Note or Section 4 of the
Warrant or otherwise, thirty (30) days after the occurrence such event or the
date of the adjustment of the Fixed Conversion Price.

                         "Holder" or "Holders" means the Purchaser or any of its
affiliates or transferees to the extent any of them hold Registrable Securities.

                         "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                         "Indemnifying Party" shall have the meaning set forth
in Section 5(c).

                         "Note" has the meaning set forth in the Securities
Purchase Agreement.

                         "Proceeding" means an action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.

                         "Prospectus" means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                         "Registrable Securities" means the shares of Common
Stock issued upon the conversion of the Note and issuable upon exercise of the
Warrants.

                         "Registration Statement" means each registration
statement required to be filed hereunder, including the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

                         "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                         "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                         "Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                         "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.

                         "Securities Purchase Agreement" means the agreement
between the parties hereto calling for the issuance by the Company of $1,500,000
convertible Note plus Warrants.

                         "Trading Market" means any of the NASD OTC Bulletin
Board, NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock
Exchange or the New York Stock Exchange.

                         "Warrants" means the Common Stock purchase warrants
issued pursuant to the Securities Purchase Agreement.

           2.          Registration.

                        (a)     On or prior to the Filing Date the Company shall
prepare and file with the Commission a Registration Statement covering the
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form [S-3] (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form [S-3], in which case such registration shall be on another appropriate
form in accordance herewith). The Company shall cause the Registration Statement
to become effective and remain effective as provided herein. The Company shall
use its reasonable commercial efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the Effectiveness Date. The
Company shall use its reasonable commercial efforts to keep the Registration
Statement continuously effective under the Securities Act until the date which
is the earlier date of when (i) all Registrable Securities have been sold or
(ii) all Registrable Securities may be sold immediately without registration
under the Securities Act and without volume restrictions pursuant to Rule
144(k), as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the affected Holders (the "Effectiveness Period").

                        (b)     If: (i) the Registration Statement is not filed
on or prior to the Filing Date; (ii) the Registration Statement is not declared
effective by the Commission by the Effectiveness Date; (iii) after the
Registration Statement is filed with and declared effective by the Commission,
the Registration Statement ceases to be effective (by suspension or otherwise)
as to all Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period (without being succeeded
immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year or more than 20 consecutive calendar days (defined as a period of 365 days
commencing on the date the Registration Statement is declared effective); or
(iv) the Common Stock is not listed or quoted, or is suspended from trading on
any Trading Market for a period of five (5) consecutive Trading Days (provided
the Company shall not have been able to cure such trading suspension within 30
days of the notice thereof or list the Common Stock on another Trading Market);
(any such failure or breach being referred to as an "Event," and for purposes of
clause (i) or (ii) the date on which such Event occurs, or for purposes of
clause (iii) the date which such 30 day or 20 consecutive day period (as the
case may be) is exceeded, or for purposes of clause (iv) the date on which such
five (5) Trading Day period is exceeded, being referred to as "Event Date"),
then until the applicable Event is cured, the Company shall pay to each Holder
an amount in cash, as liquidated damages and not as a penalty, equal to 1.50 %
for each thirty (30) day period (prorated for partial periods) on a daily basis
of the original principal amount of the Note. While such Event continues, such
liquidated damages shall be paid not less often than each thirty (30) days. Any
unpaid liquidated damages as of the date when an Event has been cured by the
Company shall be paid within three (3) days following the date on which such
Event has been cured by the Company.

                        (c)     Within three business days of the Effectiveness
Date, the Company shall cause its counsel to issue a blanket opinion in the form
attached hereto as Exhibit A, to the transfer agent stating that the shares are
subject to an effective registration statement and can be reissued free of
restrictive legend upon notice of a sale by Laurus and confirmation by Laurus
that it has complied with the prospectus delivery requirements, provided that
the Company has not advised the transfer agent orally or in writing that the
opinion has been withdrawn. Copies of the blanket opinion required by this
Section 2(c) shall be delivered to Laurus within the time frame set forth above.

           3.         Registration Procedures. If and whenever the Company is
required by the provisions hereof to effect the registration of any Registrable
Securities under the Securities Act, the Company will, as expeditiously as
possible:

                        (a)     prepare and file with the Commission the
Registration Statement with respect to such Registrable Securities, respond as
promptly as possible to any comments received from the Commission, and use its
best efforts to cause the Registration Statement to become and remain effective
for the Effectiveness Period with respect thereto, and promptly provide to the
Purchaser copies of all filings and Commission letters of comment relating
thereto;

                        (b)     prepare and file with the Commission such
amendments and supplements to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement and to keep such Registration Statement
effective until the expiration of the Effectiveness Period;

                        (c)     furnish to the Purchaser such number of copies
of the Registration Statement and the Prospectus included therein (including
each preliminary Prospectus) as the Purchaser reasonably may request to
facilitate the public sale or disposition of the Registrable Securities covered
by the Registration Statement;

                        (d)     use its commercially reasonable efforts to
register or qualify the Purchaser's Registrable Securities covered by the
Registration Statement under the securities or "blue sky" laws of such
jurisdictions within the United States as the Purchaser may reasonably request,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;

                        (e)     list the Registrable Securities covered by the
Registration Statement with any securities exchange on which the Common Stock of
the Company is then listed;

                        (f)     immediately notify the Purchaser at any time
when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has knowledge
as a result of which the Prospectus contained in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and

                        (g)     make available for inspection by the Purchaser
and any attorney, accountant or other agent retained by the Purchaser, all
publicly available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the attorney, accountant or
agent of the Purchaser.

           4.          Registration Expenses. All expenses relating to the
Company's compliance with Sections 2 and 3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Company,
fees and expenses (including reasonable counsel fees) incurred in connection
with complying with state securities or "blue sky" laws, fees of the NASD,
transfer taxes, fees of transfer agents and registrars, fees of, and
disbursements incurred by, one counsel for the Holders (to the extent such
counsel is required due to Company's failure to meet any of its obligations
hereunder), are called "Registration Expenses". All selling commissions
applicable to the sale of Registrable Securities, including any fees and
disbursements of any special counsel to the Holders beyond those included in
Registration Expenses, are called "Selling Expenses." The Company shall only be
responsible for all Registration Expenses.

           5.          Indemnification.

                        (a)     In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the Purchaser, and its officers,
directors and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Purchaser, and each such person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by or on behalf of the Purchaser or any such person
in writing specifically for use in any such document.

                        (b)     In the event of a registration of the
Registrable Securities under the Securities Act pursuant to this Agreement, the
Purchaser will indemnify and hold harmless the Company, and its officers,
directors and each other person, if any, who controls the Company within the
meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact which
was furnished in writing by the Purchaser to the Company expressly for use in
(and such information is contained in) the Registration Statement under which
such Registrable Securities were registered under the Securities Act pursuant to
this Agreement, any preliminary Prospectus or final Prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, provided, however, that the
Purchaser will be liable in any such case if and only to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing to the Company by or on behalf
of the Purchaser specifically for use in any such document. Notwithstanding the
provisions of this paragraph, the Purchaser shall not be required to indemnify
any person or entity in excess of the amount of the aggregate net proceeds
received by the Purchaser in respect of Registrable Securities in connection
with any such registration under the Securities Act.

                        (c)     Promptly after receipt by a party entitled to
claim indemnification hereunder (an "Indemnified Party") of notice of the
commencement of any action, such Indemnified Party shall, if a claim for
indemnification in respect thereof is to be made against a party hereto
obligated to indemnify such Indemnified Party (an "Indemnifying Party"), notify
the Indemnifying Party in writing thereof, but the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
such Indemnified Party other than under this Section 5(c) and shall only relieve
it from any liability which it may have to such Indemnified Party under this
Section 5(c) if and to the extent the Indemnifying Party is prejudiced by such
omission. In case any such action shall be brought against any Indemnified Party
and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such Indemnified Party, and, after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume and undertake the
defense thereof, the Indemnifying Party shall not be liable to such Indemnified
Party under this Section 5(c) for any legal expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof; if the
Indemnified Party retains its own counsel, then the Indemnified Party shall pay
all fees, costs and expenses of such counsel, provided, however, that, if the
defendants in any such action include both the indemnified party and the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, the Indemnified Party shall have the right to select
one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.

                        (d)     In order to provide for just and equitable
contribution in the event of joint liability under the Securities Act in any
case in which either (i) the Purchaser, or any officer, director or controlling
person of the Purchaser, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of the Purchaser or such officer, director or
controlling person of the Purchaser in circumstances for which indemnification
is provided under this Section 5; then, and in each such case, the Company and
the Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Purchaser is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the Registration Statement bears to the public offering price of all
securities offered by such Registration Statement, provided, however, that, in
any such case, (A) the Purchaser will not be required to contribute any amount
in excess of the public offering price of all such securities offered by it
pursuant to such Registration Statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.

           6.          Representations and Warranties.

                        (a)     The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and, except with respect
to certain matters which the Company has disclosed to the Purchaser on Schedule
4.21 to the Securities Purchase Agreement, the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has filed (i) its
Annual Report on Form 10-K for its fiscal year ended December 31, 2003 and (ii)
its Quarterly Report on Form 10-Q for the fiscal periods ended March 30, 2003,
June 30, 2003 and September 31, 2003 (collectively, the "SEC Reports"). Each SEC
Report was, at the time of its filing, in substantial compliance with the
requirements of its respective form and none of the SEC Reports, nor the
financial statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present in
all material respects the financial condition, the results of operations and the
cash flows of the Company and its subsidiaries, on a consolidated basis, as of,
and for, the periods presented in each such SEC Report.

                        (b)     The Common Stock is listed for trading on the
American Stock Exchange and satisfies all requirements for the continuation of
such listing. The Company has not received any notice that its Common Stock will
be delisted from the American Stock Exchange (except for prior notices which
have been fully remedied) or that the Common Stock does not meet all
requirements for the continuation of such listing.

                        (c)     Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Securities pursuant to
the Securities Purchase Agreement to be integrated with prior offerings by the
Company for purposes of the Securities Act which would prevent the Company from
selling the Common Stock pursuant to Rule 506 under the Securities Act, or any
applicable exchange-related stockholder approval provisions, nor will the
Company or any of its affiliates or subsidiaries take any action or steps that
would cause the offering of the Securities to be integrated with other
offerings.

                        (d)     The Warrants, the Note and the shares of Common
Stock which the Purchaser may acquire pursuant to the Warrants and the Note are
all restricted securities under the Securities Act as of the date of this
Agreement. The Company will not issue any stop transfer order or other order
impeding the sale and delivery of any of the Registrable Securities at such time
as such Registrable Securities are registered for public sale or an exemption
from registration is available, except as required by federal or state
securities laws.

                        (e)     The Company understands the nature of the
Registrable Securities issuable upon the conversion of the Note and the exercise
of the Warrant and recognizes that the issuance of such Registrable Securities
may have a potential dilutive effect. The Company specifically acknowledges that
its obligation to issue the Registrable Securities is binding upon the Company
and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

                        (f)     Except for agreements made in the ordinary
course of business, there is no agreement that has not been filed with the
Commission as an exhibit to a registration statement or to a form required to be
filed by the Company under the Exchange Act, the breach of which could
reasonably be expected to have a material and adverse effect on the Company and
its subsidiaries, or would prohibit or otherwise interfere with the ability of
the Company to enter into and perform any of its obligations under this
Agreement in any material respect.

                        (g)     The Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for the full
conversion of the Note and exercise of the Warrants.

           7.          Miscellaneous.

                        (a)     Remedies. In the event of a breach by the
Company or by a Holder, of any of their respective obligations under this
Agreement, each Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.

                        (b)     No Piggyback on Registrations. Except as and to
the extent specified in Schedule 7(b) hereto, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 7(b) hereto, the Company has not previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been fully satisfied.

                        (c)     Compliance. Each Holder covenants and agrees
that it will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.

                        (d)     Discontinued Disposition. Each Holder agrees by
its acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of a Discontinuation Event (as defined
below), such Holder will forthwith discontinue disposition of such Registrable
Securities under the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the
provisions of this paragraph. For purposes of this Section 7(d), a
"Discontinuation Event" shall mean (i) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders); (ii) any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                        (e)     Piggy-Back Registrations. If at any time during
the Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine to
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) 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 employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen days after receipt
of such notice, any such Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such holder requests to be registered to the extent the Company may
do so without violating registration rights of others which exist as of the date
of this Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required the consent
of any selling stockholder(s) to such inclusion under such registration
statement.

                        (f)     Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

                        (g)     Notices. Any notice or request hereunder may be
given to the Company or the Purchaser at the respective addresses set forth
below or as may hereafter be specified in a notice designated as a change of
address under this Section 7(g). Any notice or request hereunder shall be given
by registered or certified mail, return receipt requested, hand delivery,
overnight mail, Federal Express or other national overnight next day carrier
(collectively, "Courier") or telecopy (confirmed by mail). Notices and requests
shall be, in the case of those by hand delivery, deemed to have been given when
delivered to any party to whom it is addressed, in the case of those by mail or
overnight mail, deemed to have been given three (3) business days after the date
when deposited in the mail or with the overnight mail carrier, in the case of a
Courier, the next business day following timely delivery of the package with the
Courier, and, in the case of a telecopy, when confirmed. The address for such
notices and communications shall be as follows:

  If to the Company: Magic Lantern Group, Inc.
1075 North Service Road West
Suite 27
Oakville, Ontario L6M 2G2
Attention:Robert A. Goddard
President and CEO
Facsimile:           with a copy to:

Hodgson Russ LLP
150 King Street West Suite 2039
Toronto, Ontario M5H 1J9

          Attention: Joseph P. Galda
Facsimile: 416-595-5021       If to a Purchaser: To the address set forth under
such Purchaser name on the signature pages hereto.       If to any other Person
who is then the registered Holder: To the address of such Holder as it appears
in the stock transfer books of the Company

or such other address as may be designated in writing hereafter in accordance
with this Section 7(g) by such Person.

                        (h)     Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the prior
written consent of each Holder. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Notes and the
Security Agreement with the prior written consent of the Company, which consent
shall not be unreasonably withheld.

                        (i)     Execution and Counterparts. This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and, all of which taken together shall constitute
one and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

                        (j)     Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement shall
be commenced exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan. Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement 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 hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

                        (k)     Cumulative Remedies. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.

                        (l)     Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

                        (m)     Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

           IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

Magic Lantern Group, Inc.   Laurus Master Fund, Ltd.             By:     By:  
Name:     Name:   Title:     Title:             Address for Notices:          
825 Third Avenue − 14th Floor     New York, NY 10022     Attention: David Grin  
  Facsimile: 212-541-4434

 

 

 

EXHIBIT A

[Month __, 2004]

[Continental Stock Transfer
& Trust Company
Two Broadway
New York, NY 10004
Attn: William Seegraber]  

Re: [Company Name]. Registration Statement on Form [S-3]

Ladies and Gentlemen:

        As counsel to[company name] , a Delaware corporation (the "Company"), we
have been requested to render our opinion to you in connection with the resale
by the individuals or entitles listed on Schedule A attached hereto (the
"Selling Stockholders"), of an aggregate of [amount]shares (the "Shares") of the
Company's Common Stock.

           A Registration Statement on Form [S-3] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. Enclosed
is the Prospectus dated [date]. We understand that the Shares are to be offered
and sold in the manner described in the Prospectus.

           Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our opinion
that the Shares have been registered for resale under the Act and new
certificates evidencing the Shares upon their transfer or re-registration by the
Selling Stockholders may be issued without restrictive legend. We will advise
you if the registration statement is not available or effective at any point in
the future.

Very truly yours,

 

[Company counsel]