REGISTRATION RIGHTS AGREEMENT



          REGISTRATION  RIGHTS AGREEMENT (this  "Agreement"),  dated as of March
31,  2003,  by and  among  Aphton  Corporation,  a  Delaware  corporation,  with
headquarters  located  at  80  SW  Eight  Street,   Miami,  Florida  33130  (the
"Company"),  and the undersigned  buyers (each, a "Buyer" and collectively,  the
"Buyers").

          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  of the
Securities Purchase  Agreement,  to issue and sell to each Buyer (i) convertible
notes of the Company  (the  "Initial  Notes"),  which will be  convertible  into
shares of the Company's  common  stock,  par value $0.001 per share (the "Common
Stock") (as converted,  the "Initial  Conversion Shares") in accordance with the
terms of the Initial  Notes,  and (ii) warrants (the "Initial  Warrants")  which
will  be  exercisable   to  purchase   shares  of  Common  Stock  (as  exercised
collectively, the "Initial Warrant Shares");

          B. In connection with the Securities Purchase Agreement, a Buyer shall
be  required to  purchase  and the Company  shall be required to issue and sell,
upon  the  terms  and  subject  to the  conditions  of the  Securities  Purchase
Agreement,   (i)  additional  convertible  notes  (the  "Additional  Notes"  and
collectively  with the Initial  Notes,  the "Notes"),  which will be convertible
into shares of Common Stock (as converted,  the "Additional  Conversion  Shares"
and collectively with the Initial Conversion Shares, the "Conversion Shares") in
accordance with the terms of the Additional  Notes and (ii) additional  warrants
(the  "Additional  Warrants" and  collectively  with the Initial  Warrants,  the
"Warrants"),  which will be exercisable  to purchase  shares of Common Stock (as
exercised  collectively,  the "Additional  Warrant Shares" and collectively with
the Initial Warrant Shares, the "Warrant Shares"); and

          C. To induce the Buyers 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 Buyers hereby agree as follows:

          1. Definitions.

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

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               a. "Additional  Registrable  Securities" means (i) the Additional
Conversion  Shares issued or issuable upon  conversion of the Additional  Notes,
(ii) the  Interest  Shares  (as  defined  in the Notes)  issued or  issuable  in
connection with the Additional Notes, (iii) the Additional Warrant Shares issued
or issuable  upon  exercise of the  Additional  Warrants  and (iv) any shares of
capital  stock  issued or issuable  with  respect to the  Additional  Conversion
Shares, the Interest Shares, the Additional Notes, the Additional Warrant Shares
or the  Additional  Warrants  as a result of any stock  split,  stock  dividend,
recapitalization,  exchange or similar event or otherwise, without regard to any
limitations  on  conversions  of Additional  Notes or exercise of the Additional
Warrants.

               b.  "Additional  Registration  Statement"  means  a  registration
statement or  registration  statements  of the Company  filed under the 1933 Act
covering any Additional Registrable Securities.

               c. "Business  Day" means any day other than  Saturday,  Sunday or
any other day on which  commercial  banks in The City of New York are authorized
or required by law to remain closed.

               d.  "Effectiveness  Deadline"  means  the  Initial  Effectiveness
Deadline  (as  defined  below) and the  Additional  Effectiveness  Deadline  (as
defined below), as applicable.

               e.  "Filing  Deadline"  means the  Initial  Filing  Deadline  (as
defined  below) and the  Additional  Filing  Deadline  (as  defined  below),  as
applicable.

               f. "Investor"  means a Buyer,  any transferee or assignee thereof
to whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this  Agreement in accordance  with Section 9 and any
transferee  or assignee  thereof to whom a  transferee  or assignee  assigns its
rights under this  Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

               g.  "Initial  Registrable   Securities"  means  (i)  the  Initial
Conversion  Shares issued or issuable upon conversion of the Initial Notes, (ii)
the  Initial  Warrant  Shares  issued or issuable  upon  exercise of the Initial
Warrants,  (iii) the Interest  Shares issued or issuable in connection  with the
Initial  Notes and (iv) any  shares of capital  stock  issued or  issuable  with
respect to the Initial  Conversion  Shares,  the  Initial  Notes,  the  Interest
Shares,  the Initial  Warrant Shares or the Initial  Warrants as a result of any
stock split,  stock  dividend,  recapitalization,  exchange or similar  event or
otherwise, without regard to any limitations on conversions of the Initial Notes
or exercises of the Initial Warrants.

               h.  "Initial   Registration   Statement"   means  a  registration
statement or  registration  statements  of the Company  filed under the 1933 Act
covering the Initial Registrable Securities.

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<PAGE>

               i. "Person" means an individual,  a limited liability  company, a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization and governmental authority or any department or agency thereof.

               j.  "register,"  "registered,"  and  "registration"  refer  to  a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) 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 or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").

               k.  "Registrable   Securities"  means  the  Initial   Registrable
Securities and the Additional Registrable Securities.

               l.  "Registration   Statement"  means  the  Initial  Registration
Statement and the Additional Registration Statement(s).

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

          2. Registration.

               a. Initial Mandatory Registration. The Company shall prepare,
and, as soon as practicable but in no event later than June 5, 2003 (the
"Initial Filing Deadline"), file with the SEC the Registration Statement on Form
S-3 covering the resale of all of the Initial Registrable Securities. In the
event that Form S-3 is unavailable for such a registration, the Company shall
use such other form as is available for such a registration, subject to the
provisions of Section 2(e). The Initial Registration Statement prepared pursuant
hereto shall register for resale at least 13,650,000 shares of Common Stock. The
Initial Registration Statement shall contain (except as otherwise directed by
the Holders) the "Plan of Distribution" attached hereto as Exhibit B. The
Company shall use its best efforts to have the Initial Registration Statement
declared effective by the

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<PAGE>

SEC as soon as  practicable,  but in no event  later  than  August  1, 2003 (the
"Initial Effectiveness Deadline").

               b. Additional Mandatory Registration.  The Company shall prepare,
and,  as soon as  practicable  but in no  event  later  than 15 days  after  the
Additional Closing Date (the "Additional Filing Deadline"), file with the SEC an
Additional  Registration Statement on Form S-3 covering the resale of all of the
Additional Registrable Securities. In the event that Form S-3 is unavailable for
such a  registration,  the Company shall use such other form as is available for
such a  registration,  subject to the provisions of Section 2(e). The Additional
Registration  Statement  prepared  pursuant  hereto shall register for resale at
least  the  product  of (i) 1.5 and (ii) the  number of  Additional  Registrable
Securities as of the trading day  immediately  preceding the date the Additional
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 2(f). The Additional  Registration  Statement  shall contain
(except  as  otherwise  directed  by the  Holders)  the  "Plan of  Distribution"
attached hereto as Exhibit B. The Company shall use its best efforts to have the
Additional  Registration  Statement  declared  effective  by the  SEC as soon as
practicable,  but in no event  later  than the date  which is 90 days  after the
Additional Closing Date (the "Additional Effectiveness Deadline").

               c.  Allocation of Registrable  Securities.  The initial number of
Registrable  Securities included in any Registration Statement and each increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors  based on the number of Registrable  Securities held by
each  Investor at the time the  Registration  Statement  covering  such  initial
number of Registrable  Securities or increase  thereof is declared  effective by
the SEC. In the event that an Investor sells or otherwise  transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable  Securities included in such
Registration Statement for such transferor.  Any shares of Common Stock included
in a  Registration  Statement  and which  remain  allocated  to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining  Investors,  pro rata based on the number of
Registrable  Securities  then held by such  Investors  which are covered by such
Registration  Statement.  In no event shall the Company  include any  securities
other than  Registrable  Securities on any  Registration  Statement  without the
prior written  consent of Buyers holding at least  two-thirds of the Registrable
Securities   other  than   securities   held  on  the  date  hereof  by  Aventis
Pharmaceuticals, Inc. and Mainfield Enterprises Inc.

               d. Legal Counsel.  Subject to Section 5 hereof, legal counsel for
one of the Buyers  shall have the right to review and oversee  any  registration
pursuant to this  Section 2 ("Legal  Counsel"),  which  shall be Schulte  Roth &
Zabel LLP. The Company and Legal Counsel shall  reasonably  cooperate  with each
other in performing the Company's obligations under this Agreement.

               e. Ineligibility for Form S-3. The Company  represents,  warrants
and  covenants  that it  meets  the  requirements  for  the use of Form  S-3 for
registration of the sale by the Buyers and any other Investor of the Registrable
Securities  and the Company has filed and shall file all reports  required to be
filed by the  Company  with  the SEC in a  timely  manner  so as to  obtain  and
maintain such eligibility for the use of Form S-3. In the event that Form S-3 is
not  available  for the  registration  of the resale of  Registrable  Securities
hereunder,  the  Company  shall  (i)  register  the  resale  of the  Registrable
Securities on another  appropriate form reasonably  acceptable to the holders of
at least two-thirds of the Registrable Securities and (ii) undertake to register
the  Registrable  Securities  on Form  S-3 as soon  as such  form is  available,
provided that the Company shall maintain the  effectiveness  of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.

               f.  Sufficient  Number  of  Shares  Registered.  In the event the
number of shares  available  under a  Registration  Statement  filed pursuant to
Section 2(a) or 2(b) is insufficient to cover all of the Registrable  Securities
required to be covered by such Registration Statement or an Investor's allocated
portion of the  Registrable  Securities  pursuant to Section  2(c),  the Company
shall amend the applicable  Registration  Statement,  or file a new Registration
Statement (on the short form available therefor, if applicable),  or both, so as
to cover at least 150% of the number of such  Registrable  Securities  as of the
trading day  immediately  preceding the date of the filing of such  amendment or
new Registration Statement, in each case, as soon as

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<PAGE>

practicable,  but in any event  not  later  than  fifteen  (15)  days  after the
necessity  therefor arises. 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.  For  purposes  of  the  foregoing
provision,  the number of shares available under a Registration  Statement shall
be deemed  "insufficient  to cover all of the Registrable  Securities" if at any
time the number of Registrable  Securities issued or issuable upon conversion of
the  Notes  and  upon  exercise  of  the  Warrants,  if  any,  covered  by  such
Registration  Statement is less than the product  determined by multiplying  (i)
the number of Registrable Securities covered by such Registration  Statement, by
(ii) 1.3. The  calculation  set forth in the  foregoing  sentence  shall be made
without regard to any limitations on the conversion of the Notes or the exercise
of the  Warrants  and such  calculation  shall  assume  that the  Notes  and the
Warrants are then convertible into and exercisable for, as applicable, shares of
Common Stock and the maximum  number of Interest  Shares under the Notes will be
issued,  assuming the initial outstanding  principal amount of the Notes remains
outstanding  through the scheduled  maturity date and assuming no conversions or
redemptions  of the Notes  prior to the  scheduled  maturity  date,  at the then
prevailing Interest Conversion Price (as defined in the Notes),  Conversion Rate
(as  defined  in the  Notes)  or  Warrant  Exercise  Price  (as  defined  in the
Warrants), as applicable.

               g.   Effect  of  Failure   to  File  and   Obtain  and   Maintain
Effectiveness  of  Registration  Statement.  If  (i)  a  Registration  Statement
covering  all the  Registrable  Securities  required  to be covered  thereby and
required to be filed by the Company  pursuant to this Agreement is (A) not filed
with the SEC on or before the  respective  Filing  Deadline or (B) not  declared
effective by the SEC on or before the respective  Effectiveness Deadline or (ii)
on any day after such Registration  Statement has been declared effective by the
SEC,  sales of all the  Registrable  Securities  required to be included on such
Registration  Statement  cannot be made (other than  during an  Allowable  Grace
Period (as  defined in Section  3(q))  pursuant to such  Registration  Statement
(including,  without limitation,  because of a failure to keep such Registration
Statement  effective,  to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement or to register sufficient shares
of Common Stock)  (collectively  the  "Registration  Delays"),  then, as partial
relief for the  damages to any holder by reason of any such  Registration  Delay
(which remedy shall not be exclusive of any other  remedies  available at law or
in  equity),  the  Company  shall pay to each  holder of Notes  relating to such
Registration  Statement  an  amount  in cash  equal  to the  product  of (i) the
aggregate  Principal  (as such term is defined in the  Notes)  convertible  into
Conversion  Shares  included in such  Registration  Statement of such Investor's
Notes  multiplied  by (ii) the  product  of (I) .00033 for the first 30 days and
..00067 for all  subsequent  days  multiplied by (II) the number of days, in each
instance,  after the Registration  Statement has been declared  effective by the
SEC that such  Registration  Statement  is not  available  (other than during an
Allowable Grace Period) for the sale of all the Registrable  Securities required
to be included on such  Registration  Statement.  The payments to which a holder
shall be  entitled  pursuant  to this  Section  2(g) are  referred  to herein as
"Registration Delay Payments."  Registration Delay Payments shall be paid on the
earlier of (I) the last day of the calendar month during which such Registration
Delay  Payments are incurred and (II) the third  Business Day after the event or
failure giving rise to the  Registration  Delay Payments is cured.  In the event
the Company fails to make Registration  Delay Payments in a timely manner,  such
Registration  Delay  Payments  shall bear interest at the rate of 1.5% per month
(prorated  for partial  months)  until paid in full.  If,  after the cure of all
Registration Delays then in effect, there is a subsequent  Registration Delay, a
rate of .00033 will be used to compute the Registration

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<PAGE>

Delay Payment for the first 30 days of the Registration Delay, regardless of the
rate in effect with respect to any prior  Registration Delay at the time of cure
of such Registration Delay.

          3. Related Obligations.

          At such  time  as the  Company  is  obligated  to file a  Registration
Statement with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company
will  use its  best  efforts  to  effect  the  registration  of the  Registrable
Securities in accordance  with the intended  method of disposition  thereof and,
pursuant thereto, the Company shall have the following obligations:

               a. The Company  shall submit to the SEC,  within two (2) Business
Days  after the  Company  learns  that no review  of a  particular  Registration
Statement  will be made by the staff of the SEC or that the staff has no further
comments on a particular  Registration  Statement, as the case may be, a request
for acceleration of effectiveness of such  Registration  Statement to a time and
date not later than 48 hours after the  submission of such request.  The Company
shall keep each  Registration  Statement  effective  pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the  Investors  may sell all
of the Registrable  Securities  covered by such  Registration  Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii)  the  date on  which  the  Investors  shall  have  sold all the
Registrable Securities covered by such Registration Statement (the "Registration
Period").  The Company shall ensure that each 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
(in the case of  prospectuses,  in the light of the  circumstances in which they
were made) not misleading.

               b.  The  Company  shall  prepare  and  file  with  the  SEC  such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  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  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company  filing a report on Form 10-K,  Form
10-Q or Form 8-K or any analogous  report under the  Securities  Exchange Act of
1934,  as amended (the "1934 Act"),  the Company  shall have  incorporated  such
report by reference into such Registration  Statement,  if applicable,  or shall
file such  amendments or  supplements  with the SEC on the same day on which the
1934 Act report is filed which created the  requirement for the Company to amend
or supplement such Registration Statement.

               c. The  Company  shall (A)  permit  Legal  Counsel  to review and
comment upon (i) a Registration  Statement at least five (5) Business Days prior
to its  filing  with the SEC and  (ii) all  amendments  and  supplements  to all
Registration  Statements  (except  for

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<PAGE>

Annual Reports on Form 10-K,  Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K and any similar or successor  reports) within a reasonable number of
days  prior to their  filing  with  the SEC,  and (B) not file any  Registration
Statement or amendment or  supplement  thereto in a form to which Legal  Counsel
reasonably  objects.  The Company shall not submit a request for acceleration of
the  effectiveness  of a  Registration  Statement or any amendment or supplement
thereto without the prior approval of Legal Counsel,  which consent shall not be
unreasonably  withheld.  The Company  shall  furnish to Legal  Counsel,  without
charge, (i) copies of any correspondence from the SEC or the staff of the SEC to
the Company or its representatives relating to any Registration Statement,  (ii)
promptly  after the same is  prepared  and filed  with the SEC,  one copy of any
Registration  Statement  and  any  amendment(s)  thereto,   including  financial
statements and schedules,  all documents  incorporated therein by reference,  if
requested by an Investor,  and all exhibits and (iii) upon the  effectiveness of
any  Registration  Statement,  one  copy  of the  prospectus  included  in  such
Registration  Statement and all amendments and supplements  thereto. The Company
shall  reasonably  cooperate  with Legal  Counsel in  performing  the  Company's
obligations pursuant to this Section 3.

               d. The Company shall furnish to each Investor  whose  Registrable
Securities  are included in any  Registration  Statement,  without  charge,  (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration  Statement and any amendment(s)  thereto,  including financial
statements and schedules,  all documents  incorporated therein by reference,  if
requested by an Investor,  all exhibits and each  preliminary  prospectus,  (ii)
upon the  effectiveness  of any Registration  Statement,  ten (10) copies of the
prospectus  included  in such  Registration  Statement  and all  amendments  and
supplements  thereto  (or such  other  number  of copies  as such  Investor  may
reasonably  request)  and (iii) such other  documents,  including  copies of any
preliminary or final  prospectus,  as such Investor may reasonably  request from
time  to  time  in  order  to  facilitate  the  disposition  of the  Registrable
Securities owned by such Investor.

               e. The Company  shall use its best  efforts to (i)  register  and
qualify,  unless an exemption from registration and qualification  applies,  the
resale by  Investors of the  Registrable  Securities  covered by a  Registration
Statement  under such  other  securities  or "blue  sky" laws of all  applicable
jurisdictions   in  the  United   States,   (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 (x)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(e),  (y) subject  itself
to general taxation in any such  jurisdiction,  or (z) file a general consent to
service of process in any such  jurisdiction.  The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable  Securities of the receipt
by the  Company  of any  notification  with  respect  to the  suspension  of the
registration  or  qualification  of any of the  Registrable  Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its  receipt  of  actual  notice  of the  initiation  or  threatening  of any
proceeding for such purpose.

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<PAGE>

               f. The Company  shall notify Legal  Counsel and each  Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware  of such  event,  as a  result  of  which  the  prospectus  included  in a
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, in light of the circumstances under
which they were  made,  not  misleading  (provided  that in no event  shall such
notice contain any material,  nonpublic  information),  and,  subject to Section
3(q), promptly prepare a supplement or amendment to such Registration  Statement
to correct such untrue  statement  or  omission,  and deliver ten (10) copies of
such  supplement  or amendment to Legal Counsel and each Investor (or such other
number of copies as Legal Counsel or such Investor may reasonably request).  The
Company  shall also  promptly  notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus  supplement or post-effective  amendment
has  been  filed,  and  when a  Registration  Statement  or  any  post-effective
amendment has become  effective  (notification  of such  effectiveness  shall be
delivered  to Legal  Counsel and each  Investor by  facsimile on the same day of
such  effectiveness  and by overnight mail),  (ii) of any request by the SEC for
amendments or supplements to a Registration  Statement or related  prospectus or
related information,  and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

               g. The Company shall use its best efforts to prevent the issuance
of any  stop  order or  other  suspension  of  effectiveness  of a  Registration
Statement,  or the  suspension of the  qualification  of any of the  Registrable
Securities for sale in any  jurisdiction  and, if such an order or suspension is
issued,  to obtain the  withdrawal  of such order or  suspension at the earliest
possible  moment  and to  notify  Legal  Counsel  and each  Investor  who  holds
Registrable  Securities  being  sold  of the  issuance  of  such  order  and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any proceeding for such purpose.

               h. The Company shall make available for inspection  during normal
business  hours and upon 2 Business  Days prior notice by (i) any Investor  (ii)
Legal Counsel and (iii) one firm of accountants or other agents  retained by the
Investors  (collectively,  the "Inspectors"),  all pertinent financial and other
records,  and  pertinent  corporate  documents  and  properties  of the  Company
(collectively,  the "Records"),  as shall be reasonably deemed necessary by each
Inspector,  and cause the Company's officers,  directors and employees to supply
all information which any Inspector may reasonably request;  provided,  however,
that each Inspector shall agree to hold in strict  confidence and shall not make
any disclosure (except to an Investor) or use 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  or is  otherwise  required  under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final,  non-appealable subpoena
or 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 of which
the Inspector has knowledge.  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 written 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

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<PAGE>

confidentiality  agreement between the Company and any Investor) shall be deemed
to limit the Investors' ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.

               i.  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 final,
non-appealable   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  Agreement 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
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

               j. The Company shall use its best efforts either to (i) cause all
the Registrable  Securities covered by a Registration  Statement to be listed on
each 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) secure
designation  and  quotation  of all  the  Registrable  Securities  covered  by a
Registration  Statement on The NASDAQ National Market,  or (iii) if, despite the
Company's best efforts to satisfy the preceding  clause (i) or (ii), the Company
is  unsuccessful  in satisfying the preceding  clause (i) or (ii), to secure the
inclusion  for  quotation  on The NASDAQ  SmallCap  Market for such  Registrable
Securities.  The  Company  shall pay all fees and  expenses in  connection  with
satisfying its obligation under this Section 3(j).

               k.  The  Company  shall  cooperate  with the  Investors  who hold
Registrable  Securities being offered and, to the extent applicable,  facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend)  representing  the  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  Investors  may  reasonably  request and
registered in such names as the Investors may request.

               l. If requested by an Investor,  the Company shall (i) as soon as
practicable  incorporate in a prospectus supplement or post-effective  amendment
such  information  as an Investor  reasonably  requests  to be included  therein
relating to the sale and  distribution  of  Registrable  Securities,  including,
without  limitation,  information  with  respect  to the  number of  Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the  offering of the  Registrable  Securities  to be sold in such
offering;  (ii)  as  soon as  practicable  make  all  required  filings  of such
prospectus  supplement or  post-effective  amendment after being notified of the
matters to be  incorporated  in such  prospectus  supplement  or  post-effective
amendment;  and (iii) as soon as  practicable,  supplement or make amendments to
any  Registration  Statement if reasonably  requested by an Investor holding any
Registrable Securities.

                                      -9-
<PAGE>

               m.  The  Company   shall  use  its  best  efforts  to  cause  the
Registrable Securities covered by a Registration Statement to be registered with
or  approved  by such  other  governmental  agencies  or  authorities  as may be
necessary to consummate the disposition of such Registrable Securities.

               n. The Company  shall make  generally  available  to its security
holders as soon as  practicable,  but not later than  ninety (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with,  and in the manner  provided by, 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 a Registration
Statement.

               o. The Company  shall  otherwise  use its best  efforts to comply
with all  applicable  rules and  regulations  of the SEC in connection  with any
registration hereunder.

               p. Within two (2) Business  Days after a  Registration  Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver,  and shall cause legal counsel for the Company to deliver, to the
transfer  agent for such  Registrable  Securities  (with copies to the Investors
whose  Registrable  Securities  are  included  in such  Registration  Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

               q.  Notwithstanding  anything to the contrary herein, at any time
after the  Registration  Statement has been  declared  effective by the SEC, the
Company may delay the disclosure of material non-public  information  concerning
the  Company  the  disclosure  of which at the  time is not,  in the good  faith
opinion of the Board of Directors of the  Company,  in the best  interest of the
Company and otherwise  required (a "Grace Period");  provided,  that the Company
shall  promptly (i) notify the Investors in writing of the existence of material
non-public  information  giving rise to a Grace  Period  (provided  that in each
notice the Company  will not disclose  the content of such  material  non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the  Investors  in writing of the date on which the Grace Period
ends;  and,  provided  further,  that no Grace Period  shall exceed  twenty (20)
consecutive  days and during any three  hundred sixty five (365) day period such
Grace Periods shall not exceed an aggregate of sixty (60) days and the first day
of any Grace Period must be at least two (2) Business Days after the last day of
any prior Grace Period (each,  an  "Allowable  Grace  Period").  For purposes of
determining the length of a Grace Period above,  the Grace Period shall begin on
and include the date the Investors  receive the notice referred to in clause (i)
and shall end on and  include  the later of the date the  Investors  receive the
notice  referred to in clause (ii) and the date referred to in such notice.  The
provisions of Section 3(f) hereof shall not be  applicable  during the period of
any Allowable  Grace Period.  Upon  expiration of the Grace Period,  the Company
shall again be bound by the first  sentence of Section  3(f) with respect to the
information giving rise thereto unless such material  non-public  information is
no longer  applicable.  Notwithstanding  anything to the  contrary,  the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee  of an  Investor  in  accordance  with the  terms  of the  Securities
Purchase  Agreement in connection  with any sale of Registrable  Securities with
respect to which an Investor has entered into a contract for sale, and delivered
a

                                      -10-
<PAGE>

copy  of  the  prospectus  included  as  part  of  the  applicable  Registration
Statement,  prior to the Investor's  receipt of the notice of a Grace Period and
for which the Investor has not yet settled.

          4. Obligations Of The Investors.

               a.  At  least  seven  (7)  Business   Days  prior  to  the  first
anticipated  filing date of a Registration  Statement,  the Company shall notify
each Investor in writing of the information the Company  requires from each such
Investor  unless  such  Investor  elects  not to  have  any of  such  Investor's
Registrable  Securities included in such Registration  Statement.  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 effectiveness of the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably request.

               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 any
Registration Statement 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 such Registration Statement.

               c. 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(g) or
the first sentence of Section 3(f), such Investor will  immediately  discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the  supplemented or amended  prospectus  contemplated by Section 3(g) or the
first  sentence  of  Section  3(f) or receipt of notice  that no  supplement  or
amendment is required.  Notwithstanding  anything to the  contrary,  the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee  of an  Investor  in  accordance  with the  terms  of the  Securities
Purchase  Agreement in connection  with any sale of Registrable  Securities with
respect to which an Investor  has entered  into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(g) or the first sentence of Section 3(f) and for
which the Investor has not yet settled.

          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 qualifications fees, printers and accounting fees, and
fees and  disbursements of counsel for the Company shall be paid by the Company.
The Company  shall also  reimburse the  Investors  for the  reasonable  fees and
disbursements  of Legal  Counsel  in  connection  with  registration,  filing or
qualification  pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $10,000 for the Initial Registration Statement and $5,000 for each
Additional Registration Statement.

                                      -11-
<PAGE>

          6. Indemnification.

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

               a. To the fullest extent  permitted by law, the Company will, and
hereby does, indemnify,  hold harmless and defend each Investor,  the directors,
officers, partners,  employees, agents,  representatives of, and each Person, if
any, who controls any Investor  within the meaning of Section 15 of the 1933 Act
or Section 20(a) of the 1934 Act (each,  an "Indemnified  Person"),  against any
losses, claims, damages,  liabilities,  judgments,  fines,  penalties,  charges,
costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint
or several,  (collectively,  "Claims")  incurred in investigating,  preparing or
defending any action, claim, suit, inquiry, proceeding,  investigation or appeal
taken from the foregoing by or before any court or governmental,  administrative
or other  regulatory  agency,  body or the SEC,  whether  pending or threatened,
whether or not an indemnified  party is or may be a party thereto  ("Indemnified
Damages"),  to which any of them may become  subject  insofar as such Claims (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
arise out of or are based  upon:  (i) any untrue  statement  or  alleged  untrue
statement of a material fact in a Registration  Statement or any  post-effective
amendment  thereto or in any filing made in connection with the qualification of
the offering under the  securities or other "blue sky" laws of any  jurisdiction
in which Registrable Securities are offered ("Blue Sky Filing"), or the omission
or alleged  omission to state a material fact  required to be stated  therein 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,  (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  pursuant to a Registration  Statement or (iv) any material violation
of this Agreement (the matters in the foregoing  clauses (i) through (iv) being,
collectively, "Violations").  Notwithstanding anything to the contrary contained
herein, the indemnification  agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an  Indemnified  Person  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 such  Indemnified  Person  for  such
Indemnified  Person  expressly for use in connection with the preparation of the
Registration  Statement or any such amendment thereof or supplement  thereto, if
such  prospectus  was timely made  available by the Company  pursuant to Section
3(d);  (ii) with respect to any preliminary  prospectus,  shall not inure to the
benefit  of any such  person  from  whom the  person  asserting  any such  Claim
purchased the  Registrable  Securities  that are the subject  thereof (or to the
benefit of any person  controlling  such  person)  if the  untrue  statement  or
omission of material fact contained in the preliminary  prospectus was corrected
in the  prospectus,  as then amended or  supplemented,  if such  prospectus  was
timely  made  available  by the  Company  pursuant  to  Section  3(d),  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 or failed to deliver

                                      -12-
<PAGE>

the correct  prospectus as required by the 1933 Act and such correct  prospectus
was timely made available pursuant to Section 3(d); (iii) shall not be available
to the extent such Claim is based on a failure of the  Investor to deliver or to
cause to be delivered the prospectus made available by the Company,  including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company  pursuant to Section 3(d);  and (iv) 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 or delayed. 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.

               b. In  connection  with any  Registration  Statement  in which an
Investor  is  participating,  each such  Investor  agrees to  severally  and not
jointly indemnify,  hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the  Registration  Statement and each Person,  if any,
who  controls  the  Company  within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act (each, an "Indemnified Party"),  against any Claim
or Indemnified  Damages to which any of them may become subject,  under the 1933
Act, the 1934 Act or  otherwise,  insofar as such Claim or  Indemnified  Damages
arise out of or are based upon any  Violation,  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 or any such
amendment  thereof or supplement  thereto;  and,  subject to Section 6(c),  such
Investor will promptly reimburse any legal or other expenses reasonably incurred
by an Indemnified  Party in connection with  investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this Section
6(b) and the agreement with respect to contribution contained in Section 7 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 or delayed;  provided,  further,  however, that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages 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 or
proceeding  (including any governmental action or proceeding) involving a Claim,
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

                                      -13-
<PAGE>

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 of not more than one counsel for such  Indemnified  Person
or Indemnified Party to be paid by the indemnifying party, if, in the reasonable
opinion of the Indemnified  Person or 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.  In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall be
selected  by the  Investors  holding  at least  two-thirds  in  interest  of the
Registrable Securities included in the Registration Statement to which the Claim
relates.  The Indemnified Party or Indemnified Person shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying  party and shall furnish to the indemnifying
party  all  information   reasonably  available  to  the  Indemnified  Party  or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the  Indemnified  Party or  Indemnified  Person fully apprised at all
times as to the  status  of the  defense  or any  settlement  negotiations  with
respect thereto. No indemnifying party shall be liable for any settlement of any
action,  claim  or  proceeding  effected  without  its  prior  written  consent,
provided,  however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall,  without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other  compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified  Person of a release from all liability
in respect to such Claim or litigation.  Following  indemnification  as provided
for hereunder,  the indemnifying  party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations  relating to the matter for which indemnification has been made.
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
prejudiced in its ability to defend such action.

               d. 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 and when bills are received or Indemnified Damages
are incurred.

               e. The indemnity agreements contained herein shall be in addition
to (i) any  cause  of  action  or  similar  right  of the  Indemnified  Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

          7. Contribution.  To the extent any indemnification by an indemnifying
party is prohibited or limited by law, then each indemnifying  party, in lieu of
indemnifying such Indemnified  Person or Indemnified  Party, shall contribute to
the amount paid or payable by such Indemnified  Person or Indemnified Party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative  fault  of  the

                                      -14-
<PAGE>

indemnifying party and the Indemnified Person or Indemnified Party in connection
with the  actions,  statements  or  omissions  that  resulted  in such  Claim or
Indemnified Damages as well as any other relevant equitable considerations.  The
relative  fault of such  indemnifying  party  and  such  Indemnified  Person  or
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged  omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or such  Indemnified  Person or  Indemnified  Party,  and the parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such action,  statement or omission.  The amount paid or payable by a party as a
result of any Claim or  Indemnified  Damages  shall be  deemed  to  include  any
reasonable  attorneys'  or other  reasonable  fees or expenses  incurred by such
party in  connection  with any Claim to the extent  such  party  would have been
indemnified  for such fees or expenses if the  indemnification  provided  for in
this Section was available to such party in accordance with its terms.

          The parties  hereto  agree that it would not be just and  equitable if
contribution  pursuant to this Section 7 were  determined by pro rata allocation
or by any  other  method of  allocation  that  does not take  into  account  the
equitable  considerations  referred to in the immediately  preceding  paragraph.
Notwithstanding  the provisions of this Section 7, contribution 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 pursuant to
such  Registration  Statement.  No person  involved  in the sale of  Registrable
Securities  which person is guilty of fraudulent  misrepresentation  (within the
meaning of Section 11(f) of the 1933 Act) in connection  with such sale shall be
entitled to  contribution  from any person  involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation.

          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,  if true, 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

                                      -15-
<PAGE>

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  such  Investor's
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) immediately 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; and (v)
such  transfer   shall  have  been  made  in  accordance   with  the  applicable
requirements of the Securities Purchase Agreement.

          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 the written consent of the Company
and Investors who then hold at least  two-thirds of the Registrable  Securities.
Any  amendment or waiver  effected in  accordance  with this Section 10 shall be
binding upon each Investor and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend, or
consent to a waiver or modification  of, any provision of this Agreement  unless
the same consideration also is offered to all of the parties to this Agreement.

          11. Miscellaneous.

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

               b.  Any  notices,   consents,  waivers  or  other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

               If to the Company:

                                      -16-
<PAGE>

                 Aphton Corporation
                 80 SW Eighth Street
                 Miami, Florida 33130
                 Telephone:     (305) 374-7338
                 Facsimile:     (305) 374-7615
                 Attention:     Philip Gevas

               With a copy to:

                 White & Case LLP
                 1155 Avenue of the Americas
                 New York, New York  10036
                 Telephone:     (212) 819-8200
                 Facsimile:     (212) 354-8113
                 Attention:     Jonathan Kahn, Esq.


               If to Legal Counsel:

                 Schulte Roth & Zabel LLP
                 919 Third Avenue
                 New York, New York 10022
                 Telephone:  (212) 756-2000
                 Facsimile:  (212) 593-5955
                 Attention:  Eleazer Klein, Esq.

If to a Buyer, to its address and facsimile  number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers,  or to such other  address  and/or  facsimile  number
and/or  to the  attention  of such  other  person  as the  recipient  party  has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  or  electronically  generated  by the sender's  facsimile  machine
containing the time, date,  recipient facsimile number and an image of the first
page of such  transmission  or (C)  provided by a courier or  overnight  courier
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

          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. All questions  concerning the construction,  validity,  enforcement
and  interpretation  of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law  provision  or  rule  (whether  of the  State  of  New  York  or  any  other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party (other than Heartland  Group,  Inc.

                                      -17-
<PAGE>

("Heartland")) hereby irrevocably submits to the non- exclusive  jurisdiction of
the state and federal courts sitting The City of New York,  Borough of Manhattan
and the state and federal courts sitting in Milwaukee,  Wisconsin, and Heartland
hereby  irrevocably  submits to the non-exclusive  jurisdiction of the state and
federal  courts  sitting  in  Milwaukee,   Wisconsin,   in  each  case  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 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 a copy thereof to such
party at the address for such 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.  If any  provision  of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or  unenforceability  shall not affect the  validity  or  enforceability  of the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability  of any  provision of this  Agreement in any other  jurisdiction.
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  AGREEMENT  OR  ANY  TRANSACTION
CONTEMPLATED HEREBY.

               e.  This  Agreement,   the  Securities  Purchase  Agreement,  the
Warrants, the Notes and the instruments referenced herein and therein 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,  the Securities  Purchase Agreement,  the Warrant,  the Notes and the
instruments  referenced  herein and therein  supersede all prior  agreements and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof and thereof.

               f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

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

               h. This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  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.

               i.  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

                                      -18-
<PAGE>

in order to carry out the intent and  accomplish  the purposes of this Agreement
and the consummation of the transactions contemplated hereby.

               j. All consents and other  determinations  required to be made by
the  Investors  pursuant  to this  Agreement  shall  be made,  unless  otherwise
specified in this  Agreement,  by Investors  holding at least  two-thirds of the
Registrable Securities, determined as if all of the Notes held by Investors then
outstanding  have been  converted into  Registrable  Securities and all Warrants
then outstanding have been exercised for Registrable  Securities  without regard
to any limitations on conversion of the Notes or on exercises of the Warrants.

               k. 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.

               l. This  Agreement  is  intended  for the  benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

               m. Heartland Value Fund. The Company  understands and agrees that
Heartland  Group,  Inc.  is  entering  into this  Agreement  solely on behalf of
Heartland  Value  Fund and that any claims  that the  Company  may have  against
Heartland  Group,  Inc. under this Agreement or otherwise in connection with the
transactions  contemplated  hereby  shall only be made against the assets of the
Heartland Value Fund.

                                   * * * * * *

                                      -19-
<PAGE>

     IN WITNESS  WHEREOF,  the  parties  have caused  this  Registration  Rights
Agreement to be duly executed as of day and year first above written.

COMPANY:                                     BUYERS:

APHTON CORPORATION                           SF CAPITAL PARTNERS LTD.


By: /s/ Philip Gevas                         By: /s/ Brian H. Davidson
   ------------------------------               --------------------------------
   Name:   Philip Gevas                         Name:  Brian H. Davidson
   Title:  Chief Executive Officer              Title: Authorized Signatory


                                             HEARTLAND GROUP, INC., solely on
                                             behalf of the Heartland Value Fund


                                             By: /s/ Paul T. Beste
                                                --------------------------------
                                                Name:  Paul T. Beste
                                                Title: Vice President and
                                                          Secretary



                                             SMITH BARNEY FUNDAMENTAL VALUE
                                             FUND INC.
                                             (NOMINEE NAME: HORIZON WAVES & CO.)


                                             By: /s/ John G. Goode
                                                --------------------------------
                                                 Name:  John G. Goode
                                                 Title: Managing Director

                                      -20-
<PAGE>



                                          SCHEDULE OF BUYERS
<TABLE>
<Caption>
Buyer                                                                              Buyer's Legal
                                          Buyer Address                      Representative's Address
                                       and Facsimile Numb                       and Facsimile Number
<S>                                   <C>                                         <C>
SF Capital Partners Ltd.             c/o Staro Asset Management LLC               Schulte Roth & Zabel LLP
                                     3600 South Lake Drive                        919 Third Avenue
                                     St. Francis, Wisconsin 53235                 New York, NY 10022
                                     Attention: Brian Davidson                    Attn: Eleazer Klein, Esq.
                                                Dan McNally, Esq.                 Facsimile:  (212) 593-5955
                                     Facsimile:  (414) 294-7700                   Telephone:  (212) 756-2000
                                     Telephone: (414) 294-7000

Heartland Group, Inc.                Heartland Group, Inc.                        Quarles & Brady LLP
                                     789 North Water Street                       411 East Wisconsin Avenue
                                     Milwaukee, Wisconsin 53202                   Milwaukee, Wisconsin 53202
                                     Attention:  Connie Wick                      Attention:  Charles M. Weber, Esq.
                                     Facsimile:  (414) 347-0346                   Facsimile:  (414) 978-8708
                                     Telephone:  (414) 977-8727                   Telephone:  (414) 277-5107

Smith Barney                         c/o Davis Skaggs Investment                  Citigroup Asset Management
Fundamental Value Fund Inc.          Management                                   Mutual Funds Legal Department
(Nominee Name: Horizon Waves         1 Sansome Street, 36th Floor                 300 First Stamford Place, 4th Floor
 & Co.)                              San Francisco, CA  94104                     Stamford, CT  06902
                                     Attention:  John G. Goode                    Attention:  Gordon E. Swartz, Esq.
                                     Facsimile:  (415) 984-6606                   Facsimile:  (203) 890-7068
                                     Telephone:  (415) 984-6513                   Telephone:  (203) 890-7045
</TABLE>


<PAGE>


                                                                       EXHIBIT A


                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT


U.S. Stock Transfer Corporation
1745 Gardena Avenue
Glendale, CA  91204-2991
Attn:  William Garza

         Re:  Aphton Corporation
              ------------------

Ladies and Gentlemen:

          We are  counsel to Aphton  Corporation,  a Delaware  corporation  (the
"Company"),  and have  represented  the Company in connection  with that certain
Securities  Purchase  Agreement,  dated  as of March  31,  2003  (the  "Purchase
Agreement"),  entered into by and among the Company and the buyers named therein
(collectively,  the  "Holders")  pursuant  to which  the  Company  issued to the
Holders its  convertible  notes (the  "Notes"),  convertible  into shares of the
Company's  Common  Stock,  par value $0.001 per share (the  "Common  Stock") and
warrants  exercisable for shares of its Common Stock (the "Warrants").  Pursuant
to the Purchase  Agreement,  the Company  also has entered  into a  Registration
Rights   Agreement  with  the  Holders,   dated  as  of  March  31,  2003  (the
"Registration  Rights Agreement"),  pursuant to which the Company agreed,  among
other  things,  to  register  the  Registrable  Securities  (as  defined  in the
Registration  Rights  Agreement),  including the shares of Common Stock issuable
upon  conversion  of the  Notes  and upon  exercise  of the  Warrants  under the
Securities  Act of 1933,  as amended (the "1933 Act").  In  connection  with the
Company's  obligations under the Registration Rights Agreement,  on ____________
___,  2003,  the Company  filed a  Registration  Statement on Form S-3 (File No.
333-_____________)  (the  "Registration  Statement")  with  the  Securities  and
Exchange  Commission  (the "SEC")  relating to the  Registrable  Securities  (as
defined in the Registration Rights Agreement) which names each of the Holders as
a selling stockholder thereunder.

          In connection  with the foregoing,  we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no knowledge,
after  telephonic  inquiry of a member of the SEC's  staff,  that any stop order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose  are  pending  before,  or  threatened  by, the SEC and the  Registrable
Securities  are  available  for  resale  under  the  1933  Act  pursuant  to the
Registration Statement.

                                                    Very truly yours,

                                                    [ISSUER'S COUNSEL]


                                                    By:_____________________


<PAGE>


CC:      [LIST NAMES OF HOLDERS]


<PAGE>
                                                                       EXHIBIT B


                              PLAN OF DISTRIBUTION


     We are  registering  the shares of common stock issuable upon conversion or
redemption of the convertible notes, as interest shares on the convertible notes
and upon exercise of the warrants to permit the resale of these shares of common
stock by the holders of the convertible notes and the warrants from time to time
after the date of this prospectus.  We will not receive any of the proceeds from
the sale by any selling  stockholder of the shares of common stock. We will bear
all fees and  expenses  incident to our  obligation  to  register  the shares of
common  stock;  provided,  however,  that a  selling  stockholder  will  pay all
applicable underwriting discounts and selling commissions, if any.

     Any  selling  stockholder  may sell all or a portion  of the  common  stock
beneficially  owned by it and  offered  hereby  from  time to time  directly  or
through one or more underwriters,  broker-dealers or agents. If the common stock
is sold through underwriters or broker-dealers,  the selling stockholder will be
responsible for  underwriting  discounts or commissions or agent's  commissions.
The common stock may be sold in one or more  transactions  at fixed  prices,  at
prevailing  market prices at the time of the sale, at varying prices  determined
at the time of sale,  or at  negotiated  prices.  These sales may be effected in
transactions, which may involve crosses or block transactions,

     (1) on any national  securities  exchange or quotation service on which the
securities may be listed or quoted at the time of sale,

     (2) in the over-the-counter market,

     (3) in transactions  otherwise than on these exchanges or systems or in the
over-the-counter market,

     (4) through  the  writing of options,  whether the options are listed on an
options exchange or otherwise,

     (5) through the settlement of short sales;

     (6) through a combination of such methods of sale; or

     (7) through any other method permitted pursuant to applicable law.

     If a selling  stockholder  effects such  transactions  by selling shares of
common  stock  to  or  through  underwriters,  broker-dealers  or  agents,  such
underwriters,  broker-dealers  or agents may receive  commissions in the form of
discounts,   concessions  or  commissions   from  the  selling   stockholder  or
commissions  from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts,  concessions or
commissions as to particular  underwriters,  broker-dealers  or agents may be in
excess of those customary in the types of transactions  involved). In connection
with sales of the common stock or  otherwise,  a selling  stockholder  may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common stock in the course of hedging in positions  they assume.  A
selling  stockholder  may also sell  shares of common


<PAGE>
stock short and deliver  shares of common stock  covered by this  prospectus  to
close out short  positions.  Each  selling  stockholder  may also loan or pledge
shares of common stock to broker-dealers that in turn may sell such shares.

     Each selling stockholder may pledge or grant a security interest in some or
all of the  convertible  notes,  warrants or shares of common  stock owned by it
and, if it defaults in the performance of its secured obligations,  the pledgees
or secured  parties  may offer and sell the shares of common  stock from time to
time pursuant to this prospectus or any amendment to this prospectus  under Rule
424(b)(3)  or other  applicable  provision  of the  Securities  Act of 1933,  as
amended, amending, if necessary, the list of selling stockholders to include the
pledgee,  transferee  or other  successors-in-interest  as selling  stockholders
under this prospectus. Each selling stockholder also may transfer and donate the
shares of common  stock in other  circumstances  in which case the  transferees,
donees, pledgees or other  successors-in-interest will be the selling beneficial
owners for purposes of this prospectus.

     Each  selling  stockholder  and  any  broker-dealer  participating  in  the
distribution  of the shares of common  stock may be deemed to be  "underwriters"
within the  meaning of the  Securities  Act,  and any  commission  paid,  or any
discounts or concessions  allowed, to any such broker-dealer may be deemed to be
underwriting  commissions or discounts  under the Securities  Act. At the time a
particular  offering  of the  shares  of  common  stock  is made,  a  prospectus
supplement,  if required, will be distributed which will set forth the aggregate
amount of shares of common  stock being  offered and the terms of the  offering,
including  the name or names of any  broker-dealers  or agents,  any  discounts,
commissions  and  other  terms  constituting   compensation  from  each  selling
stockholder and any discounts,  commissions or concessions  allowed or reallowed
or paid to broker-dealers.

     Under the securities laws of some states, the shares of common stock may be
sold in such states only through  registered or licensed brokers or dealers.  In
addition,  in some states the shares of common  stock may not be sold unless the
shares have been  registered  or qualified for sale in the state or an exemption
from registration or qualification is available and is complied with.

     There can be no assurance that any selling stockholder will sell any or all
of the shares of common  stock  registered  pursuant  to the shelf  registration
statement, of which this prospectus forms a part.

     Each  selling  stockholder  and  any  other  person  participating  in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended,  and the rules and regulations  thereunder,  including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of  purchases  and sales of any of the  shares of  common  stock by the  selling
stockholders and any other participating person.  Regulation M may also restrict
the ability of any person  engaged in the  distribution  of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the  ability  of any  person  or  entity  to  engage in  market-making
activities with respect to the shares of common stock.

     We will pay all expenses of the  registration of the shares of common stock
pursuant to the registration  rights  agreement,  estimated to be $[ ] in total,
including,  without  limitation,


<PAGE>
Securities and Exchange  Commission  filing fees and expenses of compliance with
state  securities  or  "blue  sky"  laws;  provided,  however,  that  a  selling
stockholder  will  pay  all  applicable   underwriting   discounts  and  selling
commissions,  if  any.  We  will  indemnify  the  selling  stockholders  against
liabilities,  including some liabilities under the Securities Act, in accordance
with the registration  rights  agreement,  or the selling  stockholders  will be
entitled to contribution. We may be indemnified by a selling stockholder against
civil  liabilities,  including  liabilities  under the Securities  Act, that may
arise from any written  information  furnished to us by the selling  stockholder
specifically  for use in this  prospectus,  in accordance with the  registration
rights agreement, or we may be entitled to contribution.

     Once sold under the shelf registration  statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.