SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"),  dated as of July __,
2005, by and among UTIX GROUP, INC., a Delaware corporation,  with an address at
7 New England Executive Park, Suite 610,  Burlington,  MA 01803 (the "COMPANY"),
and  each  of the  purchasers  set  forth  on  SCHEDULE  A  hereto  (the  each a
"Purchaser,"  and  collectively,   the  "PURCHASERS").   (The  Company  and  the
Purchasers  may  sometimes be referred to herein  individually  as a "PARTY" and
collectively as the "PARTIES.")

         WHEREAS:

         A. The Company and the  Purchasers  are executing and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Rule 506 under  Regulation D  ("REGULATION  D") as  promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");

         B. The Purchasers  desire to purchase and the Company  desires to issue
and sell,  upon the terms and  conditions  set forth in this  Agreement  (i) 12%
convertible  promissory  notes of the Company,  in the form  attached  hereto as
EXHIBIT A, in the  aggregate  principal  amount of One Million Three Hundred and
Fifty Thousand ($1,350,000) Dollars (together with any promissory note(s) issued
in  replacement  thereof or as a  dividend  thereon or  otherwise  with  respect
thereto  in  accordance  with  the  terms  thereof,   the  "PROMISSORY  NOTES"),
convertible  into  shares of common  stock,  $0.001 par value per share,  of the
Company (the "COMMON STOCK"),  upon the terms and subject to the limitations and
conditions set forth in such Promissory  Notes, and (ii) Class A Warrants of the
Company,  in the form attached  hereto as EXHIBIT B, to purchase an aggregate of
Ten Million  Eight  Hundred  Thousand  (10,800,000)  shares of Common Stock (the
"WARRANTS"),  upon the terms and subject to the  limitations  and conditions set
forth in such Warrants;

         C. In addition to the  Promissory  Notes and Warrants,  contemporaneous
with the  execution  and  delivery of this  Agreement,  the  parties  hereto are
executing and delivering a Cash Collateral Escrow Agreement in the form attached
hereto as EXHIBIT C and a Confession of Judgment in the principal  amount of the
Promissory Notes together with all accrued and unpaid interest thereon.

         D. Each  Purchaser  wishes to purchase,  upon the terms and  conditions
stated in this Agreement,  such principal  amount of Promissory Notes and number
of Warrants as is set forth on SCHEDULE A hereto.

         NOW THEREFORE,  the Company and each of the  Purchasers  severally (and
not jointly) hereby agree as follows:

         1. PURCHASE AND SALE OF PROMISSORY NOTES AND WARRANTS.

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                  a. PURCHASE OF PROMISSORY  NOTES AND WARRANTS.  On the Closing
Date (as defined below),  the Company shall issue and sell to each Purchaser and
each  Purchaser  severally  agrees to purchase  from the Company such  principal
amount of Promissory  Notes and number of Warrants as is set forth on SCHEDULE A
hereto.

                  b.  FORM OF  PAYMENT.  (i) On the  Closing  Date  (as  defined
below),  (i) each Purchaser shall pay a purchase price for the Promissory  Notes
and the  Warrants to be issued and sold to it at the Closing (as defined  below)
in an amount equal to ninety-seven  (97%) percent of the principal amount of the
Promissory Note (the "PURCHASE PRICE") by wire transfer of immediately available
funds (or as otherwise  mutually agreed) to the Company,  in accordance with the
Company's written wiring instructions,  against delivery of the Promissory Notes
in the principal  amount equal to the Purchase  Price and the number of Warrants
as is set forth beside such Purchaser's name on SCHEDULE A hereto,  and (ii) the
Company shall deliver such Promissory Notes and Warrants duly executed on behalf
of the Company, to such Purchaser, against delivery of such Purchase Price.

                  (ii)  NOTWITHSTANDING  THE PURCHASE PRICE SET FORTH IN SECTION
1(b)(i)  ABOVE,  THE  PURCHASER  HEREBY  ACKNOWLEDGES  THAT IF THE  PURCHASER IS
PURCHASING THE PROMISSORY NOTES AND WARRANTS  THROUGH A  BROKER-DEALER,  FINDER,
PLACEMENT  AGENT  OR  ANY  OTHER  THIRD  PARTY  (HEREINAFTER  REFERRED  TO  AS A
"FINDER"),  THE PURCHASER  WILL BE PAYING A PURCHASE  PRICE EQUAL TO ONE HUNDRED
(100%) PERCENT OF THE PRINCIPAL  AMOUNT OF THE  PROMISSORY  NOTE.  FURTHER,  THE
COMPANY MAY COMPENSATE A FINDER WHO INTRODUCES THE PURCHASER TO THE COMPANY AT A
RATE NOT EXCEEDING THREE (3%) PERCENT OF THE PRINCIPAL  AMOUNT OF THE PROMISSORY
NOTE.

                  c. CLOSING DATE.  Subject to the  satisfaction  (or waiver) of
the conditions  thereto set forth in Section 6 and Section 7 below, the date and
time of the issuance and sale of the Promissory Notes and the Warrants  pursuant
to this  Agreement  (the  "CLOSING  DATE") shall be July 18, 2005, or such other
mutually agreed upon time. The closing of the transactions  contemplated by this
Agreement  (the  "CLOSING")  shall occur on the  Closing  Date at the offices of
Hodgson Russ LLP,  located at 60 East 42nd Street,  New York, New York 10165, or
at such other location as may be agreed to be the parties.

         2. PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Purchaser severally
(and not  jointly)  represents  and  warrants to the  Company  solely as to such
Purchaser that:

                  a. INVESTMENT PURPOSE. As of the date hereof, the Purchaser is
purchasing  the  Promissory  Notes and the shares of Common Stock  issuable upon
conversion  of or  otherwise  pursuant to the  Promissory  Notes (such shares of
Common  Stock being  referred  to herein as the  "CONVERSION  SHARES"),  and the
Warrants  and the shares of Common Stock  issuable  upon  exercise  thereof (the
"WARRANT  SHARES" and,  collectively  with the  Promissory  Notes,  Warrants and
Conversion Shares, the "SECURITIES"), for its own account and not with a present
view towards

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<PAGE>

the public sale or distribution thereof,  except pursuant to sales registered or
exempted from registration under the 1933 Act; PROVIDED, HOWEVER, that by making
the  representations  herein,  the  Purchaser  does not agree to hold any of the
Securities  for any minimum or other  specific  term and  reserves  the right to
dispose  of the  Securities  at any time in  accordance  with or  pursuant  to a
registration statement or an exemption under the 1933 Act.

                  b. ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED
INVESTOR").

                  c. RELIANCE ON EXEMPTIONS.  The Purchaser understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the  Company is relying  upon the truth and  accuracy  of, and the
Purchaser's  compliance  with,  the  representations,   warranties,  agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine  the  availability  of  such  exemptions  and the  eligibility  of the
Purchaser to acquire the Securities.

                  d. INFORMATION.  The Purchaser and its advisors,  if any, have
been  furnished  with all  materials  relating  to the  business,  finances  and
operations  of the Company and  materials  relating to the offer and sale of the
Securities  which have been  requested  by the  Purchaser or its  advisors.  The
Purchaser and its advisors,  if any, have been afforded the  opportunity  to ask
questions of the Company.  Neither such  inquiries  nor any other due  diligence
investigation  conducted by Purchaser or any of its advisors or  representatives
shall  modify,  amend  or  affect  Purchaser's  right  to rely on the  Company's
representations  and  warranties  contained  in Section 3 below.  The  Purchaser
understands that its investment in the Securities  involves a significant degree
of risk.

                  e.  GOVERNMENTAL  REVIEW.  The Purchaser  understands  that no
United States  federal or state agency or any other  government or  governmental
agency  has  passed  upon or  made  any  recommendation  or  endorsement  of the
Securities.

                  f. TRANSFER OR RE-SALE. The Purchaser understands that (i) the
sale or re-sale of the Securities has not been and is not being registered under
the 1933 Act or any applicable state securities laws, and the Securities may not
be  transferred  unless (A) the  Securities  are sold  pursuant to an  effective
registration  statement  under  the  1933  Act,  (B) the  Purchaser  shall  have
delivered to the Company an opinion of counsel  (which opinion shall be in form,
substance   and  scope   customary   for  opinions  of  counsel  in   comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or  transferred  pursuant to an exemption from such  registration,  (C) the
Securities are sold or  transferred  to an  "affiliate"  (as defined in Rule 144
promulgated  under  the 1933 Act (or a  successor  rule)  ("RULE  144"))  of the
Purchaser  who  agrees to sell or  otherwise  transfer  the  Securities  only in
accordance with this Section 2(f) and who is an Accredited Investor,  or (D) the
Securities are sold pursuant to Rule 144; (ii) any sale of such  Securities made
in  reliance on Rule 144 may be made only in  accordance  with the terms of said
Rule and further, if said Rule is not applicable, any re-sale of such Securities
under  circumstances in which the seller (or the person through whom the sale is

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<PAGE>

made) may be deemed to be an  underwriter  (as that term is  defined in the 1933
Act) may require  compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC  thereunder;  and (iii) neither the Company nor
any other person is under any obligation to register such  Securities  under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any  exemption  thereunder.  Notwithstanding  the  foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection with a BONA FIDE margin account or other lending arrangement.

                  g. LEGENDS.  The  Purchaser  understands  that the  Promissory
Notes and the Warrants and, until such time as the Conversion Shares and Warrant
Shares  have  been  registered  under the 1933 Act,  or  otherwise,  may be sold
pursuant to Rule 144 without any  restriction  as to the number of securities as
of a particular  date that can then be immediately  sold, the Conversion  Shares
and Warrant Shares may bear a restrictive  legend in substantially the following
form  (and  a  stop-transfer  order  may  be  placed  against  transfer  of  the
certificates for such Securities):

                  "THE   SECURITIES    REPRESENTED   BY   THIS
                  CERTIFICATE  HAVE NOT BEEN REGISTERED  UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED.  THE
                  SECURITIES  MAY NOT BE SOLD,  TRANSFERRED OR
                  ASSIGNED  IN  THE  ABSENCE  OF AN  EFFECTIVE
                  REGISTRATION  STATEMENT  FOR THE  SECURITIES
                  UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN
                  FORM,  SUBSTANCE  AND  SCOPE  CUSTOMARY  FOR
                  OPINIONS    OF   COUNSEL    IN    COMPARABLE
                  TRANSACTIONS,   THAT   REGISTRATION  IS  NOT
                  REQUIRED  UNDER  SAID  ACT  OR  UNLESS  SOLD
                  PURSUANT TO RULE 144 UNDER SAID ACT."

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped,  if, unless otherwise required by applicable state securities laws, (i)
such Security is registered for sale under an effective  registration  statement
filed under the 1933 Act or otherwise  may be sold  pursuant to Rule 144 without
any  restriction as to the number of securities as of a particular date that can
then be  immediately  sold,  or (ii) such holder  provides  the Company  with an
opinion of counsel,  in form,  substance  and scope  customary  for  opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such  Security may be made without  registration  under the 1933 Act and such
sale or transfer is  effected,  or (iii) such holder  provides  the Company with
reasonable  assurances  that such Security can be sold pursuant to Rule 144. The
Purchaser  agrees  to sell all  Securities,  including  those  represented  by a
certificate(s)  from which the  legend  has been  removed,  in  compliance  with
applicable prospectus delivery requirements, if any.

                  h.  AUTHORIZATION;  ENFORCEMENT.  This Agreement has been duly
and validly  authorized.  This Agreement has been duly executed and delivered on
behalf of the  Purchaser,  and this  Agreement  constitutes  a valid and binding
agreement of the Purchaser enforceable in accordance with its terms.

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<PAGE>

                  i. RESIDENCY.  The Purchaser is a resident of the jurisdiction
set forth immediately below such Purchaser's name on the signature pages hereto.

         3.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents and warrants to each Purchaser that:

                  a. ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries  (as defined  below),  if any,  is a  corporation  duly  organized,
validly  existing and in good  standing  under the laws of the  jurisdiction  in
which it is incorporated, with full power and authority (corporate and other) to
own,  lease,  use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted.  SCHEDULE 3(a) sets forth
a list of all of the  Subsidiaries of the Company and the  jurisdiction in which
each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a  foreign  corporation  to do  business  and is in good  standing  in  every
jurisdiction  in which its  ownership  or use of  property  or the nature of the
business  conducted by it makes such  qualification  necessary  except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.  "MATERIAL  ADVERSE  EFFECT"  means any material  adverse  effect on the
business, operations, assets, financial condition or prospects of the Company or
its Subsidiaries,  if any, taken as a whole, or on the transactions contemplated
hereby or by the  agreements  or  instruments  to be entered into in  connection
herewith.  "Subsidiaries"  means any corporation or other organization,  whether
incorporated  or  unincorporated,   in  which  the  Company  owns,  directly  or
indirectly, any equity or other ownership interest.

                  b.  AUTHORIZATION;   ENFORCEMENT.  (i)  The  Company  has  all
requisite  corporate  power  and  authority  to  enter  into  and  perform  this
Agreement,  the  Promissory  Notes,  and the  Warrants,  and to  consummate  the
transactions  contemplated  hereby and thereby and to issue the  Securities,  in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this  Agreement,  the  Promissory  Notes and the Warrants by the Company and the
consummation  by  it  of  the  transactions   contemplated  hereby  and  thereby
(including  without  limitation,  the issuance of the  Promissory  Notes and the
Warrants and the issuance and reservation for issuance of the Conversion  Shares
and Warrant Shares issuable upon conversion or exercise  thereof) have been duly
authorized  by the  Company's  Board of  Directors  and no  further  consent  or
authorization  of the Company,  its Board of Directors,  or its  shareholders is
required,  (iii) this  Agreement  has been duly  executed  and  delivered by the
Company, and (iv) this Agreement constitutes, and upon execution and delivery by
the Company of the Promissory  Notes and the Warrants,  each of such instruments
will  constitute,   a  legal,  valid  and  binding  obligation  of  the  Company
enforceable against the Company in accordance with its terms.

                  c.  CAPITALIZATION.  As of the  date  hereof,  the  authorized
capital stock of the Company  consists of (i) (A)  100,000,000  shares of Common
Stock,  of which  37,640,967  shares are issued and  outstanding,  (B) excluding
shares which may be reserved for issuance pursuant to the Company's stock option
plans, 20,903,144 shares are reserved for issuance pursuant to securities (other
than the Promissory Notes and the Warrants) exercisable for, or convertible into
or  exchangeable  for  shares of Common  Stock,  and (C)  36,000,000  shares are
reserved for issuance upon  conversion of the  Promissory  Notes and exercise of
the Warrants (subject to

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<PAGE>

adjustment  pursuant to the Company's covenant set forth in Section 4(f) below);
and (ii)  25,000,000  shares of  preferred  stock,  none of which are  issued or
outstanding.  All of such  outstanding  shares of  capital  stock  are,  or upon
issuance will be, duly authorized, validly issued, fully paid and nonassessable.
No shares of capital  stock of the Company are subject to  preemptive  rights or
any other  similar  rights of the  stockholders  of the  Company or any liens or
encumbrances  imposed  through  the  actions or  failure to act of the  Company.
Except  as  disclosed  in  SCHEDULE  3(c),  as of the  effective  date  of  this
Agreement,  (i) there are no outstanding  options,  warrants,  scrip,  rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character  whatsoever  relating to,
or  securities  or rights  convertible  into or  exchangeable  for any shares of
capital  stock of the Company or any of its  Subsidiaries,  or  arrangements  by
which the  Company or any of its  Subsidiaries  is or may become  bound to issue
additional  shares of capital  stock of the Company or any of its  Subsidiaries,
(ii) there are no agreements or  arrangements  under which the Company or any of
its  Subsidiaries  is  obligated  to  register  the  sale of any of its or their
securities  under the 1933 Act,  and (iii) there are no  anti-dilution  or price
adjustment provisions contained in any security issued by the Company (or in any
agreement  providing  rights to security  holders) that will be triggered by the
issuance of the Promissory Notes, the Warrants, the Conversion Shares or Warrant
Shares.  The Company has furnished to the Purchaser  true and correct  copies of
the  Company's  Certificate  of  Incorporation  as in effect on the date  hereof
("CERTIFICATE OF  INCORPORATION"),  the Company's  By-laws,  as in effect on the
date hereof (the "BY-LAWS"), and the terms of all securities convertible into or
exercisable  for Common  Stock of the  Company  and the  material  rights of the
holders thereof in respect thereto. The Company shall provide the Purchaser with
a written update of this representation  signed by the Company's Chief Executive
or Chief Financial Officer on behalf of the Company as of the Closing Date.

                  d.  ISSUANCE  OF SHARES.  The  Conversion  Shares and  Warrant
Shares are (or shall be) duly  authorized  and reserved for issuance  and,  upon
conversion  of the  Promissory  Notes and exercise of the Warrants in accordance
with  their  respective   terms,   will  be  validly  issued,   fully  paid  and
non-assessable,  and free from all taxes,  liens,  claims and encumbrances  with
respect to the issue  thereof and shall not be subject to  preemptive  rights or
other similar rights of stockholders of the Company and will not impose personal
liability upon the holder thereof.

                  e.  ACKNOWLEDGMENT  OF DILUTION.  The Company  understands and
acknowledges  the  potentially  dilutive  effect to the  Common  Stock  upon the
issuance of the  Conversion  Shares and Warrant  Shares upon  conversion  of the
Promissory Notes, or exercise of the Warrants.  The Company further acknowledges
that  its  obligation  to  issue  Conversion  Shares  and  Warrant  Shares  upon
conversion  of the  Promissory  Notes or exercise of the Warrants in  accordance
with this  Agreement,  the  Promissory  Notes and the  Warrants is absolute  and
unconditional  regardless of the dilutive  effect that such issuance may have on
the ownership interests of other stockholders of the Company.

                  f. NO CONFLICTS.  The execution,  delivery and  performance of
this  Agreement,  the  Promissory  Notes and the Warrants by the Company and the
consummation by

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<PAGE>

the Company of the  transactions  contemplated  hereby and  thereby  (including,
without limitation,  the issuance and reservation for issuance of the Conversion
Shares and Warrant  Shares) will not (i) conflict  with or result in a violation
of any provision of the Certificate of Incorporation or By-laws, or (ii) violate
or conflict  with,  or result in a breach of any  provision  of, or constitute a
default (or an event  which with notice or lapse of time or both could  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration  or  cancellation  of, any  agreement,  indenture,  patent,  patent
license  or  instrument  to which the  Company or any of its  Subsidiaries  is a
party,  or (iii)  result in a violation  of any law,  rule,  regulation,  order,
judgment or decree (including  federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject)  applicable to the Company or any of its Subsidiaries or
by which any  property  or asset of the  Company or any of its  Subsidiaries  is
bound  or  affected   (except  for  such  conflicts,   defaults,   terminations,
amendments,   accelerations,   cancellations   and   violations  as  would  not,
individually or in the aggregate,  have a Material Adverse Effect).  Neither the
Company  nor any of its  Subsidiaries  is in  violation  of its  Certificate  of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its  Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action  that would give to others any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party  or by  which  any  property  or  assets  of  the  Company  or  any of its
Subsidiaries  is bound or affected,  except for possible  defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries,  if any, are not being conducted, and shall
not be conducted so long as a Purchaser owns any of the Securities, in violation
of any law,  ordinance  or  regulation  of any  governmental  entity.  Except as
specifically  contemplated  by this Agreement and as required under the 1933 Act
and any applicable  state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court,  governmental agency, regulatory agency, self regulatory organization
or stock  market  or any  third  party in order for it to  execute,  deliver  or
perform any of its obligations under this Agreement, the Promissory Notes or the
Warrants in accordance with the terms hereof or thereof or to issue and sell the
Promissory  Notes and Warrants in accordance  with the terms hereof and to issue
the Conversion  Shares upon  conversion of the Promissory  Notes and the Warrant
Shares upon exercise of the  Warrants.  All  consents,  authorizations,  orders,
filings and  registrations  which the Company is required to obtain  pursuant to
the  preceding  sentence  have been obtained or effected on or prior to the date
hereof.  The  Company is not in  violation  of the listing  requirements  of the
Over-the-Counter Bulletin Board (the "OTCBB") and does not reasonably anticipate
that the Common Stock will be delisted by the OTCBB in the  foreseeable  future.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

                  g. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 2004,
the Company has timely filed all reports, schedules, forms, statements and other
documents  required  to be filed by it with the SEC  pursuant  to the  reporting
requirements  of the Exchange  Act of 1934,  as amended (the "1934 ACT") (all of
the foregoing filed prior to the date hereof and all

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<PAGE>

exhibits  included  therein and financial  statements and schedules  thereto and
documents  (other than  exhibits to such  documents)  incorporated  by reference
therein,  being  hereinafter  referred to herein as the "SEC  DOCUMENTS").  Upon
request, the Company shall deliver to each Purchaser true and complete copies of
the SEC Documents,  except for such exhibits and incorporated  documents.  As of
their respective dates, the SEC Documents complied in all material respects with
the  requirements  of the  1934 Act and the  rules  and  regulations  of the SEC
promulgated  thereunder  applicable  to the SEC  Documents,  and none of the SEC
Documents,  at the time they  were  filed  with the SEC,  contained  any  untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under  which they were  made,  not  misleading.  None of the
statements  made in any such SEC  Documents  is,  or has  been,  required  to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent  filings  prior the date  hereof).  As of their
respective  dates,  the financial  statements of the Company included in the SEC
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting  principles,  consistently  applied,
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 or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the  consolidated  results of their  operations  and
cash  flows  for the  periods  then  ended  (subject,  in the case of  unaudited
statements,  to normal year-end audit  adjustments).  Except as set forth in the
financial  statements of the Company included in the SEC Documents,  the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary  course of business  subsequent  to December 31, 2004,  and (ii)
obligations  under contracts and commitments  incurred in the ordinary course of
business and not required under generally accepted  accounting  principles to be
reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.

                  h. ABSENCE OF  LITIGATION.  There is no action,  suit,  claim,
proceeding,  inquiry  or  investigation  before or by any court,  public  board,
government  agency,  self-regulatory  organization  or body  pending  or, to the
knowledge  of the  Company  or any of its  Subsidiaries,  threatened  against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their  capacity  as such,  that  could have a Material  Adverse  Effect.  The
Company and its  Subsidiaries  are unaware of any facts or  circumstances  which
might give rise to any of the foregoing.

                  i.  PATENTS,  COPYRIGHTS,  ETC.  The  Company  and each of its
Subsidiaries  owns or  possesses  the  requisite  licenses  or rights to use all
patents,  patent  applications,   patent  rights,  inventions,  know-how,  trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights ("Intellectual Property") necessary to enable it to conduct
its business as now operated  (and to the best of the  Company's  knowledge,  as
presently  contemplated  to be  operated  in the  future);  there is no claim or
action by any person pertaining

                                       8
<PAGE>

to, or proceeding  pending,  or to the  Company's  knowledge  threatened,  which
challenges  the right of the  Company  or of a  Subsidiary  with  respect to any
Intellectual  Property  necessary  to enable it to conduct  its  business as now
operated (and to the best of the Company's knowledge,  as presently contemplated
to be operated  in the  future);  to the best of the  Company's  knowledge,  the
Company's  or its  Subsidiaries'  current and  intended  products,  services and
processes do not infringe on any  Intellectual  Property or other rights held by
any person; and the Company is unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and each of its Subsidiaries have
taken reasonable  security measures to protect the secrecy,  confidentiality and
value of their Intellectual Property.

                  j. NO MATERIALLY ADVERSE  CONTRACTS,  ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter,  corporate or other legal
restriction,  or any judgment,  decree,  order,  rule or regulation which in the
judgment of the  Company's  officers  has or is expected in the future to have a
Material  Adverse Effect.  Neither the Company nor any of its  Subsidiaries is a
party to any  contract  or  agreement  which in the  judgment  of the  Company's
officers has or is expected to have a Material Adverse Effect.

                  k. TAX STATUS.  The Company and each of its  Subsidiaries  has
made or filed all federal,  state and foreign  income and all other tax returns,
reports and  declarations  required by any  jurisdiction  to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books  provisions  reasonably  adequate  for the payment of all
unpaid  and  unreported  taxes)  and has paid all taxes  and other  governmental
assessments  and charges that are material in amount,  shown or determined to be
due on such returns,  reports and declarations,  except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the
payment  of all  taxes for  periods  subsequent  to the  periods  to which  such
returns,  reports  or  declarations  apply.  There  are no  unpaid  taxes in any
material amount claimed to be due by the taxing  authority of any  jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to
the assessment or collection of any foreign,  federal, statue or local tax. None
of the Company's tax returns is presently being audited by any taxing authority.

                  l. CERTAIN TRANSACTIONS.  Except for arm's length transactions
pursuant to which the Company or any of its  Subsidiaries  makes payments in the
ordinary course of business upon terms no less favorable than the Company or any
of its Subsidiaries  could obtain from third parties and other than the grant of
stock options  disclosed on SCHEDULE 3(c), none of the officers,  directors,  or
employees  of the  Company  is  presently  a party to any  transaction  with the
Company  or any of its  Subsidiaries  (other  than for  services  as  employees,
officers and directors),  including any contract, agreement or other arrangement
providing for the furnishing of services to or by,  providing for rental of real
or personal property to or from, or otherwise  requiring payments to or from any
officer,  director or such  employee or, to the  knowledge  of the Company,  any
corporation,  partnership, trust or other entity in which any officer, director,
or any such  employee  has a  substantial  interest or is an officer,  director,
trustee or partner.

                                       9
<PAGE>

                  m. DISCLOSURE.  All information  relating to or concerning the
Company or any of its  Subsidiaries  set forth in this Agreement and provided to
the Purchasers  pursuant to Section 2(d) hereof and otherwise in connection with
the  transactions  contemplated  hereby  is true  and  correct  in all  material
respects and the Company has not omitted to state any material fact necessary in
order  to  make  the  statements  made  herein  or  therein,  in  light  of  the
circumstances  under  which  they  were  made,  not  misleading.   No  event  or
circumstance  has  occurred or exists with  respect to the Company or any of its
Subsidiaries  or its or their  business,  properties,  prospects,  operations or
financial conditions, which, under applicable law, rule or regulation,  requires
public  disclosure  or  announcement  by the  Company  but which has not been so
publicly  announced or disclosed  (assuming  for this purpose that the Company's
reports  filed  under  the 1934 Act are  being  incorporated  into an  effective
registration statement filed by the Company under the 1933 Act).

                  n.   ACKNOWLEDGMENT    REGARDING   PURCHASERS'   PURCHASE   OF
SECURITIES.  The Company  acknowledges and agrees that the Purchasers are acting
solely in the capacity of arm's length purchasers with respect to this Agreement
and the transactions  contemplated hereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any  similar  capacity)  with  respect to this  Agreement  and the  transactions
contemplated  hereby and any  statement  made by any  Purchaser  or any of their
respective  representatives  or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchasers'  purchase of the  Securities.  The Company further
represents  to each  Purchaser  that the  Company's  decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.

                  o. NO INTEGRATED OFFERING. 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 in any security or solicited  any offers to
buy any security under  circumstances that would require  registration under the
1933 Act of the issuance of the  Securities to the  Purchasers.  The issuance of
the Securities to the Purchasers  will not be integrated with any other issuance
of the  Company's  securities  (past,  current or future)  for  purposes  of any
stockholder approval provisions applicable to the Company or its securities.

                  p.  FINDER'S  FEE.  The  Company may  compensate  a Finder (as
defined in Section  1(b)(ii)) who  introduces  the Purchaser to the Company at a
rate not exceeding three (3%) percent of the principal  amount of the Promissory
Note.

                  q.   PERMITS;   COMPLIANCE.   The  Company  and  each  of  its
Subsidiaries  is  in  possession  of  all  franchises,  grants,  authorizations,
licenses, permits, easements,  variances,  exemptions,  consents,  certificates,
approvals and orders  necessary to own,  lease and operate its properties and to
carry on its business as it is now being conducted  (collectively,  the "COMPANY
PERMITS"),  and there is no action  pending or, to the knowledge of the Company,
threatened  regarding  suspension or cancellation of any of the Company Permits.
Neither the  Company nor any of its  Subsidiaries  is in  conflict  with,  or in
default  or  violation  of,  any of the  Company  Permits,  except  for any such
conflicts, defaults or violations which, individually or in the

                                       10
<PAGE>

aggregate,  would not reasonably be expected to have a Material  Adverse Effect.
Neither the Company nor any of its  Subsidiaries  has received any  notification
with respect to possible  conflicts,  defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.

                  r. TITLE TO PROPERTY.  The Company and its  Subsidiaries  have
good and  marketable  title in fee  simple  to all  real  property  and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects as would not have a Material Adverse Effect. Any
real  property  and  facilities   held  under  lease  by  the  Company  and  its
Subsidiaries  are held by them under valid,  subsisting and  enforceable  leases
with such exceptions as would not have a Material Adverse Effect.

                  s.  INSURANCE.  The Company and each of its  Subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
Subsidiaries  are engaged.  Neither the Company nor any such  Subsidiary has any
reason  to  believe  that it will not be able to renew  its  existing  insurance
coverage as and when such coverage  expires or to obtain  similar  coverage from
similar  insurers as may be  necessary  to continue  its business at a cost that
would not have a Material Adverse Effect.

                  t. INTERNAL ACCOUNTING  CONTROLS.  The Company and each of its
Subsidiaries  maintain a system of internal accounting controls  sufficient,  in
the  judgment  of  the  Company,  to  provide  reasonable   assurance  that  (i)
transactions  are executed in accordance with  management's  general or specific
authorizations,   (ii)   transactions   are  recorded  as  necessary  to  permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles  and to maintain  asset  accountability,  (iii) access to
assets is permitted  only in accordance  with  management's  general or specific
authorization and (iv) the recorded  accountability  for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

                  u. FOREIGN CORRUPT PRACTICES.  Neither the Company, nor any of
its Subsidiaries,  nor any director,  officer,  agent,  employee or other person
acting on behalf of the  Company  or any  Subsidiary  has,  in the course of his
actions  for, or on behalf of, the  Company,  used any  corporate  funds for any
unlawful contribution,  gift,  entertainment or other unlawful expenses relating
to  political  activity;  made any direct or  indirect  unlawful  payment to any
foreign or  domestic  government  official  or employee  from  corporate  funds;
violated  or is in  violation  of any  provision  of the  U.S.  Foreign  Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff,  influence
payment,  kickback  or  other  unlawful  payment  to  any  foreign  or  domestic
government official or employee.

                  v. NO  INVESTMENT  COMPANY.  The Company is not,  and upon the
issuance and sale of the Securities as  contemplated  by this Agreement will not
be an  "investment

                                       11
<PAGE>

company" required to be registered under the Investment  Company Act of 1940 (an
"INVESTMENT COMPANY"). The Company is not controlled by an Investment Company.

         4.  COVENANTS.

                  a. BEST  EFFORTS.  The parties shall use their best efforts to
satisfy  timely  each of the  conditions  described  in  Section 6 and 7 of this
Agreement as applicable to them.

                  b. FORM D; BLUE SKY LAWS.  The Company agrees to file a Form D
with respect to the Securities as required  under  Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing. The Company shall, on
or before the Closing  Date,  take such action as the Company  shall  reasonably
determine is necessary to qualify the  Securities  for sale to the Purchasers at
the applicable closing pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the  United  States (or to obtain an  exemption
from such qualification), and shall provide evidence of any such action so taken
to each Purchaser on or prior to the Closing Date.

                  c.  REPORTING  STATUS.  So long as any Purchaser  beneficially
owns any of the Securities, the Company will use its best efforts to timely file
all reports  required to be filed with the SEC pursuant to the 1934 Act, and the
Company  shall not  terminate  its status as an issuer  required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations  thereunder
would permit such termination.

                  d. USE OF PROCEEDS.  The Company  shall use the proceeds  from
the sale of the  Promissory  Notes and the  Warrants  in the manner set forth in
SCHEDULE 4(d) attached hereto and made a part hereof, and shall not, directly or
indirectly,  use  such  proceeds  for any  loan to or  investment  in any  other
corporation,  partnership, enterprise or other person (except in connection with
its currently existing direct or indirect Subsidiaries).

                  e.  FINANCIAL  INFORMATION.  For a period of two(2) years from
the date of this Agreement,  the Company agrees to send the following reports to
each Purchaser  until such  Purchaser  transfers,  assigns,  or sells all of the
Securities:  (i) a copy of its  Annual  Report  on Form  10-KSB,  its  Quarterly
Reports on Form 10-QSB and any Current  Reports on Form 8-K;  (ii) copies of all
press  releases  issued by the  Company  or any of its  Subsidiaries;  and (iii)
copies of any notices or other  information the Company makes available or gives
to such stockholders.

                  f. RESERVATION OF SHARES.  The Company shall at all times have
authorized,  and reserved for the purpose of  issuance,  a sufficient  number of
shares of Common  Stock to provide  for the full  conversion  or exercise of the
outstanding  Promissory Notes and Warrants and issuance of the Conversion Shares
and Warrant Shares in connection therewith (based on the Conversion Price of the
Promissory  Notes or Exercise Price of the Warrants in effect from time to time)
and as otherwise  required by the Promissory Notes. The Company shall not reduce
the number of shares of Common Stock  reserved for issuance  upon  conversion of
Promissory  Notes and  exercise  of the  Warrants  without  the  consent of each
Purchaser.  The Company  shall use its best efforts at all times to maintain the
number of shares of Common  Stock so reserved  for

                                       12
<PAGE>

issuance at no less than one and  one-half (1 1/2) times the number that is then
actually issuable upon full conversion of the Promissory Notes and upon exercise
of the Warrants  (based on the Conversion  Price of the Promissory  Notes or the
Exercise Price of the Warrants in effect from time to time).  If at any time the
number of shares of Common Stock  authorized  and reserved for issuance is below
the number of  Conversion  Shares and Warrant  Shares  issued and issuable  upon
conversion of the  Promissory  Notes and exercise of the Warrants  (based on the
Conversion  Price of the Promissory  Notes or the Exercise Price of the Warrants
then in effect),  the Company will promptly take all corporate  action necessary
to  authorize  and reserve a  sufficient  number of shares,  including,  without
limitation,  calling a special meeting of  stockholders to authorize  additional
shares to meet the Company's obligations under this Section 4(f), in the case of
an  insufficient  number of  authorized  shares,  and using its best  efforts to
obtain stockholder approval of an increase in such authorized number of shares.

                  g. CORPORATE  EXISTENCE.  So long as a Purchaser  beneficially
owns any Promissory Notes or Warrants,  the Company shall maintain its corporate
existence and shall not sell all or substantially  all of the Company's  assets,
except in the event of a merger or consolidation or sale of all or substantially
all of the Company's  assets,  where the  surviving or successor  entity in such
transaction assumes the Company's obligations hereunder and under the agreements
and instruments entered into in connection herewith and (i) is a publicly traded
corporation  whose  Common  Stock is listed for  trading  on the OTCBB,  Nasdaq,
Nasdaq SmallCap,  NYSE or AMEX; or (ii) is a private company and the Company has
the  written  consent  of the  record  holder or holders of more than 50% of the
aggregate of the  Conversion  Shares issued and issuable upon  conversion of the
Promissory Notes, which such consent shall not be unreasonably withheld.

                  h. NO  INTEGRATION.  The Company shall use its best efforts to
ensure  that  it  does  not  offer  or  sell of any  security  (other  than  the
Securities)  under   circumstances  that  would  require   registration  of  the
Securities  being  offered  or sold  hereunder  under  the 1933 Act or cause the
offering  of  the  Securities  to be  integrated  with  any  other  offering  of
securities by the Company for the purpose of any stockholder  approval provision
applicable to the Company or its securities.

                  i.  STOCKHOLDER  APPROVAL.  The  Company  shall,  at its  next
special or annual meeting of  stockholders,  use its best efforts to obtain such
approvals of the Company's stockholders as may be required to authorize, reserve
and issue all of the Conversion  Shares and Warrants  Shares in accordance  with
applicable law (the "STOCKHOLDER  APPROVAL").  The Company shall comply with the
filing and disclosure requirements of Section 14 under the Exchange Act, and the
rules  and  regulations   thereunder,   in  connection  with  the  solicitation,
acquisition and disclosure of the Stockholder  Approval.  The Company represents
and warrants that its Board of Directors has approved,  and will  recommend that
the Company's  stockholders  approve, the proposal  contemplated by this Section
4(i) and shall so indicate such  recommendation  in the proxy  statement used to
solicit the  Stockholder  Approval.  The Company  shall use its best  efforts to
cause its officers and  directors to vote in favor of the proposal  contemplated
by this Section 4(i).

                                       13
<PAGE>

                  j. ADDITIONAL WARRANT SHARES.  Upon the occurrence of an Event
of Default (as defined in the  Promissory  Notes) the Company shall issue to the
Purchaser,  in  addition  to any  other  consideration  hereunder,  warrants  to
purchase  additional  shares  of the  Company's  Common  Stock  (in a number  as
determined below,  hereinafter the "ADDITIONAL  WARRANTS"),  PROVIDED,  HOWEVER,
that if the  Company  has  transferred  $1,552,500  (or such  lesser  amount  as
permitted under the terms of the Cash Collateral  Escrow  Agreement) to the Cash
Collateral Escrow Account (as defined in the Cash Collateral Escrow Agreement of
even date herewith) by the Maturity Date of the Promissory  Notes (as defined in
the  Promissory  Notes),  the  Purchaser  shall not be  entitled  to receive the
Additional Warrants.  The Purchaser shall be entitled to Additional Warrants, in
the forms  attached  hereto as EXHIBIT B, to  purchase  shares of the  Company's
Common  Stock  equal to the  number  determined  by  multiplying  the  number of
Conversion  Shares  (as  defined  in the  Promissory  Notes)  that the Holder is
entitled  to  receive by a  fraction,  the  numerator  of which is the number of
additional  days  following the Maturity Date until the earlier of the date that
the Company transfers the $1,552,500 (or such lesser amount as permitted) to the
Cash  Collateral  Escrow Account,  makes payment of the full amount  outstanding
under the Note, or the Purchaser converts the full amount of the Promissory Note
into  shares  of  Common  Stock and the  denominator  of which is 30,  PROVIDED,
HOWEVER,  that the total  aggregate  number of shares  underlying the Additional
Warrants shall not exceed ten million eight hundred thousand (10,800,000).

                  k.  FUTURE  OFFERING.   As  soon  as  possible  following  the
execution and delivery of this Agreement, the Company expects to complete a best
efforts  offering of certain of the  Company's  Series A  Convertible  Preferred
Stock,  or any  other  of the  Company's  securities  offered  in lieu  thereof,
resulting in gross proceeds of up to $9 million.

         5. REGISTRATION OF SECURITIES.  The Company hereby grants the following
registration rights to holders of the Securities.

                  a. DEMAND REGISTRATION  RIGHTS. On one occasion,  for a period
commencing 60 days after the Closing Date,  but not later than three years after
the Closing Date ("Request Date"), the Company,  upon a written request therefor
from any record  holder of  Conversion  Shares  and  Warrant  Shares  issued and
issuable upon  conversion of the  Promissory  Notes and exercise of the Warrants
(the Conversion  Shares and Warrant Shares,  being referred to in this Section 5
as the  "Registrable  Securities"),  shall  prepare  and  file  with  the  SEC a
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering  the  Registrable  Securities  which are the  subject of such  request,
unless such Registrable  Securities are the subject of an effective registration
statement.  In addition,  upon the receipt of such  request,  the Company  shall
promptly  give  written  notice to all other record  holders of the  Registrable
Securities that such registration  statement is to be filed and shall include in
such  registration  statement  Registrable  Securities for which it has received
written  requests  within 10 days after the Company  gives such written  notice.
Such other  requesting  record holders shall be deemed to have  exercised  their
demand  registration right under this Section 5(a). As a condition  precedent to
the inclusion of  Registrable  Securities,  the holder thereof shall provide the
Company with such information as the Company reasonably requests. The obligation
of the  Company  under this  Section  5(a) shall be limited to one  registration
statement.

                                       14
<PAGE>

                  b.  PIGGY-BACK  REGISTRATION.  If  the  Company  at  any  time
proposes to register any of its securities under the Act for sale to the public,
whether  for its own  account or for the  account of other  security  holders or
both,  except  with  respect to  registration  statements  on Forms S-4,  S-8 or
another form not available for registering  the Registrable  Securities for sale
to the public,  provided the Registrable Securities are not otherwise registered
for resale by the  Purchaser  pursuant to an effective  registration  statement,
each such time it will give at least 30 days' prior written notice to the record
holder of the Registrable Securities of its intention.  Upon the written request
of the Purchaser, received by the Company within 20 days after the giving of any
such notice by the Company, to register any of the Registrable  Securities,  the
Company will cause such Registrable  Securities as to which  registration  shall
have been so requested to be included  with the  securities to be covered by the
registration  statement  proposed to be filed by the Company,  all to the extent
required to permit the sale or other  disposition of the Registrable  Securities
so registered by the holder of such  Registrable  Securities (the "Seller").  In
the event that any registration pursuant to this Section 5(b) shall be, in whole
or in part, an underwritten public offering of common stock of the Company,  the
number  of  shares  of  Registrable   Securities  to  be  included  in  such  an
underwriting  may be reduced by the  managing  underwriter  if and to the extent
that the Company and the  underwriter  shall  reasonably  be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company  therein;  provided,  however,  that the Company shall notify the
Seller in writing of any such  reduction.  The Company may  withdraw or delay or
suffer a delay of any  registration  statement  referred to in this Section 5(b)
without thereby incurring any liability to the Seller.

                  c. REGISTRATION FOR COMPANY'S OWN ACCOUNT. If, at the time any
written request for  registration is received by the Company pursuant to Section
5(a),  the Company has  determined  to proceed with the actual  preparation  and
filing of a registration statement under the Act in connection with the proposed
offer and sale for cash of any of its  securities for the Company's own account,
such written request shall be deemed to have been given pursuant to Section 5(b)
rather  than  Section  5(a),  and  the  rights  of the  holders  of  Registrable
Securities covered by such written request shall be governed by Section 5(b).

                  d.  REGISTRATION  PROCEDURES.  If and  whenever the Company is
required by the provisions  hereof to effect the  registration  of any shares of
Registrable  Securities  under the Act, the Company  will, as  expeditiously  as
possible:

            (i)      prepare  and  file  with  the   Commission  a  registration
                     statement with respect to such  securities and use its best
                     efforts to cause such registration  statement to become and
                     remain   effective  for  the  period  of  the  distribution
                     contemplated  thereby (determined as herein provided),  and
                     promptly  provide to the holders of Registrable  Securities
                     ("Sellers") copies of all filings and Commission letters of
                     comment;

            (ii)     prepare and file with the  Commission  such  amendments and
                     supplements   to  such   registration   statement  and  the
                     prospectus used in connection therewith as may be necessary
                     to keep such  registration  statement  effective  until the
                     latest

                                       15
<PAGE>

                     of: (i) twelve  months after the latest  Maturity Date of a
                     Promissory  Note;  or (ii) two years after the Closing Date
                     and comply with the  provisions  of the Act with respect to
                     the  disposition  of  all  of  the  Registrable  Securities
                     covered by such  registration  statement in accordance with
                     the Seller's  intended  method of disposition  set forth in
                     such registration statement for such period;

            (iii)    furnish to the Seller, and to each underwriter if any, such
                     number  of  copies of the  registration  statement  and the
                     prospectus  included  therein  (including each  preliminary
                     prospectus) as such persons reasonably may request in order
                     to facilitate  the public sale or their  disposition of the
                     securities covered by such registration statement;

            (iv)     use its best  efforts to register  or qualify the  Seller's
                     Registrable   Securities   covered  by  such   registration
                     statement  under the  securities or "blue sky" laws of such
                     jurisdictions   as  the  Seller  and  in  the  case  of  an
                     underwritten  public  offering,  the  managing  underwriter
                     shall  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;

            (v)      list   the   Registrable   Securities   covered   by   such
                     registration  statement  with any  securities  exchange  on
                     which the Common Stock of the Company is then listed;

            (vi)     immediately  notify the Seller and each  underwriter  under
                     such  registration  statement at any time when a prospectus
                     relating thereto is required to be delivered under the 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;

            (vii)    make   available  for   inspection   by  the  Seller,   any
                     underwriter  participating in any distribution  pursuant to
                     such registration statement,  and any attorney,  accountant
                     or other agent retained by the Seller or  underwriter,  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
                     seller,  underwriter,  attorney,  accountant  or  agent  in
                     connection with such registration statement;

            (viii)   In connection with each registration hereunder,  the Seller
                     will furnish to the Company in writing such information and
                     representation  letters  with  respect  to

                                       16
<PAGE>

                     itself and the proposed  distribution  by it as  reasonably
                     shall  be  necessary  in order to  assure  compliance  with
                     federal and applicable state securities laws. In connection
                     with each  registration  pursuant  to Section  5(a) or 5(b)
                     covering an underwritten  public offering,  the Company and
                     the Seller agree to enter into a written agreement with the
                     managing  underwriter  in such  form  and  containing  such
                     provisions as are customary in the securities  business for
                     such an arrangement  between such underwriter and companies
                     of the Company's size and investment stature.

                  e. EXPENSES. All expenses incurred by the Company in complying
with Section 5, including, without limitation, all registration and filing fees,
printing  expenses,  fees and  disbursements  of counsel and independent  public
accountants  for the Company,  up to $10,000 in the  aggregate  for the fees and
expenses of one legal  counsel  designated  by the  Sellers,  fees and  expenses
(including  reasonable  counsel fees) incurred in connection with complying with
state  securities  or "blue  sky"  laws,  fees of the  National  Association  of
Securities   Dealers,   Inc.,  transfer  taxes,  fees  of  transfer  agents  and
registrars,  and costs of  insurance  are called  "Registration  Expenses".  All
underwriting  discounts  and  selling  commissions  applicable  to the  sale  of
Registrable  Securities  are  called  "Selling  Expenses".  Except as  otherwise
provided  in this  paragraph  5(e),  the  Seller  shall  pay the fees of its own
additional  counsel,  if any. The Company will pay all Registration  Expenses in
connection with the registration statement under Section 5. All Selling Expenses
in connection with each registration statement under Section 5 shall be borne by
the Seller and may be apportioned  among the Sellers in proportion to the number
of shares  sold by the Seller  relative  to the number of shares sold under such
registration statement or as all Sellers thereunder may agree.

                  f. INDEMNIFICATION AND CONTRIBUTION.

            (i)      In  the  event  of  a  registration   of  any   Registrable
                     Securities under the Act pursuant to Section 5, the Company
                     will  indemnify and hold harmless the Seller,  each officer
                     of  the  Seller,   each   director  of  the  Seller,   each
                     underwriter of such Registrable  Securities  thereunder and
                     each other  person,  if any,  who  controls  such Seller or
                     underwriter within the meaning of the 1933 Act, against any
                     losses, claims,  damages or liabilities,  joint or several,
                     to which the Seller,  or such  underwriter  or  controlling
                     person  may  become  subject  under  the 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 was registered under the
                     Act pursuant to Section 5, 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
                     Seller,  each such  underwriter  and each such  controlling
                     person for any legal or other expenses  reasonably incurred
                     by them in connection with  investigating  or defending any
                     such loss, claim,  damage,  liability or action;

                                       17
<PAGE>

                     provided,  however, that the Company shall not be liable to
                     the Seller to the extent that any such damages arise out of
                     or are based upon an untrue  statement or omission  made in
                     any preliminary prospectus if (i) the Seller failed to send
                     or deliver a copy of the final prospectus  delivered by the
                     Company  to the  Seller  with or prior to the  delivery  of
                     written  confirmation  of the  sale  by the  Seller  to the
                     person  asserting the claim from which such damages  arise,
                     (ii) the final  prospectus would have corrected such untrue
                     statement or alleged  untrue  statement or such omission or
                     alleged  omission,  or  (iii) 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 any  such  Seller,  or any  such
                     controlling person, in writing specifically for use in such
                     registration statement or prospectus.

            (ii)     In the event of a  registration  of any of the  Registrable
                     Securities  under the Act pursuant to Section 5, the Seller
                     will  indemnify  and hold  harmless the  Company,  and each
                     person, if any, who controls the Company within the meaning
                     of the Act,  each  officer  of the  Company  who  signs the
                     registration statement,  each director of the Company, each
                     underwriter  and each person who controls  any  underwriter
                     within the meaning of the Act, against all losses,  claims,
                     damages  or  liabilities,  joint or  several,  to which the
                     Company  or  such   officer,   director,   underwriter   or
                     controlling  person  may  become  subject  under the 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  the
                     registration   statement   under  which  such   Registrable
                     Securities  were  registered  under  the  Act  pursuant  to
                     Section 5, 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 officer, director,  underwriter and controlling person
                     for any legal or other expenses reasonably incurred by them
                     in  connection  with  investigating  or defending  any such
                     loss,  claim,  damage,   liability  or  action,   provided,
                     however,  that the Seller will be liable  hereunder  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 made in reliance upon and in conformity
                     with  information  pertaining  to  such  Seller,  as  such,
                     furnished   in  writing  to  the  Company  by  such  Seller
                     specifically  for use in  such  registration  statement  or
                     prospectus,  and  provided,   further,  however,  that  the
                     liability of the Seller  hereunder  shall be limited to the
                     gross  proceeds  received  by the  Seller  from the sale of
                     Registrable   Securities   covered  by  such   registration
                     statement.

            (iii)    Promptly after receipt by an indemnified party hereunder of
                     notice of the commencement of any action,  such indemnified
                     party  shall,  if a claim in respect

                                       18
<PAGE>

                     thereof  is to  be  made  against  the  indemnifying  party
                     hereunder,   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(f) and shall only  relieve it from any  liability
                     which  it may have to such  indemnified  party  under  this
                     Section  5(f),  except  and only 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(f) for any
                     legal expenses  subsequently  incurred by such  indemnified
                     party in  connection  with the defense  thereof  other than
                     reasonable  costs  of  investigation  and of  liaison  with
                     counsel  so  selected,  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 parties 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.

            (iv)     In order to provide for just and equitable  contribution in
                     the event of joint  liability  under the Act in any case in
                     which either (i) the Seller,  or any controlling  person of
                     the Seller,  makes a claim for indemnification  pursuant to
                     this Section 5(f) 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(f)  provides
                     for  indemnification  in such  case,  or (ii)  contribution
                     under the Act may be  required on the part of the Seller or
                     controlling person of the Seller in circumstances for which
                     indemnification  is provided under this Section 5(f); then,
                     and in each such case,  the  Company  and the  Seller  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
                     Seller 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,   (y)  the  Seller  will  not  be  required  to
                     contribute  any  amount in excess  of the  public  offering
                     price of all such securities

                                       19
<PAGE>

                     offered by it pursuant to such registration statement;  and
                     (z)   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.  CONDITIONS TO THE COMPANY'S  OBLIGATION TO SELL.  The obligation of
the Company  hereunder to issue and sell the Promissory  Notes and Warrants to a
Purchaser  at the  Closing  is  subject  to the  satisfaction,  at or before the
Closing Date of each of the following  conditions  thereto,  provided that these
conditions  are for the Company's  sole benefit and may be waived by the Company
at any time in its sole discretion:

                  a. The applicable Purchaser shall have executed this Agreement
and delivered the same to the Company.

                  b. The applicable  Purchaser shall have delivered the Purchase
Price in accordance with Section 1(b) above.

                  c.  The  representations  and  warranties  of  the  applicable
Purchaser shall be true and correct in all material respects as of the date when
made  and as of the  Closing  Date  as  though  made at that  time  (except  for
representations  and  warranties  that  speak as of a  specific  date),  and the
applicable  Purchaser  shall  have  performed,  satisfied  and  complied  in all
material respects with the covenants, agreements and conditions required by this
Agreement  to be  performed,  satisfied  or  complied  with  by  the  applicable
Purchaser at or prior to the Closing Date.

                  d. No litigation, statute, rule, regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by or in any court or governmental  authority of competent jurisdiction
or  any   self-regulatory   organization   having  authority  over  the  matters
contemplated  hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

         7.  CONDITIONS  TO  EACH  PURCHASER'S   OBLIGATION  TO  PURCHASE.   The
obligation  of each  Purchaser  hereunder to purchase the  Promissory  Notes and
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions, provided that these conditions are for
such Purchaser's sole benefit and may be waived by such Purchaser at any time in
its sole discretion:

                  a.  The  Company  shall  have  executed  this   Agreement  and
delivered the same to the Purchaser.

                  b. The Company  shall have  delivered to such  Purchaser  duly
executed Promissory Notes (in such denominations as the Purchaser shall request)
and Warrants in accordance with Section 1(b) above.

                  c. The  representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing  Date as  though

                                       20
<PAGE>

made at such time (except for  representations and warranties that speak as of a
specific date) and the Company shall have  performed,  satisfied and complied in
all material respects with the covenants,  agreements and conditions required by
this Agreement to be performed,  satisfied or complied with by the Company at or
prior to the Closing Date.  The Purchaser  shall have received a certificate  or
certificates,  executed by the chief executive officer of the Company,  dated as
of the Closing Date, to the foregoing effect and as to such other matters as may
be  reasonably  requested  by  such  Purchaser  including,  but not  limited  to
certificates with respect to the Company's Certificate of Incorporation, By-laws
and Board of Directors'  resolutions  relating to the transactions  contemplated
hereby.

                  d. No litigation, statute, rule, regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by or in any court or governmental  authority of competent jurisdiction
or  any   self-regulatory   organization   having  authority  over  the  matters
contemplated  hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

                  e. The Purchaser  shall,  upon  request,  receive an officer's
certificate described in Section 3(c) above, dated as of the Closing Date.

         8. GOVERNING LAW; MISCELLANEOUS.

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

                                       21
<PAGE>

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

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

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

                  e.  ENTIRE  AGREEMENT;  AMENDMENTS.  This  Agreement  and  the
instruments  referenced  herein contain the entire  understanding of the parties
with  respect  to  the  matters  covered  herein  and  therein  and,  except  as
specifically set forth herein or therein,  neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.  No provision of this  Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.

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

                           If to the Company:

                                    UTIX Group, Inc.
                                    7 New England Executive Park
                                    Suite 610
                                    Burlington, MA  01803
                                    Attn.: Anthony G. Roth
                                    Tel.: (781) 229-2589
                                    Fax: (781) 229-8886

                                       22
<PAGE>

                           With copy to:

                                    Hodgson Russ LLP
                                    60 East 42nd St., 37th Floor
                                    New York, New York 10022
                                    Attn.: Jeffrey A. Rinde, Esq.
                                    Tel.:  212-661-3535
                                    Fax.:  212-972-1677

                           If to a Purchaser:

                                    To  the  address   set  forth   beside  such
                                    Purchaser's name on SCHEDULE A hereto.

         Each party  shall  provide  notice to the other  party of any change in
address.

                  g.  SUCCESSORS AND ASSIGNS.  This  Agreement  shall be binding
upon and inure to the benefit of the parties and their  successors  and assigns.
Neither the Company nor any Purchaser  shall assign this Agreement or any rights
or  obligations  hereunder  without  the prior  written  consent  of the  other.
Notwithstanding the foregoing, subject to Section 2(f), any Purchaser may assign
its  rights  hereunder  to any person  that  purchases  Securities  in a private
transaction  from a  Purchaser  or to any of its  "affiliates,"  as that term is
defined under the 1934 Act, without the consent of the Company.

                  h. THIRD PARTY  BENEFICIARIES.  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.

                  i. SURVIVAL. The representations and warranties of the Company
and the  agreements  and  covenants  set forth in  Sections  3, 4, 5 and 8 shall
survive the Closing hereunder  notwithstanding  any due diligence  investigation
conducted by or on behalf of the Purchasers. The Company agrees to indemnify and
hold  harmless  each  of the  Purchasers  and  all  their  officers,  directors,
employees and agents for loss or damage arising as a result of or related to any
breach  or  alleged  breach  by the  Company  of  any  of  its  representations,
warranties  and  covenants  set forth in  Sections  3 and 4 hereof or any of its
covenants and obligations under this Agreement including advancement of expenses
as they are incurred.

                  j.  PUBLICITY.  The Company and each of the  Purchasers  shall
have the right to review a  reasonable  period of time  before  issuance  of any
press releases,  SEC, OTCBB or NASD filings, or any other public statements with
respect to the transactions  contemplated hereby;  PROVIDED,  HOWEVER,  that the
Company shall be entitled, without the prior approval of each of the Purchasers,
to make any press release or SEC, OTCBB (or other applicable  trading market) or
NASD filings with respect to such  transactions as is required by applicable law
and regulations.

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

                                       23
<PAGE>

                  l. NO STRICT CONSTRUCTION. 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.

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




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                                       24
<PAGE>

COUNTERPART SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT, DATED JULY __, 2005

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

                              UTIX GROUP, INC.

                              By:
                                 -----------------------------------------------
                                    Name: Anthony G. Roth
                                    Title: Chief Executive Officer and President


                              Purchasers:


                              --------------------------------------------------


                              --------------------------------------------------


                              --------------------------------------------------

                                       25