Exhibit 4.10


                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
May 21,  2004 by and between  Utix  Group,  Inc.,  a Delaware  corporation  (the
"COMPANY"),  Great  Court  Capital  LLC, a New York  limited  liability  company
("GREAT  COURT") and each  purchaser  who has  executed  this  Agreement  on the
signature page hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement  and  pursuant  to  Section  4(2) of the  Securities  Act of 1933,  as
amended,  the  Company  desires  to issue and sell to each  Purchaser,  and each
Purchaser,  severally  and not  jointly,  desires to purchase  from the Company,
certain securities of the Company as more fully described in this Agreement.

         NOW,  THEREFORE,  in consideration of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy  of  which  are  hereby  acknowledged,  the  Company  and  each  of the
Purchasers agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

         1.1    DEFINITIONS. In addition to the terms defined  elsewhere in this
Agreement, the following terms have the meanings indicated:

                1.1.1 "AFFILIATE" means any Person that,  directly or indirectly
through one or more  intermediaries,  controls or is  controlled  by or is under
common control with a Person, as such terms are used in and construed under Rule
144.

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

                1.1.3  "COMMISSION"  means  the  United  States  Securities  and
Exchange Commission.

                1.1.4 "COMMON STOCK" means the common stock of the Company,  par
value $0.001 per share.

                1.1.5 "COMMON STOCK EQUIVALENTS"  means,  collectively,  Options
and Convertible Securities.

                1.1.6 "COMPANY  COUNSEL"  means Gersten Savage  Kaplowitz Wolf &
Marcus LP.

                1.1.7 "CONVERTIBLE  SECURITIES" means any capital stock or other
securities, including warrants (other than Options) that are convertible into or
exercisable or exchangeable for Common Stock.

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                1.1.8  "EFFECTIVE  DATE"  means the date  that the  Registration
Statement is first declared effective by the Commission.

                1.1.9 "ELIGIBLE MARKET" means any of the New York Stock Exchange
(the "NYSE"),  the American  Stock  Exchange (the "AMEX"),  the Nasdaq  National
Market  ("NASDAQ  NNM"),  the  Nasdaq  Small Cap  Market  ("NASDAQ  SCM") or the
National  Association of Securities  Dealers,  Inc. OTC Bulletin Board (the "OTC
BULLETIN BOARD").

                1.1.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                1.1.11 "INITIAL NOTES CLOSING DATE" means the date of closing of
the purchase of not less than $700,000 of the Notes, pursuant to Section 2.1.1.

                1.1.12 "LIEN" means any lien, charge,  claim, security interest,
encumbrance, right of first refusal or other restriction.

                1.1.13  "LOSSES"  means  any and all  losses,  claims,  damages,
liabilities, settlement costs and expenses, including, without limitation, costs
of preparation and reasonable attorneys' fees.

                1.1.14 "NOTES CLOSING DATES" means those dates that shall be (a)
on or before May 21, 2004 when the Initial Notes  Closing Date shall occur,  and
(b) on or before May 28, 2004,  when the Final Notes Closing Date (as defined in
Section 2.1.1) shall occur.

                1.1.15 "NOTES" means one or more 15% senior  secured  promissory
notes  aggregating up to $1,500,000 in principal  amount, to be purchased at par
by the  Purchasers  at the Notes  Closings;  which Notes shall be in the form of
SCHEDULE 1.1.15.

                1.1.16  "OPTIONS"  means any  rights,  warrants  or  options  to
subscribe for or purchase Common Stock or Convertible Securities.

                1.1.17   "PERSON"   means   any   individual   or   corporation,
partnership,  trust, incorporated or unincorporated association,  joint venture,
limited  liability  company,  joint stock  company,  government (or an agency or
subdivision  thereof)  or any  court or  other  federal,  state,  local or other
governmental authority or other entity of any kind.

                1.1.18 "PURCHASER  DESIGNEE" shall mean Great Court Capital,  or
any other  Person  designated  in writing  from time to time by the holders of a
majority of the Notes and who shall be reasonably acceptable to the Company.

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

                1.1.20   "PROSPECTUS"  means  the  prospectus  included  in  the
Registration  Statement  (including,   without  limitation,  a  prospectus  that
includes any information  previously  omitted from a prospectus filed as part of
an effective registration statement in reliance upon

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Rule 430A  promulgated  under the Securities Act), as amended or supplemented by
any  prospectus  supplement,  with  respect to the terms of the  offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments,  and  all  material  incorporated  by  reference  or  deemed  to  be
incorporated by reference in such Prospectus.

                1.1.21  "REGISTRABLE  SECURITIES"  means:  (i) any Common  Stock
issuable upon exercise of the Warrant Shares, (ii) any Common Stock issued to SD
Partners or its Affiliates under an advisory  agreement  between the Company and
SD Partners,  dated of even date herewith (the "ADVISORY AGREEMENT");  (iii) any
Common  Stock  issuable  upon  exercise of warrants to purchase up to  1,000,000
shares of Company Common Stock issued under the Advisory Agreement; and (iv) any
securities  issued  or  issuable  upon  any  stock  split,   dividend  or  other
distribution, recapitalization or similar event with respect to the foregoing.

                1.1.22 "REGISTRATION STATEMENT" means the registration statement
required  to be filed  under  Article  VI below,  including  (in each  case) the
Prospectus,  amendments  and  supplements  to  such  registration  statement  or
Prospectus,  including pre- and post-effective amendments, all exhibits thereto,
and all  material  incorporated  by reference  or deemed to be  incorporated  by
reference in such registration statement.

                1.1.23 "REQUIRED  EFFECTIVENESS  DATE" means September 30, 2004,
unless such date shall be extended by mutual agreement of the Purchaser Designee
and the Company.

                1.1.24  "RULE  144,"  "RULE 415," and "RULE 424" means Rule 144,
Rule 415 and Rule 424,  respectively,  promulgated by the Commission pursuant to
the  Securities  Act,  as such  Rules may be amended  from time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

                1.1.25 "SECURITIES" means the collective  reference to the Notes
and the Warrants.

                1.1.26  "SECURITIES  ACT" means the  Securities  Act of 1933, as
amended.

                1.1.27  "SECURITY   AGREEMENT"   means  an  agreement   granting
Purchasers  a perfected  security  interest in all the assets of the Company and
its  Subsidiaries  in  which  such  lien  may be  perfected  under  the  Uniform
Commercial Code as in force in Massachusetts,  to secure repayment of the Notes,
in the form of SCHEDULE 1.1.27.

                1.1.28  "SUBSIDIARY"  means any  Person  in which  the  Company,
directly  or  indirectly,  owns  capital  stock or holds an  equity  or  similar
interest.

                1.1.29 "TRADING DAY" means (a) any day on which the Common Stock
is listed or quoted  and  traded on any  Eligible  Market,  or (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market, then a day
on which trading occurs on the Over-the-Counter Pink Sheets.

                1.1.30 "TRADING MARKET" means the  Over-the-Counter  Pink Sheets
or any Eligible Market on which the Common Stock is then listed or quoted.

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                1.1.31  "TRANSACTION   DOCUMENTS"  means  this  Agreement,   the
Warrants,  the Security Agreement and any other documents or agreements executed
in connection with the transactions contemplated hereunder.

                1.1.32 "UCC FILINGS" means the filings  within  Delaware and New
Hampshire  required  by law to  grant a first  perfected  security  interest  as
contemplated  by the  Security  Agreement  in the assets of the  Company and its
Subsidiary, respectively.

                1.1.33  "WARRANTS"  means one or more  warrants with an exercise
price of $0.35 per share, to purchase up to an aggregate of 4,285,714  shares of
Common Stock issued to the  Purchasers  at the Notes  Closing on a  proportional
basis (a Warrant  entitling  the holder to purchase  2.8571432  shares of Common
Stock for each $1.00  principal  amount of Note  purchased)  to such  Investor's
aggregate purchase of Notes contemplated by this Agreement; which Warrants shall
be in the form of SCHEDULE 1.1.33.

                1.1.34  "WARRANT  SHARES" means the aggregate of up to 4,285,714
shares of Common  Stock  issuable  upon  exercise  of the  Warrants,  subject to
adjustment as provided therein.

                                   ARTICLE II
                         PURCHASE AND SALE OF SECURITIES

         2.1    PURCHASE AND SALE OF NOTES AND WARRANTS.

                2.1.1 NOTES  CLOSING.  Subject to the terms and  conditions  set
forth herein:

                        (a) On the Notes Closing Dates,  the Company shall issue
to each of those Purchasers  listed on and who shall have executed the signature
page to this Agreement  entitled  "PURCHASERS  SIGNATURE PAGE," and each of such
Purchasers  shall  purchase from the Company,  severally  and not jointly,  such
principal  amount of Notes as is indicated  below such  Purchaser's  name on the
Purchasers  Signature Page. On such Notes Closing Dates,  not less than $700,000
and not more than  $1,500,000  principal  amount of Notes shall be purchased and
paid for by the Purchasers. The closings of the sale of the Notes (collectively,
the  "NOTES  CLOSINGS")  shall  take  place at the  offices  of  Gersten  Savage
Kaplowitz Wolf & Marcus LP, 101 East 52nd Street,  New York, New York 10022,  or
at such other location or time as all parties may agree,  on the dates set forth
in Section 2.1.1(b) below.

                        (b) On a date that shall be not later than May 21,  2004
(the  "INITIAL  NOTES  CLOSING  DATE") an  aggregate  of not less than  $700,000
principal amount of Notes shall be purchased and paid for by the Purchasers.  On
a date that  shall be not later  than May 28,  2004 (the  "FINAL  NOTES  CLOSING
DATE") up to an additional  $800,000  principal  amount of Notes (or such lesser
principal  amount equal to the difference  between  $1,500,000 and the principal
amount of Notes sold on the Initial Note Closing Date).

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                2.1.2 NOTES CLOSINGS DELIVERABLES.

                        (a) On the Initial Notes Closing Date, the Company shall
deliver or cause to be  delivered  to each  Purchaser,  against  payment by such
Purchaser of an amount in immediately  available funds to an account  designated
in writing by the Company equal to the principal amount of Notes purchased,  the
following documents:

                                (i) Notes  aggregating not less than $700,000 in
principal amount, free and clear of all restriction and other legends (except as
expressly provided in Section 4.1.2);

                                (ii)  Warrants   entitling   each  Purchaser  to
receive  Warrants to purchase  2.857143  Warrant Shares for each $1.00 principal
amount of Notes  purchased on the Initial  Notes  Closing  Date,  which  Warrant
Shares shall be free and clear of all  restrictions and other legends (except as
expressly provided in Section 4.1.2); and

                                (iii) a signed legal opinion of Company Counsel,
substantially in the form of SCHEDULE 2.1.2(B),  adapted to reflect transactions
occurring on the Initial Notes Closing Date.

                        (b) On the Final Notes Closing  Date,  the Company shall
deliver or cause to be  delivered  to each  Purchaser,  against  payment by such
Purchaser of an amount in immediately  available funds to an account  designated
in writing by the Company equal to the principal amount of Notes purchased,  the
following documents:

                                (i)  Notes  in  aggregate  principal  amount  in
excess of $700,000 and up to $1,500,000,  free and clear of all  restriction and
other legends (except as expressly provided in Section 4.1.2);

                                (ii)  Warrants   entitling   each  Purchaser  to
receive  Warrants to purchase  2.857143  Warrant Shares for each $1.00 principal
amount of Notes purchased on the Final Notes Closing Date,  which Warrant Shares
shall be free  and  clear of all  restrictions  and  other  legends  (except  as
expressly provided in Section 4.1.2); and

                                (iii) a signed legal opinion of Company Counsel,
substantially in the form of SCHEDULE 2.1.2(B),  adapted to reflect transactions
occurring on the Initial Notes Closing Date.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1    REPRESENTATIONS  AND  WARRANTIES  OF THE  COMPANY.  The  Company
hereby represents and warrants to each of the Purchasers as follows:

                3.1.1  SUBSIDIARIES.  The Company has one Subsidiary,  Corporate
Sports Incentives, Inc.

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                3.1.2 ORGANIZATION AND  QUALIFICATION.  The Company is an entity
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction of its  incorporation  or organization  (as  applicable),  with the
requisite  power and authority to own and use its  properties  and assets and to
carry on its business as currently conducted. The Company is not in violation of
any  of  the   provisions  of  its   respective   certificate   or  articles  of
incorporation,  bylaws or other organizational or charter documents. The Company
is  duly  qualified  to  do  business  and  is in  good  standing  as a  foreign
corporation  or other  entity in each  jurisdiction  in which the  nature of the
business conducted or property owned by it makes such  qualification  necessary,
except where the failure to be so qualified or in good standing, as the case may
be,  could not,  individually  or in the  aggregate,  (i)  adversely  affect the
legality,  validity or enforceability of any Transaction Document,  (ii) have or
result in a  material  adverse  effect on the  results  of  operations,  assets,
prospects,  business or condition (financial or otherwise) of the Company, taken
as a whole, or (iii) adversely impair the Company's  ability to perform fully on
a timely basis its obligations  under any of the  Transaction  Documents (any of
(i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").

                3.1.3 AUTHORIZATION;  ENFORCEMENT. The Company has the requisite
corporate  power and authority to enter into and to consummate the  transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction  Documents  by  the  Company  and  the  consummation  by it  of  the
transactions  contemplated  hereby and thereby have been duly  authorized by all
necessary  action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction  Documents  has been (or upon delivery will be) duly executed by the
Company and is, or when  delivered in  accordance  with the terms  hereof,  will
constitute,  the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.

                3.1.4 NO CONFLICTS.  The execution,  delivery and performance of
the Transaction  Documents by the Company and the consummation by the Company of
the  transactions  contemplated  hereby  and  thereby  do not and  will  not (i)
conflict with or violate any provision of the Company's  certificate or articles
of  incorporation,  bylaws or other  organizational or charter  documents,  (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both  would  become a  default)  under,  or give to others any rights of
termination,  amendment,  acceleration or cancellation  (with or without notice,
lapse  of time or  both)  of,  any  agreement,  credit  facility,  debt or other
instrument  (evidencing a Company debt or otherwise) or other  understanding  to
which the Company is a party or by which any property or asset of the Company is
bound  or  affected,  except  to the  extent  that  such  conflict,  default  or
termination  right could not  reasonably be expected to have a Material  Adverse
Effect,  or (iii) result in a violation  of any law,  rule,  regulation,  order,
judgment,  injunction,  decree or other restriction of any court or governmental
authority  to  which  the  Company  is  subject  (including  federal  and  state
securities   laws  and   regulations  and  the  rules  and  regulations  of  any
self-regulatory  organization  to  which  the  Company  or  its  securities  are
subject), or by which any property or asset of the Company is bound or affected.

                3.1.5 ISSUANCE OF THE NOTES,  WARRANTS AND WARRANT  SHARES.  The
Notes, Warrants and Warrant Shares each are duly authorized and, when issued and
paid for in accordance with the Transaction Documents,  will be duly and validly
issued, fully paid and nonassessable,  free

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and clear of all Liens and shall not be subject to preemptive  rights or similar
rights of stockholders.

                3.1.6  CAPITALIZATION.  The  number  of  shares  and type of all
authorized,  issued and outstanding capital stock,  options and other securities
of the Company  (whether or not presently  convertible  into or  exercisable  or
exchangeable  for  shares of  capital  stock of the  Company)  is set forth on a
fully-diluted  basis in SCHEDULE 3.1.6. All outstanding  shares of capital stock
are duly authorized,  validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as disclosed in
SCHEDULE 3.1.6,  there are no outstanding  options,  warrants,  script rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities,   rights  or   obligations   convertible   into  or  exercisable  or
exchangeable  for, or giving any Person any right to  subscribe  for or acquire,
any  shares  of Common  Stock,  or  contracts,  commitments,  understandings  or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common  Stock.  Except as  disclosed in SCHEDULE  3.1.6,  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) and the
issue and sale of the  Securities  will not obligate the Company to issue shares
of Common Stock or other  securities to any Person  (other than the  Purchasers)
and will not result in a right of any holder of Company securities to adjust the
exercise,  conversion,  exchange or reset price  under such  securities.  To the
knowledge of the Company, except as specifically disclosed in SCHEDULE 3.1.6, no
Person or group of related Persons  beneficially owns (as determined pursuant to
Rule 13d-3 under the Exchange  Act),  or has the right to acquire,  by agreement
with or by  obligation  binding  upon the  Company,  beneficial  ownership of in
excess of 5% of the  outstanding  Common  Stock,  ignoring for such purposes any
limitation  on the  number of shares  of Common  Stock  that may be owned at any
single time.

                3.1.7 SEC REPORTS;  FINANCIAL STATEMENTS.  The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act,  including  pursuant to Section 13(a) or 15(d) thereof,  since February 12,
2004 (the foregoing materials being collectively  referred to herein as the "SEC
REPORTS" and,  together with this Agreement and the Schedules to this Agreement,
the "DISCLOSURE  MATERIALS") on a timely basis or has received a valid extension
of such  time of  filing  and has  filed  any  such  SEC  Reports  prior  to the
expiration of any such  extension.  The Company has delivered to the  Purchasers
true,  correct and complete  copies of all SEC Reports filed within the ten (10)
days preceding the date hereof.  As of their  respective  dates, the SEC Reports
complied in all material  respects with the  requirements  of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder,  and none of the SEC  Reports,  when  filed,  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 the
light of the  circumstances  under  which they were made,  not  misleading.  The
financial  statements of the Company  included in the SEC Reports  comply in all
material  respects with  applicable  accounting  requirements  and the rules and
regulations of the Commission  with respect  thereto as in effect at the time of
filing.  Such financial  statements have been prepared in accordance with United
States generally  accepted  accounting  principles applied on a consistent basis
during the periods involved  ("GAAP"),  except as may be otherwise  specified in
such  financial  statements  or the notes  thereto,  and  fairly  present in all
material  respects the  financial  position of the Company and its  consolidated

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subsidiaries  as of and for the dates thereof and the results of operations  and
cash  flows  for the  periods  then  ended,  subject,  in the case of  unaudited
statements,  to normal,  immaterial,  year-end audit  adjustments.  All material
agreements  to which the  Company or any  Subsidiary  is a party or to which the
property or assets of the Company or any  Subsidiary  is subject are included as
part of or specifically identified in the SEC Reports.

                3.1.8  MATERIAL  CHANGES.  Since the date of the latest  audited
financial  statements  included  within the SEC Reports,  except as specifically
disclosed in the SEC Reports or the amendment to the Form 10SB12G filed with the
Commission  on April  12,  2004,  (i) there  has been no  event,  occurrence  or
development that, individually or in the aggregate, has had or that could result
in a Material Adverse Effect,  (ii) the Company has not incurred any liabilities
(contingent  or otherwise)  other than (A) trade  payables and accrued  expenses
incurred in the ordinary  course of business  consistent  with past practice and
(B)  liabilities  not  required  to be  reflected  in  the  Company's  financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission,  (iii) the Company has not altered its method of  accounting  or the
identity of its auditors, (iv) the Company has not declared or made any dividend
or  distribution  of cash or other  property to its  stockholders  or purchased,
redeemed or made any  agreements to purchase or redeem any shares of its capital
stock, and (v) the Company has not issued any equity  securities to any officer,
director or Affiliate,  except pursuant to existing  Company stock option plans;
provided that the Company may issue  capital  stock in accordance  with Sections
5.3.4 and 5.3.5. At the time the Registration  Statement becomes effective,  the
Company  will have all  necessary  procedures  in place that are required by the
Commission  and will be in compliance  with the  Sarbanes-Oxley  Act of 2002, as
amended, to the extent then binding upon the Company as a matter of law.

                3.1.9 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,  threatened  against or  affecting  the Company that
could, individually or in the aggregate, have a Material Adverse Effect.

                3.1.10 COMPLIANCE. The Company (i) is not in default under or in
violation  of (and no event has  occurred  that has not been waived  that,  with
notice  or lapse of time or both,  would  result  in a  default  by the  Company
under),  nor has the  Company  received  notice of a claim that it is in default
under or that it is in violation of, any indenture,  loan or credit agreement or
any other  agreement or  instrument to which it is a party or by which it or any
of its  properties  is bound  (whether or not such default or violation has been
waived),  (ii) is not in  violation  of any order of any  court,  arbitrator  or
governmental  body, or (iii) is not or has not been in violation of any statute,
rule or regulation of any governmental  authority,  including without limitation
all  foreign,  federal,  state and local laws  relating to taxes,  environmental
protection,  occupational  health and  safety,  product  quality  and safety and
employment and labor matters,  except in each case as could not, individually or
in the aggregate, have or result in a Material Adverse Effect.

                3.1.11 TITLE TO ASSETS.  Neither the Company nor any  Subsidiary
owns any real property.  The Company and the Subsidiary have good and marketable
title in all personal property owned by them that is material to their business,
in each case free and clear of all Liens,  except for Liens as do not materially
affect the value of such property and do not  materially

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interfere  with the use made and  proposed  to be made of such  property  by the
Company or Subsidiary.  Any real property and facilities held under lease by the
Company or the Subsidiary is held by it under valid,  subsisting and enforceable
leases of which the Company or any Subsidiary are in compliance.

                3.1.12 CERTAIN FEES.  Except for the fees and  compensation  set
forth on SCHEDULE  3.1.12 to this  Agreement,  no brokerage or finder's  fees or
commissions  are or will be payable  by the  Company  to any  broker,  financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions  contemplated by this Agreement, and the
Company has not taken any action that would cause any Purchaser to be liable for
any such fees or commissions.

                3.1.13  PRIVATE  PLACEMENT.  Neither  the Company nor any Person
acting on the  Company's  behalf has sold or offered  to sell or  solicited  any
offer  to buy the  Notes  by  means  of any  form  of  general  solicitation  or
advertising. Neither the Company nor any of its Affiliates nor any Person acting
on the Company's behalf has, directly or indirectly, at any time within the past
six months,  made any offer or sale of any security or solicitation of any offer
to  buy  any  security  under   circumstances   that  would  (i)  eliminate  the
availability  of the exemption from  registration  under  Regulation D under the
Securities  Act  in  connection  with  the  offer  and  sale  of  the  Notes  as
contemplated  hereby or (ii) cause the  offering  of the Notes  pursuant  to the
Transaction  Documents to be integrated  with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder  approval  provisions,
including,  without  limitation,  under the rules and regulations of any Trading
Market. The Company is not, and is not an Affiliate of, an "investment  company"
within the  meaning of the  Investment  Company  Act of 1940,  as  amended.  The
Company is not a United  States real  property  holding  corporation  within the
meaning of the Foreign Investment in Real Property Tax Act of 1980.

                3.1.14 [Intentionally Omitted]

                3.1.15 TRADING.  The Company's  Common Stock currently is traded
in the "Pink Sheets."

                3.1.16  REGISTRATION  RIGHTS.  Except as  described  in SCHEDULE
3.1.16,  the Company has not granted or agreed to grant to any Person any rights
(including  "piggy-back"  registration  rights)  to have any  securities  of the
Company registered with the Commission or any other governmental  authority that
have not been satisfied.

                3.1.17 APPLICATION OF TAKEOVER PROTECTIONS.  There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights  agreement) or other similar  anti-takeover  provision  under the
Company's  charter  documents  that is or could become  applicable to any of the
Purchasers  as a result  of the  Purchasers  and the  Company  fulfilling  their
obligations  or  exercising  their  rights  under  the  Transaction   Documents,
including,  without  limitation,  as a result of the  Company's  issuance of the
Notes and the Purchasers' ownership of the Notes.

                3.1.18 DISCLOSURE.  The Company confirms that neither it nor any
other Person  authorized to act on its behalf has provided any of the Purchasers
or their  agents or  counsel  with

                                                                               9
<PAGE>

any  information  that  constitutes  or  might  constitute  material,  nonpublic
information.  The Company  understands  and confirms that each of the Purchasers
will  rely  on  the  foregoing  representations  in  effecting  transactions  in
securities of the Company.  All disclosure provided to the Purchasers  regarding
the Company, its business and the transactions  contemplated  hereby,  including
the  Schedules to this  Agreement,  furnished by or on behalf of the Company are
true and correct and do not contain any untrue  statement of a material  fact or
omit to state any material fact necessary in order to make the  statements  made
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.  No event or  circumstance  has occurred or information  exists with
respect to the Company or the Subsidiary 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.  The Company acknowledges
and agrees that no Purchaser makes or has made any representations or warranties
with  respect  to  the  transactions   contemplated   hereby  other  than  those
specifically set forth in Section 3.2.

                3.1.19   ACKNOWLEDGMENT   REGARDING   PURCHASERS'   PURCHASE  OF
SECURITIES.  The Company  acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm's length  purchaser 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 any other Purchaser (or in any similar  capacity) with respect to
this Agreement and the transactions  contemplated hereby and any advice given by
any Purchaser or any of their respective representatives or agents in connection
with  this  Agreement  and  the  transactions   contemplated  hereby  is  merely
incidental to such Purchaser's  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
transactions contemplated hereby by the Company and its representatives.

                3.1.20  PATENTS AND  TRADEMARKS.  The Company and its Subsidiary
have,  or have rights to use,  all  patents,  patent  applications,  trademarks,
trademark  applications,  service marks, trade names,  copyrights,  licenses and
other similar  rights that are necessary or material for use in connection  with
their  respective  businesses  as  described  in the SEC  Reports  and which the
failure  to so have  could have a Material  Adverse  Effect  (collectively,  the
"INTELLECTUAL  PROPERTY  RIGHTS").  Neither the Company nor its Subsidiary  have
received a written  notice that the  Intellectual  Property  Rights used by them
violates or  infringes  upon the rights of any Person.  To the  knowledge of the
Company,  all such Intellectual  Property Rights are enforceable and there is no
existing  infringement  by another  Person of any of the  Intellectual  Property
Rights.

                3.1.21 INSURANCE.  The Company and its Subsidiary are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such amounts as are prudent and customary in the  businesses in which the
Company and Subsidiary are engaged.  Neither the Company nor its Subsidiary have
reason to believe that they will not be able to renew their  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  without  a
significant increase in cost.

                3.1.22  REGULATORY  PERMITS.  The  Company  and  its  Subsidiary
possess all certificates,  authorizations  and permits issued by the appropriate
federal,  state,  local or foreign

                                                                              10
<PAGE>

regulatory  authorities  necessary to conduct their business as described in the
SEC  Reports,  except  where the  failure to  possess  such  permits  could not,
individually  or in the aggregate,  have or result in a Material  Adverse Effect
("MATERIAL  PERMITS"),  and the Company and its Subsidiary have not received any
notice of proceedings relating to the revocation or modification of any Material
Permit.

                3.1.23 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in SEC Reports  filed at least ten days prior to the date hereof,  none of
the officers or  directors of the Company and, to the  knowledge of the Company,
none of the  employees  of the Company is  presently a party to any  transaction
with the  Company or its  Subsidiary  (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
entity in which any officer,  director,  or any such  employee has a substantial
interest or is an officer, director, trustee or partner.

                3.1.24 [INTENTIONALLY OMITTED].

                3.1.25  INTERNAL  ACCOUNTING  CONTROLS.   The  Company  and  its
Subsidiary  maintain a system of  internal  accounting  controls  sufficient  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.

         3.2    REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

                3.2.1 ORGANIZATION;  AUTHORITY.  Such Purchaser is an individual
or entity duly organized,  validly  existing and in good standing under the laws
of  the  jurisdiction  of its  organization  with  the  requisite  corporate  or
partnership power and authority to enter into and to consummate the transactions
contemplated  by the  Transaction  Documents  and  otherwise  to  carry  out its
obligations  hereunder  and  thereunder.  The purchase by such  Purchaser of the
Notes and Warrants hereunder has been duly authorized by all necessary action on
the part of such Purchaser.  This Agreement has been duly executed and delivered
by such  Purchaser  and  constitutes  the valid and binding  obligation  of such
Purchaser, enforceable against it in accordance with its terms.

                3.2.2 INVESTMENT  INTENT.  Such Purchaser is acquiring the Notes
and Warrants as principal for its own account for  investment  purposes only and
not with a view to or for  distributing  or reselling such Notes and Warrants or
any part thereof, without prejudice, however, to such Purchaser's right, subject
to the provisions of this Agreement,  at all times to sell or otherwise  dispose
of all or any part of such Notes pursuant to an effective registration statement
under the  Securities Act or under an exemption  from such  registration  and in
compliance with applicable  federal and state securities laws. Nothing contained
herein shall be

                                                                              11
<PAGE>

deemed a representation or warranty by such Purchaser to hold Notes and Warrants
for any  period  of  time.  Such  Purchaser  does  not  have  any  agreement  or
understanding,  directly or indirectly, with any Person to distribute any of the
Notes and Warrants.

                3.2.3 PURCHASER  STATUS.  At the time such Purchaser was offered
the Notes and  Warrants  it was,  and at the date  hereof it is, an  "accredited
investor" as defined in Rule 501(a) under the Securities Act.

                3.2.4 EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone
or together with its  representatives,  has such knowledge,  sophistication  and
experience in business and financial matters,  including investments in entities
that are listed on the "Pink  Sheets",  so as to be capable  of  evaluating  the
merits  and risks of the  prospective  investment  in the  Notes,  Warrants  and
Warrant  Shares,  and has so evaluated the merits and risks of such  investment.
Such  Purchaser is (i) aware that the volume of the trading market for the Notes
is limited or may be  non-existent  for a period of time;  and (ii) able to bear
the economic risk of an investment  in the Notes,  Warrants and Warrant  Shares,
and, at the present time, is able to afford a complete loss of such investment.

                3.2.5 ACCESS TO INFORMATION. Such Purchaser acknowledges that it
has reviewed the Disclosure  Materials and has been afforded (i) the opportunity
to ask such  questions  as it has deemed  necessary  of, and to receive  answers
from,  representatives of the Company concerning the terms and conditions of the
offering of the Notes and  Warrants and the merits and risks of investing in the
Notes and  Warrants;  (ii)  access to  information  about  the  Company  and the
Subsidiaries and their respective  financial  condition,  results of operations,
business,  properties,  management  and  prospects  sufficient  to  enable it to
evaluate its  investment;  and (iii) the  opportunity to obtain such  additional
information  that the  Company  possesses  or can acquire  without  unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the  investment.  Neither such inquiries nor any other  investigation
conducted by or on behalf of such  Purchaser or its  representatives  or counsel
shall  modify,  amend or affect  such  Purchaser's  right to rely on the  truth,
accuracy  and  completeness  of  the  Disclosure  Materials  and  the  Company's
representations and warranties contained in the Transaction Documents.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1    TRANSFER RESTRICTIONS.

                4.1.1 Notes,  Warrants or Warrant Shares may only be disposed of
pursuant to an effective  registration  statement  under the  Securities  Act or
pursuant to an available  exemption from the  registration  requirements  of the
Securities Act, and in compliance with any applicable  state securities laws. In
connection  with any  transfer of Notes,  Warrants or Warrant  Shares other than
pursuant to an effective registration statement or to the Company or pursuant to
Rule 144(k),  except as otherwise set forth herein,  the Company may require the
transferor  to provide to the  Company  an  opinion of counsel  selected  by the
transferor  (with the costs associated with the production of such opinion borne
by the  Company),  the form and  substance of which  opinion shall be reasonably
satisfactory  to the Company,  to the effect that such transfer does not require

                                                                              12
<PAGE>

registration  under the  Securities  Act.  Notwithstanding  the  foregoing,  the
Company  hereby  consents  to and agrees to register on the books of the Company
and with its Transfer  Agent,  without any such legal  opinion,  any transfer of
Notes,  Warrants  or  Warrant  Shares by a  Purchaser  to an  Affiliate  of such
Purchaser,  provided that the transferee  certifies to the Company that it is an
"accredited  investor"  as defined in Rule 501(a) under the  Securities  Act. In
addition,  if a Purchaser  reasonably  believes  that a transfer  may be made in
compliance with the rules and  regulations of the Commission,  the Purchaser may
request a transfer of Notes,  Warrants or Warrant Shares without  obtaining such
legal opinion,  but the Company (if it is unsure of transferability)  may itself
seek a legal opinion before being required to take any action.

                4.1.2  The  Purchasers  agree to the  imprinting,  so long as is
required by this SECTION 4.1.2, of the following  legend on any Notes,  Warrants
or any certificate evidencing Warrant Shares:

         THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES  AND
         EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE  IN
         RELIANCE UPON AN EXEMPTION FROM  REGISTRATION  UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,  ACCORDINGLY,  MAY NOT
         BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO AN  EFFECTIVE  REGISTRATION
         STATEMENT  UNDER  THE  SECURITIES  ACT  OR  PURSUANT  TO  AN  AVAILABLE
         EXEMPTION  FROM, OR IN A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION
         REQUIREMENTS  OF THE SECURITIES ACT AND IN ACCORDANCE  WITH  APPLICABLE
         STATE SECURITIES LAWS.  NOTWITHSTANDING THE FOREGOING, THESE SECURITIES
         MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
         LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

Certificates  evidencing  Notes shall not be required to contain  such legend or
any other legend (i) while a Registration  Statement covering the resale of such
Notes is effective  under the Securities Act, or (ii) following any sale of such
Notes  pursuant to Rule 144, or (iii) if such Notes are  eligible for sale under
Rule 144(k), or (iv) if (in the written opinion of competent  securities counsel
rendered to the Company,  with the costs  associated with the production of such
opinion  borne by the  Company)  such legend is not  required  under  applicable
requirements  of the  Securities  Act (including  judicial  interpretations  and
pronouncements  issued by the Staff of the Commission).  The Company shall cause
Company  Counsel  to issue the legal  opinion  included  in the  Transfer  Agent
Instructions  to  the  Transfer  Agent  on the  Effective  Date.  Following  the
Effective  Date or at such  earlier  time as a legend is no longer  required for
certain  Notes,  the Company will no later than three Trading Days following the
delivery  by a  Purchaser  to the  Company or the  Transfer  Agent of a legended
certificate  representing  such Notes,  deliver or cause to be delivered to such
Purchaser  a  certificate   representing  such  Notes  that  is  free  from  all
restrictive  and other  legends.  The Company  may not make any  notation on its
records or give  instructions  to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.

                                                                              13
<PAGE>

                4.1.3 The Company  acknowledges  and agrees that a Purchaser may
from time to time  pledge  or grant a  security  interest  in some or all of the
Notes in connection with a bona fide margin agreement or other loan or financing
arrangement  secured  by the  Notes  and,  if  required  under the terms of such
agreement,  loan or arrangement,  such Purchaser may transfer pledged or secured
Notes to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the pledgee,  secured
party or pledgor shall be required in connection  therewith.  Further, no notice
shall be required of such pledge. At the appropriate  Purchaser's  expense,  the
Company will execute and deliver such reasonable  documentation  as a pledgee or
secured party of Notes may  reasonably  request in  connection  with a pledge or
transfer of the Notes,  including  the  preparation  and filing of any  required
prospectus  supplement  under  Rule  424(b)(3)  of the  Securities  Act or other
applicable  provision of the Securities Act to  appropriately  amend the list of
selling stockholders thereunder.

         4.2    FURNISHING OF INFORMATION.  As long as any Purchaser owns Notes,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any  Purchaser,  the  Company  shall  deliver  to such  Purchaser  a  written
certification  of a duly  authorized  officer as to whether it has complied with
the preceding  sentence.  As long as any Purchaser owns Notes, if the Company is
not required to file reports  pursuant to such laws, it will prepare and furnish
to the Purchasers and make publicly  available in accordance  with paragraph (c)
of Rule 144 such information as is required for the Purchasers to sell the Notes
under Rule 144.  The Company  further  covenants  that it will take such further
action as any holder of Notes may  reasonably  request to satisfy the provisions
of Rule 144 applicable to the issuer of securities  relating to transactions for
the sale of securities pursuant to Rule 144.

         4.3    INTEGRATION. Company Counsel and counsel to the Purchasers shall
confirm with the Securities and Exchange Commission ("SEC") that the offering of
the Notes and Warrants  shall not be deemed to be  integrated  with the offer or
sale of shares of Company Common Stock,  as reflected in the Company's Form SB-2
Registration  Statement  filed with the SEC on February  12,  2004 (the  "UNITED
STATES  COMMON  STOCK  OFFERING")  in a manner  that  would  require  the  prior
registration  under the  Securities  Act of the sale of the  Notes  and  Warrant
Shares to the Purchasers.

         4.4    RESERVATION AND LISTING OF COMMON STOCK; BLUE SKY.

                4.4.1  The  Company  shall  maintain  a  reserve  from  its duly
authorized  shares of Common  Stock for  issuance  pursuant  to the  Transaction
Documents in such amount as may be required to fulfill its  obligations  in full
under  the  Transaction  Documents.  In the  event  that at any  time  the  then
authorized  shares of Common Stock are  insufficient  for the Company to satisfy
its  obligations  in full under the  Transaction  Documents,  the Company  shall
promptly  take  such  actions  as may be  required  to  increase  the  number of
authorized shares.

                4.4.2  Following  the  Notes  Closing,  the  Company  shall  use
commercially  reasonable  best  efforts to cause its Common Stock to be approved
for listing on an Eligible  Market and maintain the listing of such Common Stock
on such  Eligible  Market.  The Company

                                                                              14
<PAGE>

covenants to promptly file any listing application  required by the OTC Bulletin
Board with respect to the Warrant Shares.

         4.5    SUBSEQUENT EQUITY OFFERINGS.

                4.5.1  Following the Notes  Closings,  the Company shall use its
best efforts to effect the sale and  placement of not less than  $3,500,000  and
not more than  $7,500,000  of shares of its Common Stock  pursuant to the United
States  Common  Stock  Offering  and/or a separate  offering of shares of Common
Stock on the London Stock Exchange  Alternative  Investment Market ("AIMS");  in
each case,  at per share  prices that shall be greater  than the $0.35 per share
Exercise Price of the Warrants.  In such  connection,  the Company shall, on the
Initial Notes Closing Date, engage SD Partners and/or the services of an advisor
recommended by SD Partners  (individually and collectively,  the "AIMS ADVISOR")
to assist the Company in  effecting  an offering of its Common Stock on the AIMs
market.  Pursuant to the Advisory Agreement,  the AIMs Advisor shall be entitled
to receive an  advisory  fee of $25,000  per month for a period of up to six (6)
consecutive  months,  payable on the first day of the month  commencing  June 1,
2004,  and  such  other  success  fees as  shall  be  provided  in the  Advisory
Agreement.

         4.6    SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, on the
Final Notes Closing Date,  issue a press  release  reasonably  acceptable to the
Purchasers  disclosing  all  material  terms  of the  transactions  contemplated
hereby. Not later than five days after the Final Notes Closing Date, the Company
shall file a Current Report on Form 8-K with the  Commission  (the "8-K FILING")
describing  the  material  terms  of  the   transactions   contemplated  by  the
Transaction  Documents and including as exhibits to such Current  Report on Form
8-K this  Agreement in the form  required by the Exchange Act.  Thereafter,  the
Company shall timely file any filings and notices  required by the Commission or
applicable law with respect to the transactions  contemplated hereby and provide
copies thereof to the Purchasers  promptly after filing.  Except with respect to
the 8-K Filing and the press release  referenced  above (a copy of which will be
provided to the Purchaser  Designee on behalf of the Purchasers for their review
as early as practicable  prior to its filing),  the Company shall,  at least two
Trading Days prior to the filing or dissemination of any disclosure  required by
this  paragraph,  provide a copy thereof to the Purchaser  Designee on behalf of
the  Purchasers  for their  review.  The Company and the  Purchaser  Designee on
behalf of the  Purchasers  shall  consult  with each other in issuing  any press
releases  or  otherwise   making   public   statements   or  filings  and  other
communications  with the Commission or any  regulatory  agency or Trading Market
with respect to the transactions  contemplated  hereby,  and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other  communication  without the prior consent of the other,  except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior  notice of such public  statement,  filing or
other  communication.  Notwithstanding  the  foregoing,  the  Company  shall not
publicly  disclose  the  name  of any  Purchaser,  or  include  the  name of any
Purchaser in any filing with the Commission or any regulatory  agency or Trading
Market,  without  the prior  written  consent of such  Purchaser,  except to the
extent such  disclosure  (but not any disclosure as to the  controlling  Persons
thereof)  is required by law or Trading  Market  regulations,  in which case the
Company shall provide the Purchasers with prior notice of such  disclosure.  The
Company shall not, and shall cause each of its  Subsidiaries and its and each of
their respective officers,  directors,  employees and agents not to, provide any
Purchaser with any material nonpublic  information  regarding the Company or

                                                                              15
<PAGE>

any of its Subsidiaries  from and after the filing of the 8-K Filing without the
express  written  consent  of such  Purchaser.  In the  event of a breach of the
foregoing  covenant by the Company,  any of its  Subsidiaries,  or any of its or
their respective officers,  directors,  employees and agents, in addition to any
other remedy provided herein or in the Transaction  Documents, a Purchaser shall
have  the  right to make a public  disclosure,  in the form of a press  release,
public  advertisement  or  otherwise,  of such  material  nonpublic  information
without the prior approval by the Company,  its  Subsidiaries,  or any of its or
their respective  officers,  directors,  employees or agents. No Purchaser shall
have any  liability to the  Company,  its  Subsidiaries,  or any of its or their
respective officers, directors,  employees,  stockholders or agents for any such
disclosure.  Subject to the  foregoing,  neither the  Company nor any  Purchaser
shall issue any press  releases 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 any  Purchaser,  to make any press
release or other  public  disclosure  with respect to such  transactions  (i) in
substantial  conformity with the 8-K Filing and contemporaneously  therewith and
(ii) as is required by applicable law and regulations (provided that in the case
of clause (i) each  Purchaser  shall be consulted  by the Company in  connection
with any such press  release or other public  disclosure  prior to its release).
Each press release  disseminated during the 12 months preceding the date of this
Agreement  did not at the time of  release  contain  any untrue  statement  of a
material fact or omit 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 are made, not misleading.

         4.7    USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Notes and  Warrants  hereunder  solely for the purposes set forth on
SCHEDULE 4.7.

         4.8    REIMBURSEMENT.  If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED  PERSON")  becomes involved in any capacity
in any  Proceeding  brought by or against any Person in connection  with or as a
result  of the  transactions  contemplated  by the  Transaction  Documents,  the
Company will  indemnify and hold harmless such  Purchaser or Related  Person for
its  reasonable   legal  and  other   expenses   (including  the  costs  of  any
investigation, preparation and travel) and for any Losses incurred in connection
therewith,  as such expenses or Losses are incurred,  excluding only Losses that
result directly from such Purchaser's or Related Person's  negligence or willful
misconduct.  In addition,  the Company  shall  indemnify  and hold harmless each
Purchaser and Related  Person from and against any and all Losses,  as incurred,
arising  out  of or  relating  to  any  breach  by  the  Company  of  any of the
representations,  warranties or covenants  made by the Company in this Agreement
or any other Transaction  Document,  or any allegation by a third party that, if
true, would  constitute such a breach.  The conduct of any Proceedings for which
indemnification  is available  under this paragraph shall be governed by Section
6.4(c)  below.  The  indemnification  obligations  of  the  Company  under  this
paragraph  shall be in addition to any liability  that the Company may otherwise
have and shall be  binding  upon and  inure to the  benefit  of any  successors,
assigns,  heirs and  personal  representatives  of the  Purchasers  and any such
Related  Persons.  The Company also agrees that neither the  Purchasers  nor any
Related Persons shall have any liability to the Company or any Person  asserting
claims on behalf of or in right of the Company in connection with or as a result
of the  transactions  contemplated by the Transaction  Documents,  except to the
extent that any Losses  incurred by the Company  result from the  negligence  or
willful  misconduct of the applicable  Purchaser or Related

                                                                              16
<PAGE>

Person in  connection  with  such  transactions.  If the  Company  breaches  its
obligations  under any  Transaction  Document,  then,  in  addition to any other
liabilities  the Company may have under any  Transaction  Document or applicable
law, the Company shall pay or reimburse  the  Purchasers on demand for all costs
of  collection  and  enforcement   (including   reasonable  attorneys  fees  and
expenses).  Without  limiting  the  generality  of the  foregoing,  the  Company
specifically  agrees to  reimburse  the  Purchasers  on demand  for all costs of
enforcing the indemnification obligations in this paragraph.

         4.9    FUTURE EQUITY OFFERINGS.

                (a) Subject to the exceptions described in Section 4.9(b) below,
for a period of six (6) months  following the Final  Closing  Date,  the Company
will not,  without the prior written  consent of the Purchaser  Designee,  sell,
offer to sell or contract  with any Person to obtain  proceeds  from the sale of
Equity Equivalents that involves:

                        (i) the  issuance  of shares of Common  Stock at a price
per share that shall be less than $0.35 (unless in such connection,  the Company
shall offer to reduce the exercise  price of the Warrants to such lower exercise
price), or

                        (ii)  the  issuance  of  Equity   Equivalents  that  are
convertible into or exercisable for an indeterminate  number of shares of Common
Stock, or

                        (iii) are not  subject  to  restrictions  on the  public
resale or  distribution  thereof  of for at least six (6) months  following  the
effective date of the  Registration  Statement

(the  limitations  referred  to in this  Section  4.9(a) are  referred to as the
"CAPITAL RAISING LIMITATIONS").

                (b) The Capital Raising  Limitations set forth in Section 4.9(a)
shall NOT apply to any transaction or series of transactions involving issuances
of securities:

                        (i)  to  employees,  directors  or  consultants  of  the
Company pursuant to a Company stock option plan;

                        (ii) upon the  exercise or  conversion,  as the case may
be, of currently outstanding options, warrants or convertible securities;

                        (iv)  upon  the   exercise  of  the  Warrants  or  other
Registrable Securities issued pursuant to the Transaction Documents;

                        (v)  in  connection  with  any  business   acquisitions,
mergers or strategic partnerships; or

                        (v) the sale of shares of Company  Common Stock pursuant
to the United State  Common Stock  Offering  and/or the AIMs  Offering,  in each
case, at per share prices that shall be equal to or greater than $0.35 per share
(unless, in each such

                                                                              17
<PAGE>

case,  the Company  shall offer to reduce the exercise  price of the Warrants to
such lower exercise price).

                                   ARTICLE V
                                   CONDITIONS

         5.1    CONDITIONS  PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS.  The
obligation of each  Purchaser to acquire Notes and Warrants on the Initial Notes
Closing Date and on the Final Notes Closing Date (as  applicable)  is subject to
the  satisfaction or waiver by such Purchaser,  on or before each of the Initial
Closing Date or the Final Closing Date, as applicable,  of each of the following
conditions:

                5.1.1  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties  of the  Company  contained  herein  shall be true and correct in all
material  respects as of the date when made on each of the Initial  Closing Date
and the Final Closing Date, as though made on and as of such dates; and

                5.1.2  PERFORMANCE.  The Company and each other  Purchaser shall
have  performed,  satisfied  and  complied  in all  material  respects  with all
covenants, agreements and conditions required by the Transaction Documents to be
performed,  satisfied or complied with by it at or prior to the Initial  Closing
Date and the Final Closing Date, as applicable.

                5.1.3  EFFECTIVENESS  OF FORM 10SB.  The Company's  Form 10SB12G
filing  that  was  filed  with  the  Commission  on April  12,  2004 has  become
effective.

                5.1.4  SUBORDINATION  OF  CERTAIN  COMPANY  INDEBTEDNESS.  On or
before the Final Closing Date,  the Company shall obtain from holders of Company
indebtedness  for  borrowed  money  representing  not less than an  aggregate of
$1,405,000 of the (a) $470,000  outstanding 9% convertible  notes of the Company
due 2006;  (b) $1,175,000  outstanding  amount of 7% bridge notes of the Company
due November 2004; and (c) $260,000 of outstanding  10% notes of the Company due
2005,  shall  pursuant  to  a  subordination   agreement  in  form  and  content
satisfactory to counsel to Purchasers, be made fully subject and subordinated to
the payment in full of the Notes.

                5.1.5  LOCK-UP  AGREEMENT.  On or before the Final Closing Date,
the Company  shall  undertake  to obtain from all Company  directors,  officers,
holders of 5% or more of the  Company's  Common  Stock and all selling  security
holders identified in the United States Common Stock Offering shall enter into a
Lock-Up Agreement wherein each of the foregoing agree that they will not, during
the period  ending May 15, 2005 (a) offer,  pledge,  announce  the  intention to
sell, sell, contract to sell, sell any option or contract to purchase,  purchase
any option or contract to sell, grant any option,  right or warrant to purchase,
or otherwise  transfer or dispose of, directly or indirectly,  any securities of
the Company or Equity Equivalents (including,  securities which may be deemed to
be  beneficially  owned by them in accordance  with the rules and regulations of
the Securities and Exchange  Commission and securities  which may be issued upon
exercise  of a stock  option or  warrant)  or (b) enter  into any swap,  option,
future,  forward or other agreement that transfers,  in whole or in part, any of
the economic consequences of

                                                                              18
<PAGE>

ownership of any securities of the Company,  including,  but not limited to, any
security  convertible  into or exercisable or exchangeable for any securities of
the Company.  Notwithstanding the foregoing,  in the event that any such Company
stockholder  fails or refuses to execute and deliver such  Lock-Up  Agreement by
the Final Notes Closing Date (a "DEFAULTING STOCKHOLDER"), the Company shall (i)
amend its  registration  statement in respect of the United  States Common Stock
Offering  to  remove  such  Defaulting  Stockholder  as  a  selling  stockholder
thereunder,  and (ii) instruct its legal counsel and the transfer agent to place
a "stop  transfer"  order with  respect to all shares of Common  Stock  owned of
record by such Defaulting Stockholder or his or its Affiliates.

         5.2    CONDITIONS  PRECEDENT TO THE  OBLIGATIONS  OF THE  COMPANY.  The
obligation  of the Company to sell Notes at the Notes  Closing is subject to the
satisfaction  or waiver by each  Purchaser,  at or before each such Closing,  of
each of the following conditions:

                5.2.1  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties of the Purchasers  contained  herein shall be true and correct in all
material respects as of the date when made and as of the applicable Closing Date
as though made on and as of such date; and

                5.2.2   PERFORMANCE.   The  Purchasers   shall  have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by the Transaction Documents to be performed,  satisfied
or complied with by the Purchasers at or prior to such Closing.

                                   ARTICLE VI
                               REGISTRATION RIGHTS

         6.1    REGISTRATION

                6.1.1 Not later than sixty (60) days after the effective date of
the United States Common Stock  Offering  registration  statement  (the "PENDING
REGISTRATION  STATEMENT")  , the Company  shall have prepared and filed with the
Commission the Registration  Statement covering the sale to the Purchasers,  and
the resale by the Purchasers of all Registrable Securities for an offering to be
made on a  continuous  basis  pursuant to Rule 415.  The Company  shall have the
right to include in such Registration  Statement,  securities of the Company (a)
registered for resale pursuant to the Pending Registration Statement, and/or (b)
previously  issued or committed  to be issued,  to the extent and to the Persons
disclosed on SCHEDULE 3.1.16.

                6.1.2 The  Company  shall  promptly  respond  to all  letters of
comment that the Company shall receive from the staff of the SEC with respect to
such  Registration  Statement  and shall use its  commercially  reasonable  best
efforts to cause the Registration  Statement to be declared effective by the SEC
as soon as practicable  thereafter;  provided,  that the Purchasers  acknowledge
that such  registration  efforts  may be delayed  in the event that the  Company
enters into any agreement or  commitment  for the  acquisition  of any assets or
securities  of any  Person  prior  to the  effectiveness  of  such  Registration
Statement,  and is required to cause an audit to be conducted in accordance with
the rules and  regulations  promulgated  by the SEC.  By his  execution  of this
Agreement, Anthony G. Roth, does hereby personally guaranty that, for so long

                                                                              19
<PAGE>

as he shall be the  President  and CEO of the Company,  the Company shall comply
with its covenants and agreements contained in this Section 6.1.2.

                6.1.3 The Company  shall use its  commercially  reasonable  best
efforts to keep the  Registration  Statement  continuously  effective  under the
Securities  Act until  the  second  anniversary  of the  Effective  Date or such
earlier  date  when all  Registrable  Securities  covered  by such  Registration
Statement have been sold (the "EFFECTIVENESS PERIOD").

                6.1.4  The  Company  shall  notify  each  Purchaser  in  writing
promptly (and in any event within one Trading Day) after receiving  notification
from the Commission that the Registration Statement has been declared effective.

                6.1.5 Upon the occurrence of any Event (as defined below) and on
every  monthly  anniversary  thereof  until the  applicable  Event is cured,  as
partial relief for the damages suffered therefrom by any Purchaser (which remedy
shall not be exclusive of any other remedies available under this Agreement,  at
law or in equity),  the Company shall pay or issue,  as the case may be, to each
Purchaser  as to which an Event  relates,  as  liquidated  damages  and not as a
penalty,  cash or,  upon the  payment of the par value  thereof,  such number of
shares  of Common  Stock as shall  equal  three  percent  (3%) of the  aggregate
outstanding  principal  amount of the Notes  purchased by such Purchasers at the
Notes Closings. Such additional shares are designated "EVENT SHARES" and will be
treated by all parties,  after issuance,  in the same manner as all other Shares
of  Common  Stock  and  shall  thereafter  be  included  in  the  definition  of
"Registrable  Securities."  Event Shares will be issued on a pro-rata  basis for
any portion of a month prior to the cure of an Event.

For such  purposes,  each of the  following if occurring  prior to or during the
Effectiveness Period shall constitute an "EVENT":

                        (i) the Registration Statement is not declared effective
on or prior to the Required Effectiveness Date;

                        (ii) after the  Effective  Date,  a  Purchaser  (without
fault  on the  part of any  Purchaser)  is not  permitted  to  sell  Registrable
Securities  under  the  Registration  Statement  (or a  subsequent  Registration
Statement filed in replacement  thereof) for any reason for five or more Trading
Days (whether or not consecutive);

                        (iii)  after  the  Effective   Date,   any   Registrable
Securities covered by such Registration  Statement are not listed on an Eligible
Market;

                        (iv) after the Effective  Date,  the Common Stock is not
listed or quoted,  or is suspended  from  trading,  on an Eligible  Market for a
period of three Trading Days (which need not be consecutive Trading Days);

                        (v) the  Company  fails  for any  reason  to  deliver  a
certificate  evidencing  any Shares of Common Stock to a Purchaser  within three
Trading  Days after  delivery of such  certificate  is required  pursuant to any
Transaction  Document or the exercise  rights of the Purchasers  pursuant to the
Transaction Documents are otherwise suspended for any reason.

                                                                              20
<PAGE>

         6.2    REGISTRATION  PROCEDURES.   In  connection  with  the  Company's
registration obligations hereunder, the Company shall:

                6.2.1 Not less than three  Trading Days prior to the filing of a
Registration  Statement or any related Prospectus or any amendment or supplement
thereto  (including  any  document  that would be  incorporated  or deemed to be
incorporated  therein  by  reference),  the  Company  shall (i)  furnish to each
Purchaser  and any counsel  designated  by any  Purchaser  (each,  a  "PURCHASER
COUNSEL"),  copies of all such documents  proposed to be filed,  which documents
(other than those  incorporated  or deemed to be incorporated by reference) will
be subject to the review of such Purchasers and each Purchaser Counsel, and (ii)
cause its officers  and  directors,  counsel and  independent  certified  public
accountants  to  respond  to  such  inquiries  as  shall  be  necessary,  in the
reasonable  opinion  of  each  Purchaser   Counsel,   to  conduct  a  reasonable
investigation  within the meaning of the  Securities  Act. The Company shall not
file a  Registration  Statement  or any such  Prospectus  or any  amendments  or
supplements  thereto to which  Purchasers  holding a majority of the Registrable
Securities shall reasonably object.

                6.2.2 (i) Prepare and file with the Commission such  amendments,
including  post-effective  amendments,  to each  Registration  Statement and the
Prospectus  used  in  connection  therewith  as may be  necessary  to  keep  the
Registration  Statement  continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such  additional  Registration  Statements in order to register for resale under
the Securities  Act all of the  Registrable  Securities;  (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus  supplement,
and as so  supplemented  or  amended  to be filed  pursuant  to Rule 424;  (iii)
respond as promptly as reasonably possible, and in any event within ten days, to
any comments  received  from the  Commission  with  respect to the  Registration
Statement  or any  amendment  thereto  and as promptly  as  reasonably  possible
provide the Purchasers true and complete copies of all  correspondence  from and
to the Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the  disposition of all  Registrable  Securities  covered by the
Registration  Statement  during the  applicable  period in  accordance  with the
intended  methods of  disposition  by the  Purchasers  thereof  set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                6.2.3 Notify the Purchasers of Registrable Securities to be sold
and each Purchaser Counsel as promptly as reasonably possible, and (if requested
by any such Person) confirm such notice in writing no later than one Trading Day
thereafter,  of any of the following  events:  (i) the  Commission  notifies the
Company whether there will be a "review" of any Registration Statement; (ii) the
Commission comments in writing on any Registration  Statement (in which case the
Company  shall  deliver to each  Purchaser  a copy of such  comments  and of all
written   responses   thereto);   (iii)  any   Registration   Statement  or  any
post-effective amendment is declared effective; (iv) the Commission or any other
Federal or state governmental  authority requests any amendment or supplement to
any  Registration  Statement or  Prospectus or requests  additional  information
related  thereto;  (v) the  Commission  issues  any stop  order  suspending  the
effectiveness  of any  Registration  Statement or initiates any  Proceedings for
that  purpose;  (vi)  the  Company  receives  notice  of any  suspension  of the
qualification or exemption from qualification of any Registrable  Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose;  or  (vii)  the  financial  statements  included  in  any  Registration

                                                                              21
<PAGE>

Statement become  ineligible for inclusion  therein or any statement made in any
Registration  Statement or Prospectus or any document  incorporated or deemed to
be  incorporated  therein by reference is untrue in any material  respect or any
revision to a Registration  Statement,  Prospectus or other document is required
so that it will not contain any untrue  statement of a material  fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.

                6.2.4 Use its commercially  reasonable best efforts to avoid the
issuance of or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness  of any  Registration  Statement,  or (ii) any  suspension  of the
qualification  (or  exemption  from  qualification)  of any  of the  Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

                6.2.5  Furnish to each  Purchaser  and each  Purchaser  Counsel,
without charge, at least one conformed copy of each  Registration  Statement and
each amendment  thereto,  including  financial  statements  and  schedules,  all
documents  incorporated or deemed to be incorporated  therein by reference,  and
all exhibits to the extent requested by such Person  (including those previously
furnished  or  incorporated  by  reference)  promptly  after the  filing of such
documents with the Commission.

                6.2.6  Promptly  deliver to each  Purchaser  and each  Purchaser
Counsel,  without  charge,  as many  copies of the  Prospectus  or  Prospectuses
(including each form of prospectus) and each amendment or supplement  thereto as
such Persons may reasonably  request.  The Company hereby consents to the use of
such Prospectus and each amendment or supplement  thereto by each of the selling
Purchasers  in  connection  with  the  offering  and  sale  of  the  Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.

                6.2.7 Once  applicable:  (i) in the time and manner  required by
each Trading  Market,  prepare and file with such Trading  Market an  additional
shares listing application covering all of the Registrable Securities; (ii) take
all steps  necessary  to cause such  Registrable  Securities  to be approved for
listing on each Trading Market as soon as possible thereafter;  (iii) provide to
the Purchasers  evidence of such listing;  and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.

                6.2.8 Prior to any public  offering of  Registrable  Securities,
use its best  efforts  to  register  or qualify or  cooperate  with the  selling
Purchasers  and  each  applicable  Purchaser  Counsel  in  connection  with  the
registration  or   qualification   (or  exemption  from  such   registration  or
qualification)  of such  Registrable  Securities  for offer  and sale  under the
securities  or blue sky laws of such  jurisdictions  within the United States as
any  Purchaser   requests  in  writing,   to  keep  each  such  registration  or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things  necessary or advisable to enable the
disposition in such  jurisdictions  of the Registrable  Securities  covered by a
Registration  Statement;  PROVIDED,  HOWEVER,  that  the  Company  shall  not be
obligated  to file any general  consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so  qualified  or to subject  itself to taxation in any  jurisdiction  in
which it is not otherwise subject.

                                                                              22
<PAGE>

                6.2.9  Cooperate  with the  Purchasers to facilitate  the timely
preparation and delivery of certificates  representing Registrable Securities to
be  delivered  to a  transferee  pursuant  to a  Registration  Statement,  which
certificates  shall be free, to the extent  permitted by this Agreement,  of all
restrictive  legends,  and to enable such  Registrable  Securities to be in such
denominations and registered in such names as any such Purchasers may request.

                6.2.10 Upon the  occurrence  of any event  described  in Section
6.2.3(vii),  as  promptly  as  reasonably  possible,  prepare  a  supplement  or
amendment,  including a post-effective  amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that,  as  thereafter  delivered,  neither the  Registration  Statement nor such
Prospectus will contain an 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 light of the  circumstances  under  which they were
made, not misleading.

                6.2.11 Cooperate with any due diligence investigation undertaken
by the  Purchasers  in  connection  with  the  sale of  Registrable  Securities,
including without  limitation by making available any documents and information;
provided  that the Company will not deliver or make  available to any  Purchaser
material,  nonpublic information unless such Purchaser  specifically requests in
advance to receive  material,  nonpublic  information  in writing  and agrees to
utilize such information in a manner consistent with applicable law.

                6.2.12 If Holders of a majority  of the  Registrable  Securities
being offered pursuant to a Registration  Statement select  underwriters for the
offering,  the Company  shall enter into and  perform its  obligations  under an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,   by  providing  customary  legal  opinions,   comfort  letters  and
indemnification and contribution obligations.

                6.2.13 Comply with all applicable  rules and  regulations of the
Commission.

         6.3    REGISTRATION  EXPENSES. The Company shall pay (or  reimburse the
Purchasers  for)  all  fees  and  expenses  incident  to the  performance  of or
compliance with this Agreement by the Company,  including without limitation (a)
all  registration  and filing fees and expenses,  including  without  limitation
those  related  to  filings  with the  Commission,  any  Trading  Market  and in
connection  with  applicable  state  securities  or Blue Sky laws,  (b) printing
expenses  (including  without limitation  expenses of printing  certificates for
Registrable   Securities   and  of  printing   prospectuses   requested  by  the
Purchasers),  (c)  messenger,  telephone  and  delivery  expenses,  (d) fees and
disbursements  of counsel for the Company and up to $10,000 in the aggregate for
the fees and expenses of one legal  counsel  designated by the  Purchasers,  (e)
fees and  expenses of all other  Persons  retained by the Company in  connection
with the  consummation of the transactions  contemplated by this Agreement,  and
(f) all listing fees to be paid by the Company to the Trading Market.

         6.4    INDEMNIFICATION

                6.4.1   INDEMNIFICATION  BY  THE  COMPANY.  The  Company  shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Purchaser, the officers,

                                                                              23
<PAGE>

directors,  partners,  members, agents, brokers (including brokers who offer and
sell Registrable  Securities as principal as a result of a pledge or any failure
to  perform  under a margin  call of  Common  Stock),  investment  advisors  and
employees of each of them,  each Person who controls any such Purchaser  (within
the meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange
Act) and the officers,  directors,  partners,  members,  agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all Losses, as incurred,  arising out of or relating to
any untrue or alleged  untrue  statement  of a material  fact  contained  in the
Registration  Statement,  any  Prospectus  or any form of  prospectus  or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged  omission of a material  fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement  thereto, in the light of the
circumstances under which they were made) not misleading,  except to the extent,
but  only to the  extent,  that  (i)  such  untrue  statements,  alleged  untrue
statements,  omissions or alleged  omissions  are based solely upon  information
regarding such  Purchaser  furnished in writing to the Company by such Purchaser
expressly  for use therein,  or to the extent that such  information  relates to
such  Purchaser  or  such   Purchaser's   proposed  method  of  distribution  of
Registrable  Securities  and was reviewed and  expressly  approved in writing by
such Purchaser expressly for use in the Registration Statement,  such Prospectus
or such form of Prospectus or in any amendment or supplement  thereto or (ii) in
the  case  of an  occurrence  of an  event  of the  type  specified  in  Section
6.2.3(v)-(vii), the use by such Purchaser of an outdated or defective Prospectus
after the Company has notified such  Purchaser in writing that the Prospectus is
outdated or defective  and prior to the receipt by such  Purchaser of the Advice
contemplated in Section 6.5. The Company shall notify the Purchasers promptly of
the  institution,  threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.

                6.4.2  INDEMNIFICATION  BY  PURCHASERS.  Each  Purchaser  shall,
severally  and not  jointly,  indemnify  and  hold  harmless  the  Company,  its
directors,  officers, agents and employees, each Person who controls the Company
(within  the meaning of Section 15 of the  Securities  Act and Section 20 of the
Exchange  Act),  and  the  directors,  officers,  agents  or  employees  of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as  determined  by a court of  competent  jurisdiction  in a
final judgment not subject to appeal or review) arising solely out of any untrue
statement  of a material  fact  contained  in the  Registration  Statement,  any
Prospectus,  or any  form  of  prospectus,  or in any  amendment  or  supplement
thereto, or arising solely out of any omission of a material fact required to be
stated therein or necessary to make the  statements  therein (in the case of any
Prospectus  or form of prospectus  or  supplement  thereto,  in the light of the
circumstances under which they were made) not misleading to the extent, but only
to the extent,  that such untrue  statement  or  omission  is  contained  in any
information   so  furnished  in  writing  by  such   Purchaser  to  the  Company
specifically for inclusion in such Registration  Statement or such Prospectus or
to the extent that (i) such untrue statements or omissions are based solely upon
information regarding such Purchaser furnished in writing to the Company by such
Purchaser  expressly  for use  therein,  or to the extent that such  information
relates to such Purchaser or such Purchaser's proposed method of distribution of
Registrable  Securities  and was reviewed and  expressly  approved in writing by
such Purchaser expressly for use in the Registration Statement,  such Prospectus
or such form of Prospectus or in any amendment or supplement  thereto or (ii) in
the  case  of an  occurrence  of an  event  of the  type  specified  in  SECTION
6.2.3(V)-(VII), the use by such Purchaser of an outdated or

                                                                              24
<PAGE>

defective  Prospectus  after the Company has notified such  Purchaser in writing
that the  Prospectus  is outdated or defective  and prior to the receipt by such
Purchaser  of the Advice  contemplated  in SECTION  6.5.  In no event  shall the
liability  of any  selling  Purchaser  hereunder  be greater in amount  than the
dollar  amount  of the net  proceeds,  in  excess  of the  amount  paid for such
Registrable  Securities,  received  by  such  Purchaser  upon  the  sale  of the
Registrable Securities giving rise to such indemnification obligation.

                6.4.3 CONDUCT OF INDEMNIFICATION  PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity  hereunder
(an  "INDEMNIFIED  PARTY"),  such  Indemnified  Party shall promptly  notify the
Person from whom indemnity is sought (the "INDEMNIFYING  PARTY") in writing, and
the  Indemnifying  Party  shall  assume  the  defense  thereof,   including  the
employment of counsel  reasonably  satisfactory to the Indemnified Party and the
payment of all fees and expenses  incurred in connection  with defense  thereof;
provided,  that the failure of any  Indemnified  Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this  Agreement,  except  (and  only) to the  extent  that it  shall be  finally
determined  by a court of competent  jurisdiction  (which  determination  is not
subject to appeal or further  review) that such failure  shall have  proximately
and materially adversely prejudiced the Indemnifying Party.

                An  Indemnified  Party  shall have the right to employ  separate
counsel in any such  Proceeding and to participate in the defense  thereof,  but
the  fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
Indemnified  Party or Parties unless:  (i) the Indemnifying  Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed  promptly to assume the defense of such  Proceeding and to employ counsel
reasonably  satisfactory to such Indemnified  Party in any such  Proceeding;  or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include  both  such  Indemnified  Party  and the  Indemnifying  Party,  and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified  Party
and the Indemnifying  Party (in which case, if such  Indemnified  Party notifies
the  Indemnifying  Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                All  fees  and  expenses  of the  Indemnified  Party  (including
reasonable  fees  and  expenses  to  the  extent  incurred  in  connection  with
investigating   or  preparing  to  defend  such   Proceeding  in  a  manner  not
inconsistent  with this  Section)  shall be paid to the  Indemnified  Party,  as
incurred, within ten calendar days of written notice thereof to the Indemnifying
Party  (regardless  of whether it is ultimately  determined  that an Indemnified
Party  is  not  entitled  to  indemnification  hereunder;   provided,  that  the
Indemnifying  Party may require such Indemnified Party to undertake to reimburse
all such fees and  expenses  to the extent it is finally  judicially  determined
that such Indemnified Party is not entitled to indemnification hereunder).

                                                                              25
<PAGE>

                6.4.4 CONTRIBUTION. If a claim for indemnification under SECTION
6.4.1 or .2 is unavailable  to an  Indemnified  Party (by reasons other than the
specified exclusions to indemnification),  then each Indemnifying Party, in lieu
of indemnifying such Indemnified  Party,  shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative  fault of the  Indemnifying  Party and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  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 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 Losses shall be deemed to include, subject
to the  limitations  set forth in SECTION 6.4.3,  any  reasonable  attorneys' or
other reasonable fees or expenses  incurred by such party in connection with any
Proceeding 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  6.4.4 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  6.4.4,  no Purchaser  shall be
required to contribute,  in the aggregate, any amount in excess of the amount by
which the net proceeds  actually received by such Purchaser from the sale of the
Registrable  Securities  subject  to the  Proceeding  exceeds  the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                The  indemnity  and  contribution  agreements  contained in this
Section are in addition to any liability that the Indemnifying  Parties may have
to the Indemnified Parties.

         6.5    DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus  delivery  requirements  of the Securities Act as applicable to it in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company  of the  occurrence  of any  event of the  kind  described  in  SECTIONS
6.2.3(V),  (VI) or (VII),  such Purchaser will  discontinue  disposition of such
Registrable  Securities under the Registration  Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by SECTION 6.2.10, or until it is advised in writing (the
"ADVICE")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.

                                                                              26
<PAGE>

         6.6    PURCHASERS' PIGGY-BACK  REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective  Registration  Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the  Commission a registration  statement  relating to an offering for
its own account or the account of others under the  Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents  relating to equity  securities to
be issued solely in connection with any acquisition of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans,  then the Company shall send to each Purchaser  written notice of
such determination and if, within fifteen days after receipt of such notice, any
such  Purchaser  shall so request in writing,  the Company shall include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Purchaser requests to be registered.  In such event, the following provisions of
this Agreement shall apply: Sections 6.2.5, 6.2.6, 6.4 and 6.5.

                                  ARTICLE VII
                                  MISCELLANEOUS

         7.1    TERMINATION.  Unless  otherwise  agreed  by Great  Court and the
Company, this Agreement shall automatically terminate and be of no further force
if Purchasers  fail to purchase at least  $700,000 of the Notes by May 21, 2004.
In the  event  of such  termination  no party  hereto  shall  have  any  further
liability to the other.

         7.2    FEES AND  EXPENSES.  On the  Initial  Notes  Closing  Date,  the
Company  shall pay to  counsel  for all  Purchasers  $15,000  for legal fees and
expenses  incurred in connection  with the  preparation  and  negotiation of the
Transaction  Documents.  Except as otherwise set forth herein, the Company shall
have no further obligation to pay fees of counsel for any Purchaser at any other
time.  Except  as  expressly  set  forth  in the  Transaction  Documents  to the
contrary,  each party shall pay the fees and expenses of its advisers,  counsel,
accountants and other experts,  if any, and all other expenses  incurred by such
party  incident  to  the  negotiation,   preparation,  execution,  delivery  and
performance  of this  Agreement.  The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the issuance of
the Notes.

         7.3    ENTIRE AGREEMENT.  The Transaction Documents,  together with the
Exhibits and Schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents,  exhibits and schedules. At or
after the Final Notes  Closing  Date,  and without  further  consideration,  the
parties will execute and deliver to each other such further  documents as may be
reasonably  requested in order to give practical  effect to the intention of the
parties under the Transaction Documents.

         7.4    NOTICES.   Any  and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified in this Section  prior to 6:30 p.m.  (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or

                                                                              27
<PAGE>

communication  is delivered via facsimile at the facsimile  number  specified in
this  Section on a day that is not a Trading  Day or later  than 6:30 p.m.  (New
York City time) on any Trading  Day, (c) the Trading Day  following  the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon  actual  receipt by the party to whom such  notice is required to be given.
The  addresses  and facsimile  numbers for such notices and  communications  are
those  set  forth on the  signature  pages  hereof,  or such  other  address  or
facsimile number as may be designated in writing hereafter,  in the same manner,
by such Person. Any party providing notice to the Company  simultaneously  shall
provide a copy of that notice and all  accompanying  materials to Gersten Savage
Kaplowitz Wolf & Marcus, LP, at the address shown on the signature page hereto.

         7.5    AMENDMENTS;  WAIVERS.  No  provision  of this  Agreement  may be
waived  or  amended  except in a written  instrument  signed,  in the case of an
amendment,  by the  Company  and  each of the  Purchasers  or,  in the case of a
waiver,  by the party against whom enforcement of any such waiver is sought.  No
waiver of any default with respect to any provision, condition or requirement of
this  Agreement  shall be deemed to be a  continuing  waiver in the  future or a
waiver of any subsequent  default or a waiver of any other provision,  condition
or  requirement  hereof,  nor  shall any delay or  omission  of either  party to
exercise  any right  hereunder  in any manner  impair the  exercise  of any such
right.  Notwithstanding  the  foregoing,  a waiver or consent to depart from the
provisions  hereof with  respect to a matter  that  relates  exclusively  to the
rights of  Purchasers  under ARTICLE VI and that does not directly or indirectly
affect  the rights of other  Purchasers  may be given by  Purchasers  holding at
least a majority of the  Registrable  Securities to which such waiver or consent
relates.

         7.6    CONSTRUCTION.  The headings herein are for convenience  only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof. 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.

         7.7    SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of the  Purchasers.  Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser  assigns or
transfers  any Notes,  provided such  transferee  agrees in writing to be bound,
with respect to the transferred  Notes,  by the provisions  hereof that apply to
the "Purchasers."  Notwithstanding anything to the contrary herein, Notes may be
assigned to any Person in  connection  with a bona fide margin  account or other
loan or financing arrangement secured by such Notes.

         7.8    NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

                                                                              28
<PAGE>

         7.9    GOVERNING  LAW;  VENUE;  WAIVER  OF JURY  TRAIL.  all  questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the STATE OF NEW YORK.  THE COMPANY AND  PURCHASERS  Hereby  Irrevocably
Submit To The Exclusive  Jurisdiction Of The State And Federal Courts Sitting In
The CITY OF NEW YORK,  STATE OF NEW YORK,  For The  Adjudication  Of Any Dispute
BROUGHT BY THE COMPANY OR ANY PURCHASER  Hereunder,  In  Connection  Herewith Or
With Any Transaction  Contemplated  Hereby Or Discussed  Herein  (Including With
Respect To The  Enforcement  Of Any Of The  Transaction  Documents),  And Hereby
Irrevocably  Waive,  And Agree Not To Assert In Any Suit,  Action Or  ProceedinG
BROUGHT BY THE  COMPANY OR ANY  PURCHASER,  Any Claim That It Is Not  Personally
Subject To The  Jurisdiction  Of Any Such  Court,  OR That 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  Via  Registered  Or  Certified  Mail Or
Overnight  Delivery  (With Evidence Of Delivery) To Such Party At The Address In
Effect For Notices To It Under This Agreement And Agrees That Such Service Shall
Constitute Good And Sufficient  Service Of Process And Notice  Thereof.  Nothing
Contained  Herein Shall Be Deemed To Limit In Any Way Any Right To Serve Process
In Any Manner  Permitted  By Law.  The Company AND  PURCHASERS  Hereby Waive All
Rights To A Trial By Jury.

         7.10   SURVIVAL.  The  representations,   warranties,   agreements  and
covenants  contained  herein  shall  survive all Closings  hereunder,  including
without  limitation  the delivery of the Notes and the exercise of all Warrants,
as applicable.

         7.11   EXECUTION. This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

         7.12   SEVERABILITY. If any  provision of this  Agreement is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         7.13   REPLACEMENT  OF  NOTES,  WARRANTS  OR  WARRANT  SHARES.  If  any
certificate or instrument  evidencing  any Notes,  Warrants or Warrant Shares is
mutilated,  lost,  stolen or  destroyed,  the Company shall issue or cause to be
issued in exchange and substitution  for and

                                                                              29
<PAGE>

upon  cancellation  thereof,  or in lieu  of and  substitution  therefor,  a new
certificate  or  instrument,  but  only  upon  receipt  of  evidence  reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable  indemnity,  if requested.  The applicants  for a new  certificate or
instrument under such  circumstances  shall also pay any reasonable  third-party
costs associated with the issuance of such replacement.

         7.14  REMEDIES.  In addition to being  entitled to exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate. The parties further agree that no bond or other
security shall be required in obtaining  such  equitable  relief and the parties
hereby  consent to the  ordering  of  specific  performance.  The  parties  also
understand  that other  action may be taken and  remedies  enforced  against the
breaching party.

         7.15   PAYMENT  SET  ASIDE.  To the  extent  that the  Company  makes a
payment or payments to any  Purchaser  hereunder  or any  Purchaser  enforces or
exercises its rights  hereunder or  thereunder,  and such payment or payments or
the  proceeds  of  such   enforcement  or  exercise  or  any  part  thereof  are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         7.16   ADJUSTMENTS  IN SHARE  NUMBERS AND  PRICES.  In the event of any
stock split,  subdivision,  dividend or distribution payable in shares of Common
Stock (or other securities or rights  convertible  into, or entitling the holder
thereof to receive directly or indirectly  shares of Common Stock),  combination
or other similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

         7.17   INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS  AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser  under any  Transaction  Document.  The decision of each  Purchaser to
purchase  Notes  pursuant  to this  Agreement  has been  made by such  Purchaser
independently  of any other  Purchaser  and  independently  of any  information,
materials,  statements  or opinions  as to the  business,  affairs,  operations,
assets, properties,  liabilities, results of operations, condition (financial or
otherwise)  or prospects of the Company which may have been made or given by any
other  Purchaser  or by any agent or  employee  of any other  Purchaser,  and no
Purchaser  or any of its agents or  employees  shall have any  liability  to any
other  Purchaser  (or any other  Person)  relating  to or arising  from any such
information,  materials,  statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any

                                                                              30
<PAGE>

Purchaser  pursuant  thereto,  shall be deemed to constitute the Purchasers as a
partnership,  an  association,  a joint venture or any other kind of entity,  or
create a presumption  that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction  Document.  Each Purchaser  acknowledges that no other Purchaser has
acted as agent for such  Purchaser  in  connection  with  making its  investment
hereunder and that no other  Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder.  Each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation  the  rights  arising  out of  this  Agreement  or  out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]



                                                                              31
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

                                     UTIX GROUP, INC.

                                     By:
                                            ------------------------------------
                                     Name:  Anthony G. Roth
                                     Title: President and CEO

                                     AS TO THE PROVISIONS OF SECTION 6.1.2 ONLY:

                                     -------------------------------------------
                                              Anthony G. Roth

                                     Address for Notice:

                                     Anthony G. Roth
                                     Utix Group, Inc.
                                     170 Cambridge Street
                                     Burlington, MA 01803
                                     Facsimile No.: 781-229-8886
                                     Telephone No.: 781-229-2589

                   With a copy to:   Gersten Savage Kaplowitz
                                     Wolf & Marcus LP
                                     101 East 52nd Street
                                     New York, NY 10022
                                     Facsimile No.: 212-980-5192
                                     Telephone No.: 212-752-9700
                                     Attn: Stephen A. Weiss, Esq.


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]



<PAGE>


                            PURCHASER SIGNATURE PAGE

New York Holdings, Ltd

By:
    ----------------------------------
         Name and Title

New York Holdings, Ltd.
Address:
3 Daniel Frisch Street
Tel Aviv 64731, Israel


$400,000
Dollar Amount of Notes Purchased












<PAGE>


                            PURCHASER SIGNATURE PAGE





--------------------------------------
         SOL KEST

Address:
5150 Overland Avenue
Culver City, CA 90230l


$250,000
Dollar Amount of Notes Purchased












<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         ROBERT KORNSTEIN


Address:
15 West 72nd St., 15K
New York, NY 10023


$100,000
Dollar Amount of Notes Purchased












<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         AVNER MALOUL


Address:
155 E. 34 St., #3S
New York, NY 10010


$102,500
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         ALLEN LOWY


Address:
1776 Broadway, 11th floor
New York, NY 10019


$89 ,500
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         SHAYKIN FAMILY FOUNDATION

By:
    -------------------------------
    Leonard P. Shaykin
    President/Treasurer


Address:
630 Fifth Ave., Suite 3110
New York, NY 10111


$100,000
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         SIDNEY KESSOUS


Address:
7 Hidden Springs Lane
East Windsor, NJ  08520


$200,000
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         Phil St. Germain


Address:
11 Bow Street
Portsmouth, NH  03801


$35,000
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         James Kendall


Address:
676 Reef Road
Vero Beach, FL  32963


$50,000
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         Mort Goulder


Address:
Ridge Road
Hollis, NH  03049


$100,000
Dollar Amount of Notes Purchased


<PAGE>


                            PURCHASER SIGNATURE PAGE




--------------------------------------
         David Friend


Address:
111 Huntington Ave., Ste. 2600
Boston, MA  02199


$100,000
Dollar Amount of Notes Purchased


<PAGE>


                                   SCHEDULES:

---------------------------------------------------------------------------
NUMBER            DESCRIPTION

---------------------------------------------------------------------------
1.1.17            Form of Note

---------------------------------------------------------------------------
1.1.18            Form of Warrant

---------------------------------------------------------------------------
1.1.27            Security Agreement

---------------------------------------------------------------------------
2.1.2(b)          Opinion of Company's Counsel

---------------------------------------------------------------------------
3.1.6             Capitalization

---------------------------------------------------------------------------
3.1.12            Certain Finders Fee Agreements

---------------------------------------------------------------------------
3.1.16            Existing Registration Rights

---------------------------------------------------------------------------
4.7               Use of Proceeds

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




<PAGE>

                                                                 Schedule 1.1.17

THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES  AND EXCHANGE
COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE  IN  RELIANCE  UPON AN
EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN  AVAILABLE   EXEMPTION  FROM,  OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE
REGISTRATION   REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN  ACCORDANCE  WITH
APPLICABLE  STATE  SECURITIES  LAWS.   NOTWITHSTANDING   THE  FOREGOING,   THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

                                UTIX Group, Inc.
                       15% Senior Secured Promissory Note

No.__________                                Original Issue Date:  _______, 2004


         UTIX GROUP, INC., a Delaware corporation ("UTIX"),  for value received,
hereby  promises  to pay to  _________________________________________,  with an
address at _________________________________________, or registered assigns (the
"Holder"),   the   principal   amount  of   __________________________   Dollars
($_______________)  and,  subject  to the terms and  conditions  hereof,  to pay
interest on the unpaid  principal  balance hereof at the rate (calculated on the
basis of a 360-day year  consisting  of twelve  30-day  months) of 15% per annum
from the  date  hereof  until  the  Maturity  Date (as  defined  below),  all as
hereafter  provided.  In no event shall any interest to be paid hereunder exceed
the  maximum  rate  permitted  by  law.  In any  such  event,  this  Note  shall
automatically  be deemed amended to permit  interest  charges at an amount equal
to, but no greater than, the maximum rate permitted by law.

         1.     OFFERING; CONVERSION; SECURITY.

         (a) This Note was  issued by UTIX in an  offering  of up to  $1,500,000
principal  amount of 15% Senior  Secured  Promissory  Notes  (collectively,  the
"Notes") pursuant to the Securities Purchase Agreement, dated as of May __, 2004
(the  "Purchase  Agreement"),  among  UTIX,  Great  Court  Capital  LLC  and the
"Purchasers"  named therein.  Capitalized  terms used and not otherwise  defined
herein have the meanings as defined in the Purchase Agreement.

         (b) Payment of principal of and interest on this Note is secured by the
Security Agreement,  dated the Original Issue Date, between UTIX and Great Court
Capital  LLC, as Agent for itself and such other  Purchasers  that are or become
parties to the  Purchase  Agreement,  and this Note is entitled to the  benefits
thereof.

<PAGE>

         2.     PAYMENTS.

                All  principal  of and  interest  on this Note  shall be due and
payable in full on the  Maturity  Date  pursuant to the terms of this Note.  The
"Maturity Date" shall be May 28, 2005; provided, however, that, in the event and
to the extent that UTIX shall receive IN EXCESS of $2,500,000 of gross  proceeds
in connection with either (i) the United States Common Stock  Offering,  (ii) an
offering of  securities  on the AIMs,  or (iii) any private  placement of Common
Stock or other Equity Type Securities  under  Regulation S, Rule 505 or Rule 506
promulgated  under the  Securities Act prior to May 28, 2005  (collectively,  an
"Equity  Financing"),  the Company shall apply fifty percent (50%) of any or all
of such cumulative  gross proceeds in excess of $2,500,000 it shall receive from
such Equity  Financing to prepay all Notes (and this Note on a pro-rata basis by
which the principal amount of this Note bears to all Notes).

If pursuant to the foregoing,  the Maturity Date would fall on a day that is not
a  Business  Day (as  defined  below),  the  Maturity  Date  shall  be the  next
succeeding Business Day. "Business Day" means any day which is not a Saturday or
Sunday and is not a day on which banking  institutions are generally  authorized
or obligated to close in the City of New York, New York.

         (a)    Payments of principal and interest on this Note shall be made by
check sent to the Holder.  All  payments  will be  delivered  to the address set
forth therefor on the note register described below, and will be in such coin or
currency  of the United  States of  America  as at the time of payment  shall be
legal tender for the payment of public and private debts.

         (b)    UTIX  shall  have the  right to  prepay  all or any part of this
Note,  together with all interest accrued hereon to the date of such prepayment,
at any  time or from  time to  time,  without  prepayment  premium  or  penalty;
provided, that

                (i) if UTIX shall be  required  to prepay all or any  portion of
         this Note out of the net proceeds of any Equity  Financing  received on
         or after November 28, 2004, it shall pay to the Holder of this Note and
         the holders of all other Notes a prepayment  premium in an amount equal
         to (x) one years interest on the  outstanding  balance of this Note, at
         the rate of 15% per annum, less (y) all interest previously paid, and

                (ii) if UTIX shall have voluntarily prepaid the entire principal
         amount of this Note at any time on or after November 28, 2004, it shall
         simultaneously  with such prepayment pay to the Holder of this Note and
         the holders of all other Notes a prepayment  premium in an amount equal
         to (x) one years interest on the  outstanding  balance of this Note, at
         the rate of 15% per annum, less (y) all interest previously paid.

         All  payments on this Note shall be applied  first to accrued  interest
         hereon and the balance to the payment of principal hereof.

         (c) The obligations to make the payments  provided for in this Note are
absolute  and   unconditional   and  not  subject  to  any   defense,   set-off,
counterclaim,  rescission,  recoupment  or  adjustment  whatsoever.  UTIX hereby
expressly  waives demand and  presentment  for payment,  notice of  non-payment,
notice of dishonor,  protest, notice of protest,  bringing of suit and diligence
in taking any action to collect any amount  called for  hereunder,  and shall be
directly and primarily  liable for the payment of all sums owing and to be owing
hereon,  regardless of and

                                       2
<PAGE>

without any notice, diligence, act or omission with respect to the collection of
any amount called for hereunder.

         3.     CONVERSION. This Note shall not be convertible into Common Stock
or other securities of UTIX.

         4.     EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an event of default (an "Event of Default"):

         (a)    A default in the payment of the principal of or interest on this
Note,  when and as the same shall become due and payable,  which  default  shall
continue for a period of three Business Days after the date fixed for the making
of such payment.

         (b)    A failure  to  perform  or  observe  any  material  covenant  or
agreement  contained  in the  Purchase  Agreement,  this  Note  or the  Security
Agreement  within 10  Business  Days after the giving of notice by the Holder of
such failure.

         (c)    The  entry of a decree or order by a court  having  jurisdiction
adjudging  UTIX  bankrupt  or  insolvent,   or  approving  a  petition   seeking
reorganization,  arrangement,  adjustment,  or  composition  of or in respect of
UTIX,  under federal  bankruptcy  law, as now or hereafter  constituted,  or any
other applicable  federal or state bankruptcy,  insolvency or other similar law,
and the  continuance  of any such decree or order  unstayed  and in effect for a
period of 60 consecutive  days; or the  commencement by UTIX of a voluntary case
under  federal  bankruptcy  law, as now or hereafter  constituted,  or any other
applicable federal or state bankruptcy,  insolvency or other similar law, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it,  or  the  filing  by  it  of  a  petition  or  answer  or  consent   seeking
reorganization  or relief under federal  bankruptcy law or any other  applicable
federal or state law, or the consent by it to the filing of such  petition or to
the appointment of a receiver,  liquidator,  assignee, trustee, sequestration or
similar  official of UTIX or of any  substantial  part of its  property,  or the
making by it of an assignment for the benefit of creditors,  or the admission by
it in writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by UTIX in furtherance of any such action.

         5.     REMEDIES UPON DEFAULT.

         (a)    Upon the occurrence, and during the continuance,  of an Event of
Default  specified  in Section  4(a) or (b), the Holder of this Note may declare
all or any part of the unpaid  principal  amount of this Note,  and all interest
accrued  and  unpaid  thereon,  to  be  immediately  due  and  payable,  without
presentment,  demand, protest or other formalities of any kind, all of which are
hereby expressly waived by UTIX.

         (b)    Upon the occurrence of an Event of Default  specified in Section
4(c), all of the principal  amount then outstanding of, and all interest accrued
and unpaid on, the Notes shall automatically  become immediately due and payable
without  presentment,  demand,  protest or other formalities of any kind, all of
which are hereby expressly waived by UTIX.

                                       3
<PAGE>

         (c)    The Holder may institute  such actions or  proceedings in law or
equity as it shall  deem  expedient  for the  protection  of its  rights and may
prosecute and enforce its claims against all assets of UTIX.

         6.     REGISTRATION AND TRANSFER.

         (a)    UTIX shall maintain books for the  registration  and transfer of
the Notes.

         (b)    Prior to due  presentment  for  registration of transfer of this
Note,  UTIX may deem and  treat the  registered  Holder  as the  absolute  owner
thereof.  UTIX shall be entitled to treat the  registered  holder of any Note on
the note register as the owner in fact thereof for all purposes and shall not be
bound to recognize  any  equitable or other claim to or interest in such Note on
the part of any other person,  and shall not be liable for any  registration  or
transfer of the Notes which are  registered or to be registered in the name of a
fiduciary  or the nominee of a fiduciary  unless made with the actual  knowledge
that a fiduciary or nominee is committing a breach of trust in  requesting  such
registration  or  transfer,  or with  the  knowledge  of  such  facts  that  its
participation  therein  amounts to bad  faith.  In all cases of  transfer  by an
attorney, executor, administrator, guardian, or other legal representative, duly
authenticated evidence of his or its authority shall be produced.

         (c)    This Note has not been  registered  under the  Securities Act of
1933,  as amended  (the  "Securities  Act").  The  Holders  are  entitled to the
benefits of the Purchase  Agreement,  which  provides,  among other things,  for
certain  registration rights and certain  restrictions on the disposition of the
Notes and the Warrant Shares,  and each Holder, by acceptance of a Note, accepts
the  restrictions  and  other  provisions  of the  Purchase  Agreement.  Without
limiting the foregoing, no Holder may make any disposition of this Note unless:

                (i) each transferee is an accredited  investor,  as such term is
         defined in Regulation D promulgated  under the Securities  Act, and has
         delivered  certification  thereof to UTIX,  reasonably  satisfactory to
         UTIX; and

                (ii) (A) each  transferee  has  agreed in writing to be bound by
         the terms of this Note and the Purchase Agreement, (B) the Holder shall
         have notified UTIX of the proposed disposition and shall have furnished
         UTIX with a detailed  statement of the  circumstances  surrounding  the
         proposed disposition, and (C) the Holder shall have furnished UTIX with
         an opinion of counsel  (with the costs of obtaining  such opinion borne
         by UTIX),  which  counsel and opinion are  reasonably  satisfactory  to
         UTIX,  that this Note has been  registered  under the Securities Act or
         that such registration is not required.

         (d)    Each Note shall be stamped or otherwise  imprinted with a legend
substantially similar to the following (in addition to any legend required under
other applicable securities laws):

         THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES  AND
         EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE  IN
         RELIANCE UPON AN EXEMPTION FROM  REGISTRATION  UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"),

                                       4
<PAGE>

         AND,  ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO AN
         EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
         TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         APPLICABLE STATE SECURITIES LAWS.  NOTWITHSTANDING THE FOREGOING, THESE
         SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
         OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

         (e)    UTIX shall  register  upon its books any  permitted  transfer of
this Note, upon surrender of same to UTIX with a written instrument of transfer,
in the form attached as Exhibit A, duly executed by the registered  Holder or by
a duly authorized attorney thereof and (unless being transferred to UTIX) by the
transferee or by a duly authorized  attorney  thereof,  together with such other
documents as may be required for such transfer as provided above.  Upon any such
registration of transfer,  new Note(s) shall be issued to the  transferee(s) and
the surrendered Note shall be canceled by UTIX. This Note may also be exchanged,
at the option of the Holder,  for new Notes  representing  in the  aggregate the
principal amount of this Note then outstanding.

         (f)    Upon receipt by UTIX of reasonable  evidence of the ownership of
and the loss, theft, destruction, or mutilation of this Note and, in the case of
loss, theft, or destruction,  of indemnity reasonably  satisfactory to UTIX, or,
in the case of  mutilation,  upon  surrender and  cancellation  of the mutilated
Note, UTIX shall execute and deliver in lieu thereof a new Note representing the
principal amount of such Note then outstanding.

         7.     MISCELLANEOUS.

         (a)    This Note shall be governed by and construed in accordance  with
the laws of the State of New York, without giving effect to principles governing
conflicts of law.

         (b)    Any notice or other  communication  required or  permitted to be
given  hereunder  shall be in  writing  and shall be given by  Federal  Express,
Express Mail or similar  overnight  delivery or courier service or delivered (in
person or by telecopy,  telex or similar  telecommunications  equipment) against
receipt to the party to whom it is to be given,  (i) if to UTIX,  at its address
at UTIX Group,  Inc., 170 Cambridge  Street,  Burlington,  MA 01803,  Attention:
President and Chief Executive Officer, (ii) if to the Holder, at its address set
forth on the first page hereof,  or (iii) in either case,  to such other address
as the party shall have  furnished in writing in accordance  with the provisions
of this  Section  7(b).  Any notice shall be deemed given at the time of receipt
thereof.

         (c)    No course of dealing and no delay or omission on the part of the
Holder in exercising  any right or remedy shall  operate as a waiver  thereof or
otherwise prejudice the Holder's rights,  powers or remedies. No right, power or
remedy  conferred  by this Note upon the Holder  shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter  available at law,
in equity,  by statute or  otherwise,  and all such  remedies  may be  exercised
singly or concurrently.

                                       5
<PAGE>

         IN WITNESS WHEREOF,  UTIX has caused this Note to be executed and dated
the day and year first above written.

                                           UTIX GROUP, INC.


                                           By:
                                               -------------------------------
                                               Name:
                                               Title:














                                       6
<PAGE>

                                    EXHIBIT A
                               FORM OF ASSIGNMENT

   (To be executed by the registered holder if such holder desires to transfer
                               the attached Note)

         FOR VALUE RECEIVED, ______________________ (the "Holder") hereby sells,
assigns, and transfers unto

                     Name
                          ------------------------------------

                     Address
                             ---------------------------------

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

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

                     Social Security or Tax Identification Number

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

______ Notes,  together with all right,  title, and interest  therein,  and does
hereby irrevocably constitute and appoint  _______________  attorney to transfer
such  Note on the  books  of UTIX  Group,  Inc.  ("UTIX"),  with  full  power of
substitution.

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

                        --------------------------------------------------------
                        Name of Holder


                        --------------------------------------------------------
                        Signature



                        --------------------------------------------------------
                        If executed in a representative  or fiduciary  capacity,
                        print name and title of individual executing this notice
                        on behalf of the Holder.

                        NOTE: The above signature should correspond exactly with
                        the name on the first page of the attached Note.


                        --------------------------------------------------------
                        Social Security or Tax Identification Number of Holder

                        Address of Holder:

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

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

<PAGE>

         The undersigned  transferee,  by execution  hereof,  (i) represents and
warrants to UTIX that (a) such transferee is an accredited investor,  and agrees
to provide such evidence thereof as may be reasonably requested by UTIX, (b) the
undersigned  is acquiring the Note,  and will acquire any shares of Common Stock
(as  defined in the Note)  issued in  conversion  thereof,  for  investment  and
without a view to a distribution other than pursuant to a registration statement
under the Securities Act of 1933, as amended,  and applicable  state  securities
laws, or an exemption therefrom,  and (c) the name, address, and social security
or tax identification  number of the undersigned is as set forth above, and (ii)
agrees  to be bound by the  terms of the  Note and the  Purchase  Agreement  (as
defined in the Note).

Dated: _________________

                                ------------------------------------------------
                                Name of Transferee

                                ------------------------------------------------
                                Signature

                                ------------------------------------------------
                                If executed  in a  representative  or  fiduciary
                                capacity,  print  name and  title of  individual
                                executing   this   notice   on   behalf  of  the
                                transferee.

NOTE:  The above  signature  should  correspond  exactly with the name set forth
above.





                                       2
<PAGE>

                                 SCHEDULE 1.1.18

THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES  AND EXCHANGE
COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE  IN  RELIANCE  UPON AN
EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN  AVAILABLE   EXEMPTION  FROM,  OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE
REGISTRATION   REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN  ACCORDANCE  WITH
APPLICABLE  STATE  SECURITIES  LAWS.   NOTWITHSTANDING   THE  FOREGOING,   THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

                                UTIX GROUP, INC.
                                     WARRANT

Warrant No. ________                    Date of Original Issuance:  May 21, 2004



         Utix  Group,  Inc.,  a Delaware  corporation  (the  "COMPANY"),  hereby
certifies that, for value received,  _____________________________ or his, hers,
or its  registered  assigns  (the  "HOLDER"),  is entitled to purchase  from the
Company up to a total of  _____________________shares of common stock, par value
$0.001 per share (the  "COMMON  STOCK"),  of the  Company  (each such  share,  a
"WARRANT SHARE" and all such shares,  the "WARRANT SHARES") at an exercise price
equal to  thirty-five  cents ($0.35) per share (as adjusted from time to time as
provided in Section 9, the "EXERCISE PRICE"),  at any time and from time to time
from and after the date  hereof and  through  and  including  May 21,  2009 (the
"EXPIRATION DATE"), and subject to the following terms and conditions:

         1.     DEFINITIONS. The Warrants evidenced hereby are part of the issue
of warrants entitling the Holders thereof to purchase up to ____________  shares
of Common Stock of the Company  that are being  issued  pursuant to the terms of
that certain Securities Purchase Agreement, among UTIX, Great Court Capital, LLC
and the  purchasers  named  therein,  dated as of May 21, 2004 (the  "SECURITIES
PURCHASE  AGREEMENT").  Capitalized  terms used and not otherwise defined herein
have the meanings as defined in the Securities Purchase Agreement.

         2.     REGISTRATION OF WARRANT;  TRANSFERS.  The Company shall register
this Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"),  in the name of the record Holder hereof from time to time.
The  Company  may deem and treat the


<PAGE>

registered  Holder of this Warrant as the absolute  owner hereof for the purpose
of any  exercise  hereof or any  distribution  to the Holder,  and for all other
purposes,  absent actual notice to the contrary. The Holders are entitled to the
benefits of the  Securities  Purchase  Agreement,  which  provides,  among other
things, for certain registration rights and certain restrictions on the transfer
of the Warrants and the Warrant  Shares,  and each Holder,  by  acceptance  of a
Warrant,  accepts  the  restrictions  and  other  provisions  of the  Securities
Purchase Agreement.

         3.     REGISTRATION  OF  TRANSFERS.  The  Company  shall  register  the
transfer of any portion of this Warrant in the Warrant Register,  upon surrender
of this Warrant,  with the Form of Assignment attached hereto duly completed and
signed,  to  the  Company  at  its  address  specified  herein.  Upon  any  such
registration   or  transfer,   a  new  Warrant  to  purchase  Common  Stock,  in
substantially the form of this Warrant (any such new Warrant,  a "NEW Warrant"),
evidencing  the portion of this  Warrant so  transferred  shall be issued to the
transferee and a New Warrant  evidencing  the remaining  portion of this Warrant
not so  transferred,  if any, shall be issued to the  transferring  Holder.  The
acceptance  of the New  Warrant by the  transferee  thereof  shall be deemed the
acceptance by such  transferee of all of the rights and  obligations of a holder
of a Warrant.

         4.     EXERCISE AND DURATION OF WARRANTS; RIGHT TO REDEEM WARRANT.

                (a) This Warrant shall be exercisable  by the registered  Holder
at any time and from time to time on or after the date  hereof to and  including
the Expiration  Date. At 6:30 p.m.,  New York City time on the Expiration  Date,
the portion of this Warrant not exercised prior thereto shall be and become void
and of no value,  provided,  that if the closing sales price of the Common Stock
on the  Expiration  Date is  greater  than  102% of the  Exercise  Price  on the
Expiration  Date,  then this Warrant  shall be deemed to have been  exercised in
full (to the extent not previously  exercised) on a "cashless exercise" basis at
6:30 P.M. New York City time on the Expiration Date. The Company may not call or
redeem all or any portion of this Warrant  without the prior written  consent of
the Holder.

                (b)  Commencing  on a date  that  shall be one (1) year from the
effective date of the  Registration  Statement and prior to the Expiration Date,
the Company shall have the right to redeem and repurchase this Warrant, together
with all other  outstanding  Note Warrants and Share Warrants issued to the Note
Purchasers  and Share  Purchasers,  upon sixty (60) days prior written notice to
the Holder and all other holders of the Warrants (the "REDEMPTION NOTICE"),  for
a  redemption  price of $0.001  per  Warrant  Share  (the  "REDEMPTION  Price");
provided, that:

                        (i) as at the date of the Redemption  Notice and for the
sixty (60) days thereafter (the "REDEMPTION  PERIOD") (A) all of the Registrable
Securities  shall have been  registered  for resale under the  Securities Act of
1933, as amended,  (B) a registration  statement on Form S-1 or other applicable
form for registering securities shall be current, and (C) no stop order or other
restriction on resale of the Registrable Securities shall then be in effect;

                        (ii)  as at  the  date  of  the  Redemption  Notice  and
throughout the Redemption  Period,  the Company's Common Stock shall trade on an
Eligible Market;

                                                                             -2-
<PAGE>

                        (iii) for the thirty (30) Trading Days immediately prior
to the date of the  Redemption  Notice  and during the  Redemption  Period,  the
average of the  closing  prices of the  Company's  Common  Stock as traded on an
Eligible  Market,  shall be not less  than two  hundred  percent  (200%)  of the
Exercise Price then in effect; and

                        (iv) for the sixty (60) Trading Days  immediately  prior
to the date of the Redemption  Notice, the average daily dollar amount of shares
of Company  Common Stock that shall trade on such  Eligible  Market shall be not
less than $75,000.

Notwithstanding  the  foregoing,  even  if all of the  above  conditions  to the
Company's right to redeem and repurchase this Warrant shall have been satisfied,
the Holder of this Warrant and the holders of any of the other Note  Warrants or
Share Warrants shall have the right, at any time during the Redemption Period or
thereafter  if  the  Company  shall  not  have  redeemed  such  Warrants  at the
expiration of the sixty (60) day Redemption  Period to exercise this Warrant and
any other outstanding warrants at the Exercise Price then in effect.

On a day which  shall be not more than three (3)  Business  Days  following  the
expiration of the sixty (60) day Redemption Period, the Company shall tender the
Redemption Price to the Holder of this Warrant in immediately available funds or
by check;  failing which the Company's right to redeem this Warrant shall expire
and be of no further force or effect.

         5.     DELIVERY OF WARRANT SHARES.

                (a) To  effect  exercises  hereunder,  the  Holder  shall not be
required to  physically  surrender  this Warrant  unless the  aggregate  Warrant
Shares  represented  by this Warrant is being  exercised.  Upon  delivery of the
Exercise  Notice to the Company (with the attached  Warrant Shares Exercise Log)
at its  address  for notice set forth  herein and upon  payment of the  Exercise
Price  multiplied  by the number of Warrant  Shares  that the Holder  intends to
purchase hereunder, the Company shall promptly (but in no event later than three
Trading Days after the Date of Exercise (as defined  herein))  issue and deliver
to the Holder, a certificate for the Warrant Shares issuable upon such exercise,
which, unless otherwise required by the Securities Purchase Agreement,  shall be
free of restrictive  legends.  The Company shall, upon request of the Holder and
subsequent to the date on which a registration  statement covering the resale of
the Warrant  Shares has been declared  effective by the  Securities and Exchange
Commission,   use  its  best  efforts  to  deliver   Warrant  Shares   hereunder
electronically  through the Depository Trust Corporation or another  established
clearing corporation performing similar functions, if available, provided, that,
the Company may,  but will not be required to change its  transfer  agent if its
current transfer agent cannot deliver Warrant Shares electronically  through the
Depository Trust  Corporation.  A "DATE OF EXERCISE" means the date on which the
Holder  shall have  delivered  to Company:  (i) the  Exercise  Notice  (with the
Warrant  Exercise Log attached to it),  appropriately  completed and duly signed
and (ii) if such Holder is not utilizing the cashless  exercise  provisions  set
forth in this Warrant,  payment of the Exercise  Price for the number of Warrant
Shares so indicated by the Holder to be purchased.

                                                                             -3-
<PAGE>

                (b) If by the third  Trading  Day after a Date of  Exercise  the
Company  fails to deliver the  required  number of Warrant  Shares in the manner
required  pursuant  to  Section  5(a),  then the  Holder  will have the right to
rescind such exercise.

                (c) If by the third  Trading  Day after a Date of  Exercise  the
Company  fails to deliver the  required  number of Warrant  Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior
to the receipt of such Warrant Shares,  the Holder  purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated  receiving
upon such exercise (a  "BUY-IN"),  then the Company shall (1) pay in cash to the
Holder the amount by which (x) the  Holder's  total  purchase  price  (including
brokerage  commissions,  if any) for the  shares  of Common  Stock so  purchased
exceeds (y) the amount  obtained by multiplying (A) the number of Warrant Shares
that the Company was  required to deliver to the Holder in  connection  with the
exercise at issue by (B) the  closing bid price of the Common  Stock at the time
of the obligation giving rise to such purchase  obligation and (2) at the option
of the Holder, either reinstate the portion of the Warrant and equivalent number
of  Warrant  Shares for which such  exercise  was not  honored or deliver to the
Holder the number of shares of Common  Stock that would have been issued had the
Company timely  complied with its exercise and delivery  obligations  hereunder.
The Holder  shall  provide the Company  written  notice  indicating  the amounts
payable to the Holder in respect of the Buy-In.

                (d) The  Company's  obligations  to issue  and  deliver  Warrant
Shares in  accordance  with the terms  hereof are  absolute  and  unconditional,
irrespective  of any action or inaction  by the Holder to enforce the same,  any
waiver or consent  with  respect to any  provision  hereof,  the recovery of any
judgment  against any Person or any action to enforce  the same,  or any setoff,
counterclaim,  recoupment,  limitation or termination,  or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation  or alleged  violation of law by the Holder or any other  Person,  and
irrespective  of  any  other  circumstance  which  might  otherwise  limit  such
obligation  of the  Company to the Holder in  connection  with the  issuance  of
Warrant Shares.  Nothing herein shall limit a Holder's right to pursue any other
remedies  available  to it  hereunder,  at law or in equity  including,  without
limitation,  a decree of  specific  performance  and/or  injunctive  relief with
respect to the Company's  failure to timely  deliver  certificates  representing
shares of Common Stock upon exercise of the Warrant as required  pursuant to the
terms hereof.

         6.     CHARGES,   TAXES  AND   EXPENSES.   Issuance   and  delivery  of
certificates  for shares of Common Stock upon  exercise of this Warrant shall be
made  without  charge to the Holder for any issue or transfer  tax,  withholding
tax,  transfer  agent fee or other  incidental  tax or expense in respect of the
issuance of such certificates,  all of which taxes and expenses shall be paid by
the Company;  provided,  however,  that the Company shall not be required to pay
any tax  which  may be  payable  in  respect  of any  transfer  involved  in the
registration of any  certificates for Warrant Shares or Warrants in a name other
than that of the  Holder.  The  Holder  shall be  responsible  for all other tax
liability that may arise as a result of holding or transferring  this Warrant or
receiving Warrant Shares upon exercise hereof.

         7.     REPLACEMENT  OF WARRANT.  If this  Warrant is  mutilated,  lost,
stolen or  destroyed,  the Company shall issue or cause to be issued in exchange
and substitution for and upon

                                                                             -4-
<PAGE>

cancellation  hereof,  or in lieu of and  substitution  for this Warrant,  a New
Warrant,  but only upon  receipt  of  evidence  reasonably  satisfactory  to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity (which shall not include a surety bond), if requested.  Applicants for
a New  Warrant  under  such  circumstances  shall  also  comply  with such other
reasonable  regulations and procedures and pay such other reasonable third-party
costs as the Company may prescribe. If a New Warrant is requested as a result of
a  mutilation  of this  Warrant,  then the Holder shall  deliver such  mutilated
Warrant to the Company as a condition  precedent to the Company's  obligation to
issue the New Warrant.

         8.     RESERVATION  OF WARRANT  SHARES.  The Company  covenants that it
will at all  times  reserve  and  keep  available  out of the  aggregate  of its
authorized but unissued and otherwise  unreserved  Common Stock,  solely for the
purpose of enabling it to issue Warrant  Shares upon exercise of this Warrant as
herein  provided,  the  number of Warrant  Shares  which are then  issuable  and
deliverable  upon the  exercise of this  entire  Warrant,  free from  preemptive
rights or any other contingent  purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 9). The Company
covenants  that all  Warrant  Shares so issuable  and  deliverable  shall,  upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof,  shall be duly and validly  authorized,  issued and fully paid and
nonassessable.

         9.     CERTAIN  ADJUSTMENTS.  The Exercise  Price and number of Warrant
Shares  issuable upon  exercise of this Warrant are subject to  adjustment  from
time to time as set forth in this Section 9.

                (a) STOCK  DIVIDENDS  AND SPLITS.  If the  Company,  at any time
while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock
or otherwise  makes a distribution on any class of capital stock that is payable
in shares of Common Stock,  (ii) subdivides  outstanding  shares of Common Stock
into a larger number of shares, or (iii) combines  outstanding  shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator  shall be the number of
shares of Common Stock  outstanding  immediately  before such event and of which
the  denominator  shall be the  number of shares  of  Common  Stock  outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph  shall  become  effective  immediately  after the record  date for the
determination of stockholders entitled to receive such dividend or distribution,
and any  adjustment  pursuant  to clause (ii) or (iii) of this  paragraph  shall
become  effective  immediately  after the effective date of such  subdivision or
combination. If any event requiring an adjustment under this Section 9(a) occurs
during the period  that an  Exercise  Price is  calculated  hereunder,  then the
calculation  of such Exercise Price shall be adjusted  appropriately  to reflect
such event.

                (b) FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant
is  outstanding,  (1) the  Company  effects any merger or  consolidation  of the
Company with or into another Person,  (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,  (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which

                                                                             -5-
<PAGE>

the  Common  Stock  is  effectively   converted  into  or  exchanged  for  other
securities,  cash or property (in any such case, a  "FUNDAMENTAL  TRANSACTION"),
then the Holder shall have the right  thereafter  to receive,  upon  exercise of
this  Warrant,  the same amount and kind of  securities,  cash or property as it
would have been  entitled to receive  upon the  occurrence  of such  Fundamental
Transaction if it had been,  immediately prior to such Fundamental  Transaction,
the holder of the number of Warrant  Shares then  issuable upon exercise in full
of this  Warrant  (the  "ALTERNATE  CONSIDERATION").  For  purposes  of any such
exercise,  the  determination  of the  Exercise  Price  shall  be  appropriately
adjusted  to apply  to such  Alternate  Consideration  based  on the  amount  of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental  Transaction,  and the Company shall  apportion  the Exercise  Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration.  If holders of
Common Stock are given any choice as to the  securities,  cash or property to be
received in a Fundamental  Transaction,  then the Holder shall be given the same
choice as to the Alternate  Consideration  it receives upon any exercise of this
Warrant  following  such  Fundamental  Transaction.  At the Holder's  option and
request,  any successor to the Company or surviving  entity in such  Fundamental
Transaction shall, either (1) issue to the Holder a new warrant substantially in
the form of this  Warrant  and  consistent  with the  foregoing  provisions  and
evidencing  the Holder's right to purchase the Alternate  Consideration  for the
aggregate Exercise Price upon exercise thereof, or (2) purchase the Warrant from
the Holder for a purchase price,  payable in cash within five Trading Days after
such  request  (or,  if  later,   on  the  effective  date  of  the  Fundamental
Transaction),  equal to the Black  Scholes  value of the  remaining  unexercised
portion of this Warrant on the date of such request.  The terms of any agreement
pursuant to which a  Fundamental  Transaction  is effected  shall  include terms
requiring any such  successor or surviving  entity to comply with the provisions
of this  Section  9(b) and  insuring  that the Warrant (or any such  replacement
security) will be similarly adjusted upon any subsequent  transaction  analogous
to a Fundamental Transaction.

                (c) In case the Company  shall issue  shares of Common  Stock or
rights,  options,  or warrants to subscribe  for or purchase  Common  Stock,  or
securities  convertible into or exchangeable for Common Stock (excluding shares,
rights, options, warrants, or convertible or exchangeable securities,  issued or
issuable (i) in any of the  transactions  with respect to which an adjustment of
the Exercise Price is provided  pursuant to Sections 9(a) or 9(b) above, or (ii)
upon exercise of the Warrants, at a price per share (determined,  in the case of
such rights, options,  warrants, or convertible or exchangeable  securities,  by
dividing  (x)  the  total  amount  received  or  receivable  by the  Company  in
consideration  of the sale and issuance of such rights,  options,  warrants,  or
convertible or exchangeable securities, plus the minimum aggregate consideration
payable to the Company upon exercise,  conversion,  or exchange thereof,  by (y)
the maximum  number of shares  covered by such  rights,  options,  warrants,  or
convertible  or  exchangeable  securities)  lower  than the  Exercise  Price (as
hereinafter  defined) per share of Common Stock in effect  immediately  prior to
such  issuance,  then the  Exercise  Price  shall be reduced on the date of such
issuance to a price  (calculated to the nearest cent)  determined by multiplying
the Exercise Price in effect  immediately  prior to such issuance by a fraction,
(1) the numerator of which shall be an amount equal to the sum of (A) the number
of shares of Common Stock  outstanding  immediately  prior to such issuance plus
(B) the quotient obtained by dividing the consideration  received by the Company
upon such  issuance by such Exercise  Price,  and (2) the  denominator  of which
shall be the total  number of shares  of Common  Stock  outstanding  immediately
after such

                                                                             -6-
<PAGE>

issuance.  For the purposes of such  adjustments,  the maximum  number of shares
which the holders of any such  rights,  options,  warrants,  or  convertible  or
exchangeable  securities,  shall  be  entitled  to  initially  subscribe  for or
purchase  or  convert or  exchange  such  securities  into shall be deemed to be
issued and  outstanding as of the date of such issuance,  and the  consideration
received  by the  Company  therefor  shall  be  deemed  to be the  consideration
received by the Company for such rights,  options,  warrants,  or convertible or
exchangeable  securities,  plus the minimum aggregate  consideration or premiums
stated  in such  rights,  options,  warrants,  or  convertible  or  exchangeable
securities,  to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights,  options, or warrants, or on conversion
or exchange of such convertible or exchangeable securities. On the expiration or
the termination of such rights, options, or warrants, or the termination of such
right to convert or exchange,  the Exercise Price shall  forthwith be readjusted
(but only with respect to Warrants  exercised or converted after such expiration
or  termination)  to  such  Exercise  Price  as  would  have  obtained  had  the
adjustments  made  upon the  issuance  of such  rights,  options,  warrants,  or
convertible or exchangeable securities, been made upon the basis of the delivery
of only the  number  of  shares  of Common  Stock  actually  delivered  upon the
exercise  of such  rights,  options,  or  warrants,  or upon the  conversion  or
exchange  of any such  securities;  and on any change of the number of shares of
Common  Stock  deliverable  upon the exercise of any such  rights,  options,  or
warrants  or  conversion,  or  exchange  of  such  convertible  or  exchangeable
securities,  or any change in the  consideration  to be  received by the Company
upon such exercise,  conversion,  or exchange,  including, but not limited to, a
change resulting from the anti-dilution  provisions thereof, the Exercise Price,
as then in effect,  shall  forthwith  be  readjusted  (but only with  respect to
Warrants  exercised or converted  after such change) to such  Exercise  Price as
would have been obtained had an  adjustment  been made upon the issuance of such
rights,  options,  or warrants not exercised prior to such change, or securities
not converted or exchanged prior to such change, on the basis of such change. In
case the Company shall issue shares of Common Stock or any such rights, options,
warrants,  or  convertible  or  exchangeable  securities,  for  a  consideration
consisting,  in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the  "consideration  received by the Company" for
purposes of the first  sentence of this Section 9(c) shall be as  determined  in
good faith by the Board of  Directors  of the  Company.  Shares of Common  Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.

                (d) For the purposes of this Agreement,  "EXERCISE  PRICE" shall
mean the  Exercise  Price,  as  adjusted  from time to time as  provided in this
Section 9; provided,  however,  that  notwithstanding  anything to the contrary,
express or implied,  contained in this  Agreement,  the Exercise  Price shall be
subject to  reduction  to the lowest price per share of Common Stock that may be
sold by the Company as is contemplated by Section 4.9(a)(i) or Section 4.9(b)(v)
of the Securities Purchase Agreement.

                (e) NUMBER OF WARRANT SHARES. Simultaneously with any adjustment
to the Exercise  Price  pursuant to Sections  9(a),  9(b) or 9(c), the number of
Warrant  Shares that may be purchased  upon  exercise of this  Warrant  shall be
increased  or  decreased  proportionately,  so that  after such  adjustment  the
aggregate  Exercise Price payable  hereunder for the adjusted  number of Warrant
Shares shall be the same as the aggregate  Exercise Price in effect  immediately
prior to such adjustment.

                                                                             -7-
<PAGE>

                (f) CALCULATIONS. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share,  as applicable.  The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company,  and the  disposition
of any such shares shall be considered an issue or sale of Common Stock.

                (g)  NOTICE  OF   ADJUSTMENTS.   Upon  the  occurrence  of  each
adjustment  pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a  certificate  setting  forth such  adjustment,  including a  statement  of the
adjusted  Exercise Price and adjusted  number or type of Warrant Shares or other
securities  issuable upon exercise of this Warrant (as  applicable),  describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such  adjustment  is based.  Upon written  request,  the Company will
promptly  deliver  a copy of each  such  certificate  to the  Holder  and to the
Company's Transfer Agent.

                (h) NOTICE OF  CORPORATE  EVENTS.  If the Company (i) declares a
dividend or any other  distribution  of cash,  securities  or other  property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or  solicits  stockholder  approval  for any  Fundamental  Transaction  or (iii)
authorizes  a  repurchase  of  Common  Stock  or  the   voluntary   dissolution,
liquidation or winding up of the affairs of the Company,  then the Company shall
deliver to the Holder a notice  describing  the material terms and conditions of
such  transaction,  at least 20 calendar days prior to the applicable  record or
effective  date on which a Person  would need to hold  Common  Stock in order to
participate  in or vote with respect to such  transaction,  and the Company will
take all steps reasonably  necessary in order to insure that the Holder is given
the practical  opportunity  to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver  such notice or any defect  therein  shall not affect the
validity of the corporate action required to be described in such notice.

                (i)  SUCCESSIVE  ADJUSTMENTS  AND  CHANGES.  The  provisions  of
Section  9  shall  similarly  apply  to  successive   dividends,   subdivisions,
combinations, and distributions,  to successive consolidations,  mergers, sales,
leases, or conveyances, and to successive  reclassifications,  changes of shares
of Common Stock and issuances of Common Stock, warrants, options or other rights
to subscribe for or purchase Common Stock, or securities convertible into Common
Stock. If applicable, appropriate adjustment, as determined in good faith by the
Company's Board of Directors, shall be made in the application of the provisions
herein set forth with respect to the rights and  interests of the Holder so that
the  provisions  of  Section  9 shall  thereafter  be  applicable,  as nearly as
possible,  in relation to any shares or other  property  thereafter  deliverable
upon exercise of this Warrant.

                (j) PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise
Price only in cash in immediately available funds;  provided,  that if, and only
if, the Company shall have realized  cumulative  gross proceeds of $4,500,000 or
more from any equity  financing(s)  consummated on or before May 21, 2005,  then
and in such event the Holder may, at his or its option, notify the Company in an
Exercise  Notice of its election to utilize a cashless  exercise.  If the Holder
shall  have the right and shall  elect to effect  such  cashless  exercise,  the
Company  shall

                                                                             -8-
<PAGE>

issue to the Holder the number of Warrant Shares equal to the product of (i) the
number  of  Warrant  Shares  as to  which  such  Warrants  are  being  exercised
multiplied  by (ii) a fraction,  the numerator of which is the Fair Market Value
of the Common Stock less the Exercise Price and the denominator of which is such
Fair Market  Value.  The Fair  Market  Value shall be defined as the closing bid
price of the Company's Common Stock on the Trading Day immediately preceding the
date on which the Exercise Notice annexed to such Warrant Certificate as to such
exercise  is deemed to have been sent to the  Company  pursuant  to  Section  12
hereof.  Notwithstanding  the foregoing,  the Holder's obligation to pay cash in
connection  with his or its  exercise  of this  Warrant  shall be subject to the
effectiveness of a current registration statement covering the Warrant Shares.

         10.    LIMITATIONS  ON  EXERCISE.   Notwithstanding   anything  to  the
contrary  contained  herein,  the  number of shares of Common  Stock that may be
acquired  by the Holder  upon any  exercise of this  Warrant  (or  otherwise  in
respect  hereof)  shall be  limited  to the  extent  necessary  to insure  that,
following  such  exercise  (or other  issuance),  the total  number of shares of
Common Stock then  beneficially  owned by such Holder and its Affiliates and any
other  Persons  whose  beneficial  ownership of Common Stock would be aggregated
with the Holder's for purposes of Section  13(d) of the Exchange  Act,  does not
exceed  4.999% of the total  number of issued and  outstanding  shares of Common
Stock  (including for such purpose the shares of Common Stock issuable upon such
exercise).  For such  purposes,  beneficial  ownership  shall be  determined  in
accordance  with Section 13(d) of the Exchange Act and the rules and regulations
promulgated  thereunder.  This provision shall not restrict the number of shares
of Common  Stock  which a Holder  may  receive or  beneficially  own in order to
determine the amount of securities or other  consideration  that such Holder may
receive in the event of a Fundamental  Transaction as  contemplated in Section 9
of this Warrant. This restriction may not be waived.

         11.    NO FRACTIONAL  SHARES.  No fractional  shares of Warrant  Shares
will be issued in connection  with any exercise of this Warrant.  In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing bid price of one
Warrant  Share as  reported  by the  applicable  Trading  Market  on the date of
exercise.

         12.    NOTICES.   Any  and  all  notices  or  other  communications  or
deliveries hereunder (including,  without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile  number  specified in this Section prior to 6:30 p.m. (New York
City  time) on a  Trading  Day,  (ii) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day,  (iii) the Trading
Day following the date of mailing,  if sent by nationally  recognized  overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications  shall be: (i) if to
the Company,  to the contact  information  set forth on the Company's  signature
page to the  Securities  Purchase  Agreement,  or (ii) if to the Holder,  to the
address or  facsimile  number  appearing  on the Warrant  Register or such other
address  or  facsimile  number as the  Holder  may  provide  to the  Company  in
accordance with this Section.

                                                                             -9-
<PAGE>

         13.    WARRANT  AGENT.  The Company  shall serve as warrant agent under
this Warrant.  Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent.  Any corporation  into which the Company or any new warrant agent
may be merged or any corporation  resulting from any  consolidation to which the
Company or any new warrant  agent shall be a party or any  corporation  to which
the  Company  or  any  new  warrant  agent  transfers  substantially  all of its
corporate trust or shareholders  services  business shall be a successor warrant
agent under this Warrant  without any further act.  Any such  successor  warrant
agent shall  promptly  cause  notice of its  succession  as warrant  agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

         14.    MISCELLANEOUS.

                (a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective  successors and assigns.  Subject to the
preceding  sentence,  nothing in this Warrant  shall be construed to give to any
Person  other than the  Company  and the Holder  any legal or  equitable  right,
remedy or cause of action under this  Warrant.  This Warrant may be amended only
in  writing  signed by the  Company  and the  Holder  and their  successors  and
assigns.

                (b)  All  questions   concerning  the  construction,   validity,
enforcement  and  interpretation  of  this  Warrant  shall  be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York,  without regard to the principles of conflicts of law thereof.  Each party
agrees that all legal proceedings  concerning the  interpretations,  enforcement
and  defense  of  this  Warrant  and  the   transactions   herein   contemplated
("PROCEEDINGS")  (whether  brought  against  a party  hereto  or its  respective
Affiliates,  employees or agents) may be commenced  non-exclusively in the state
and federal  courts  sitting in the City of New York,  Borough of Manhattan (the
"NEW  YORK  COURTS").  Each  party  hereto  hereby  irrevocably  submits  to the
non-exclusive  jurisdiction  of the New York Courts for the  adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein,  and hereby  irrevocably  waives,  and agrees not to
assert in any  Proceeding,  any claim that it is not  personally  subject to the
jurisdiction  of any New York Court,  or that such Proceeding has been commenced
in an improper or  inconvenient  forum.  Each party  hereto  hereby  irrevocably
waives  personal  service of process and consents to process being served in any
such  Proceeding by mailing a copy thereof via  registered or certified  mail or
overnight  delivery  (with evidence of delivery) to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably  waives, to
the fullest  extent  permitted by applicable  law, any and all right to trial by
jury in any legal  proceeding  arising out of or relating to this Warrant or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce  any  provisions  of this  Warrant,  then the  prevailing  party in such
Proceeding  shall be reimbursed by the other party for its  attorney's  fees and
other  costs and  expenses  incurred  with the  investigation,  preparation  and
prosecution of such Proceeding.

                (c)  The  headings  herein  are  for  convenience  only,  do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                                                                            -10-
<PAGE>

                (d) In case any one or more of the  provisions  of this  Warrant
shall  be  invalid  or   unenforceable   in  any   respect,   the  validity  and
enforceability  of the remaining  terms and provisions of this Warrant shall not
in any way be affected or impaired  thereby and the parties will attempt in good
faith  to  agree  upon a  valid  and  enforceable  provision  which  shall  be a
commercially  reasonable  substitute  therefor,  and  upon  so  agreeing,  shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]










                                                                            -11-
<PAGE>

         IN WITNESS  WHEREOF,  the Company  has caused  this  Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                      UTIX GROUP, INC.



                                      By:
                                         ---------------------------------------
                                      Name:
                                      Title:









                                                                            -12-
<PAGE>

                       UTIX GROUP, INC. -- EXERCISE NOTICE

Exercise Notice for Warrant No: ________

The undersigned hereby irrevocably  elects to purchase  _____________  shares of
Common Stock pursuant to the above captioned Warrant, and, if such Holder is not
utilizing the cashless  exercise  provisions set forth in the Warrant,  encloses
herewith $________ in cash,  certified or official bank check or checks or other
immediately  available funds,  which sum represents the aggregate Exercise Price
(as defined in the  Warrant)  for the number of shares of Common  Stock to which
this Exercise Notice relates,  together with any applicable taxes payable by the
undersigned pursuant to the Warrant.

         By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise  evidenced  hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock  (determined in accordance  with Section 13(d) of the Securities  Exchange
Act of 1934)  permitted  to be owned under  Section 11 of this  Warrant to which
this notice relates.

         The  undersigned  requests that  certificates  for the shares of Common
Stock issuable upon this exercise be issued in the name of:


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

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

                    ----------------------------------------
                    (Print Name, Address and Social Security
                          or Tax Identification Number)

and,  if such  number of  Warrant  Shares  shall not be all the  Warrant  Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.

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

                               By:
                                  ----------------------------------------------
                                        Print Name


                               -------------------------------------------------
                               Signature

Address:

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

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

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



<PAGE>


                           WARRANT SHARES EXERCISE LOG

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Date                  Number of Warrant Shares     Number of Warrant Shares        Number of Warrant
                      Available to be Exercised    Exercised                       Shares Remaining to
                                                                                   be Exercised
--------------------------------------------------------------------------------------------------------
<S>                   <C>                          <C>                             <C>














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</TABLE>




<PAGE>


                                UTIX GROUP, INC.

                               FORM OF ASSIGNMENT


           [To be completed and signed only upon transfer of Warrant]

Warrant No: ____________

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto    ________________________________    the   right   represented   by   the
above-captioned Warrant to purchase ____________ shares of Common Stock to which
such Warrant  relates and appoints  ________________  attorney to transfer  said
right on the  books of the  Company  with  full  power  of  substitution  in the
premises.

Dated:   _______________, ____

                                ------------------------------------------------
                                (Signature  must  conform in all respects to
                                name of holder as specified on the face of the
                                Warrant)



                                ------------------------------------------------
                                Address of Transferee



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

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


In the presence of:


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



<PAGE>

                                                                 Schedule 1.1.27

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT ("Agreement") is made this 21st day of May
2004, by and between UTIX GROUP, INC., a Delaware corporation (the "Debtor"),
and GREAT COURT CAPITAL LLC (the "Secured Party"), as Agent for itself and such
other persons or entities (collectively, the "Note Purchasers" and each
individually, a "Note Purchaser") that are or become parties to that certain
Securities Purchase Agreement, dated as of May 21, 2004 (as amended or in effect
from time to time, the "Purchase Agreement"), by and among the Debtor, the Note
Purchasers, and the Secured Party.

                                    RECITALS

         A.     Pursuant to the Purchase Agreement, the Note Purchasers have
agreed to purchase from the Debtor 15% Senior Secured Promissory Notes (the
"Notes") in the aggregate principal amount of up to $1,250,000.

         B.     The Debtor has agreed to issue the Notes and enter into this
Agreement to induce the Note Purchasers to purchase the Notes from the Debtor.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1    "Accounts", "Account Debtors", and "Proceeds" shall each have
the meaning set forth in the Uniform Commercial Code.

         1.2    "Collateral" shall mean all of the Debtor's right, title and
interest in and to the following properties, assets and rights of the Debtor,
wherever located, whether now owned or existing or hereafter acquired or
arising:

                           (a) All personal and fixture property of every kind
         and nature including without limitation all goods (including inventory,
         equipment and any accessions thereto and all farm products and proceeds
         thereof), instruments (including promissory notes), documents, accounts
         (including health-care insurance receivables), chattel paper (whether
         tangible or electronic), deposit accounts, letter-of-credit rights


<PAGE>

         (whether or not the letter of credit is evidenced by a writing),
         commercial tort claims, securities and all other investment property,
         supporting obligations, any other contract rights or rights to the
         payment of money, insurance claims and proceeds, tort claims, and all
         general intangibles (including all payment intangibles); and

                  (b) All proceeds of every kind and nature and in whatever
         form, including, without limitation, both cash and non-cash proceeds
         resulting or arising from the rendering of services by the Debtor or
         the sale or other disposition of inventory or other collateral and all
         products thereof.

         1.3    "Event of Default" shall mean any event of default set forth in
Article VI.

         1.4    "Obligations" shall have the meaning set forth in Article II.

         1.5    "Security Interest" shall mean the interest in the Collateral
granted by the Debtor to the Secured Party in this Agreement.

         1.6    "U.C.C." shall mean the Uniform Commercial Code.

         1.7    "Uniform Commercial Code" shall mean the Uniform Commercial Code
as presently enacted in the Commonwealth of Massachusetts as the same may be
amended from time to time.

All terms defined by the U.C.C. and used herein shall have the same meanings
herein as specified therein. All other capitalized terms that are not otherwise
defined herein shall have the meanings ascribed to them in the Notes and the
Purchase Agreement.

                                   ARTICLE II
                               SECURITY INTERESTS

         2.1    To secure the payment of the principal sum and interest
evidenced by the Notes and the payment, performance and discharge of each and
every obligation of the Debtor under this Agreement, the Notes and the Purchase
Agreement (the "Obligations"), the Debtor hereby grants to the Secured Party a
continuing, Security Interest in the Collateral. The Security Interest of the
Secured Party in and to the Collateral shall be and shall represent:

                (a) subject only to the exception set forth in Section 6.1
hereof, a senior and first priority lien and Security Interest on the Collateral
with respect to $1,405,000 of the (i) $470,000 outstanding 9% convertible notes
of the Company due 2006; (ii) $1,175,000 outstanding amount of 7% bridge notes
of the Company due November 2004; and (iii) $260,000 of outstanding 10% notes of
the Company due 2005 (collectively, the "Existing Notes"); it being agreed that
the holders of not less than $1,405,000 principal amount of such Existing Notes
shall

                                       2
<PAGE>

on or before the "Subordination Agreements Delivery Date" (as hereinafter
defined) execute and deliver subordination agreements in form and content
reasonably satisfactory to counsel to Purchasers (the "Subordination
Agreements"), pursuant to which such Existing Notes shall be made fully subject
and subordinated to the payment in full of the Obligations; and

                (b) a second priority lien and Security Interest, subordinated
only to the remaining $500,000 principal amount of Existing Notes.

The Secured Party acknowledges the Debtor does not presently have, but shall
undertake to obtain duly executed Subordination Agreements from the holders of
not less than $1,405,000 principal amount of such Existing Notes on a date that
shall be not later than May 31, 2004 (the "Subordination Agreements Delivery
Date"). The Secured Party further acknowledges that the attachment of its
security interest in any commercial tort claim as original collateral is subject
to the Debtor's compliance with Section 3.5.

                                   ARTICLE III
                        PERFECTION OF SECURITY INTERESTS

         3.1    The Debtor agrees to cooperate and join, at its expense, with
the Secured Party in taking such steps as are reasonably necessary, in the
Secured Party's judgment, to perfect or continue the perfected status of the
Security Interest granted hereunder, including, without limitation, the delivery
of any financing statements, amendments thereto and continuation statements, the
obtaining of landlords' and mortgagees' waivers reasonably required by the
Secured Party, the notation of encumbrances in favor of the Secured Party on
certificates of title, and the execution and filing of any collateral
assignments and any other instruments reasonably requested by the Secured Party
to perfect its Security Interest in any and all of the Collateral.

         3.2    The Debtor hereby authorizes the Secured Party, at any time and
from time to time, to file financing statements, continuation statements and
amendments thereto which contain any information required by the U.C.C. for the
sufficiency or filing office acceptance of any financing statement, continuation
statement, or amendment, including whether the Debtor is an organization, the
type of organization, and any organization identification number issued to the
Debtor. The Debtor agrees to furnish any such information to the Secured Party
promptly upon request. Any such financing statements, continuation statements,
or amendments may be filed at any time in any jurisdiction whether or not
"Revised Article 9" of the U.C.C. is then in effect in that jurisdiction.

         3.3    The Debtor shall, at any time and from time to time, take such
steps as the Secured Party may reasonably require for the Secured Party, (a) to
obtain an acknowledgment, in form and substance reasonably satisfactory to the
Secured Party of any third party having possession of any of the Collateral that
the third party holds such Collateral for the benefit of the Secured Party, (b)
to obtain "control" (as described in the U.C.C.) of any Collateral with any

                                       3
<PAGE>

agreements, establishing control to be in form and substance reasonably
satisfactory to the Secured Party, and (c) otherwise to ensure the continued
perfection and priority of the Secured Party's Security Interest in any of the
Collateral and of the preservation of its rights therein.

         3.4    The Debtor shall, at its expense, execute, deliver, file and
record (in such manner and form as the Secured Party may at any time reasonably
require), and authorize the Secured Party to file and record, any financing
statements, any carbon, photographic or other reproduction of a financing
statement or of this Agreement (which shall be sufficient as a financing
statement hereunder), any specific assignments or other paper that may be
reasonably necessary or desirable or that the Secured Party may request, to
create, preserve, perfect, continue or validate any Security Interest or to
enable the Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral.

         3.5    If the Debtor shall at any time hold or acquire a commercial
tort claim, the Debtor shall immediately notify the Secured Party in a writing
signed by the Debtor of the details thereof and grant to the Secured Party in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, such writing to be in form and substance
satisfactory to the Secured Party.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

         The Debtor represents and warrants as follows:

         4.1    Except for the Security Interest and as set forth in Section
2.1, the Debtor has good and marketable title to, and is the owner of, the
Collateral free from any other lien, security interest, claim or encumbrance.

         4.2    Except as set forth in Section 2.1, there is no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral on file in any recording office except as may have been
filed in favor of the Secured Party pursuant to this Agreement.

         4.3    This Agreement creates a valid security interest of the Secured
Party in the Collateral securing payment of the Obligations. Upon the filing of
the financing statements with the Delaware Secretary of State, the Secured Party
shall, except as provided in Section 2.1, have valid first and prior perfected
liens on and Security Interests in the Collateral as to which security interests
can be perfected by the filing of a financing statements with the Delaware
Secretary of State.

         4.4.   Except for the Subordination Agreements contemplated by Section
2.1, no consent, authorization, approval, or other action by, and no notice to
or filing with, any

                                       4
<PAGE>

governmental authority, regulatory body, or other person is required for the
grant by the Debtor of the Security Interest granted hereby or for the
execution, delivery, or performance of this Agreement by the Debtor or for the
perfection or exercise by the Secured Party of its rights and remedies
hereunder, except filings of financing statements.

         4.5    The Debtor is a corporation organized under the laws of the
State of Delaware. The Debtor's exact legal name is as set forth in the first
paragraph of this Agreement.

         4.6    The places of business of the Debtor are as set forth in
Schedule 4.6. If the Debtor has more than one place of business, the chief
executive offices of the Debtor are at the address set forth in Schedule 4.6 or
at the location(s) hereafter disclosed to the Secured Party pursuant to Section
5.7.

         4.7    The locations of the offices where the Debtor maintains its
books and records concerning the Collateral are as set forth in Schedule 4.7 or
at the location(s) hereafter disclosed to the Secured Party pursuant to Section
5.7.

                                    ARTICLE V
                                    COVENANTS

         The Debtor agrees and covenants as follows:

         5.1    The Debtor shall preserve its corporate existence and shall not,
either in one transaction or a series of transactions, merge into or consolidate
with any entity or change its corporate name.

         5.2    The Collateral shall remain in the possession or under the
control of the Debtor (except for sale or replacement in the ordinary course of
business) and shall not be used for any unlawful purpose. The Collateral shall
not be misused, abused, wasted, or allowed to deteriorate, ordinary wear and
tear and insured casualty excepted. The Debtor shall keep the Collateral, as
appropriate and applicable, in good condition and repair (ordinary wear and tear
and insured casualty excepted), and shall clean, shelter, and otherwise deal
with the Collateral in all such ways as are considered normal practice by owners
of like property.

         5.3    The Debtor shall have and maintain insurance at all times with
respect to the Collateral against risks of fire (including so-called extended
coverage) and theft, and such other risks as the Secured Party may reasonably
require, containing such terms, in such amounts (not exceeding replacement
value), in such form for such periods and written by such companies as may be
reasonably satisfactory to the Secured Party, such insurance to be payable to
the Secured Party for the ratable benefit of the holders of the Notes and to the
Debtor as their interests may appear. Upon request, Debtor shall utilize
commercially reasonable efforts to cause all policies of insurance to provide
for 30 days' minimum written notice to the Secured Party of cancellation

                                       5
<PAGE>

or material change, and upon request the Debtor shall furnish the Secured Party
original policies of insurance or other evidence satisfactory to the Secured
Party of compliance with the foregoing insurance provisions.

         5.4    The Debtor shall defend the Collateral against the claims and
demands of all other parties, including, without limitation, defenses, setoffs,
claims, and counterclaims asserted against the Debtor or Secured Party; shall
keep the Collateral free from all security interests or other encumbrances,
except as set forth in Section 2.1 and for the Security Interest created hereby;
and shall not sell, transfer, lease, assign, deliver, or otherwise dispose of
any Collateral or any interest therein without the prior written consent of the
Secured Party, except that the Debtor may in the ordinary course of its business
sell assets which are not material.

         5.5    The Debtor shall promptly pay any and all taxes, assessments and
governmental charges upon the Collateral prior to the date penalties are
attached thereto, except to the extent that such taxes, assessments and charges
shall be contested in good faith and diligently by the Debtor.

         5.6    The Debtor shall promptly notify the Secured Party in writing of
any event causing a substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of the amount of
such loss or diminution.

         5.7    The Debtor shall maintain complete and accurate books and
records concerning the Collateral at its offices set forth in Schedule 4.7, or
at such other place or places of business as the Secured Party may approve in
writing. The Debtor shall hold and preserve such records and shall, upon
reasonable notice, permit representatives of the Secured Party at any time
during normal business hours (but not so as to materially interfere with the
business of the Debtor) to examine and inspect the Collateral and to make
abstracts from or copies of such records and shall furnish to the Secured Party
such information and reports regarding the Collateral as the Secured Party may
from time to time reasonably request.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

         The existence or occurrence of any one or more of the following events
shall constitute an Event of Default:

         6.1    The Debtor shall fail to deliver duly executed Subordination
Agreements from the holders of not less than $1,405,000 principal amount of
Existing Notes by the Subordination Agreements Delivery Date; provided, that the
failure or refusal (after request by the Debtor) of any of The Rubin Family
Irrevocable Stock Trust, Charles Warshaw Family Limited Partnership, Mark and
Jolene Bolendar or Norman Friedman to execute and deliver such Subordination
Agreements shall not be deemed to be an Event of Default hereunder;

                                       6
<PAGE>

         6.2    The Debtor fails to perform or observe any other covenant or
agreement contained in this Agreement within 10 days after the giving of notice
by the Secured Party of such default;

         6.3    Any representation or warranty of the Debtor contained in this
Agreement, or in any certificate or other writing delivered by the Debtor
pursuant to this Agreement, proves to have been incorrect in any material
respect; or

         6.4    The occurrence of an Event of Default (as such term is or may
hereafter be specifically defined in the Notes or the Purchase Agreement) under
the Notes or the Purchase Agreement, as applicable.

                                   ARTICLE VII
                         REMEDIES UPON EVENT OF DEFAULT

         Upon the occurrence of an Event of Default that remains uncured:

         7.1    The Secured Party may exercise all the rights and remedies of a
Secured Party under the U.C.C. and all applicable law and, with respect to
Accounts, the rights provided in Article IX hereof. In addition, the Secured
Party may, without notice to the Debtor, (a) set off all or any part of the
Collateral against the Obligations, (b) apply the cash, if any, then held by it
as Collateral in the manner set forth in Article X, and (c) if there shall be no
such cash or if such cash shall be insufficient to pay all the Obligations in
full upon 10 days' prior written notice to the Debtor, sell the Collateral, or
any part thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Secured Party may reasonably deem satisfactory.

         7.2    The Secured Party may require the Debtor to assemble all or any
part of the Collateral and make it available to the Secured Party at a place
within Massachusetts to be designated by the Secured Party which is reasonably
convenient to the Secured Party.

         7.3    Any holder of the Notes may be the purchaser of any or all of
the Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is subject to
widely distributed standard price quotations, at any private sale) and
thereafter hold the same, absolutely, free from any right or claim of whatsoever
kind. Upon any such sale, the Secured Party shall have the right to deliver,
assign, and transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold absolutely free
from any claim or right of whatsoever kind, including any equity or right or
redemption of the Debtor. The Debtor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any rule of law or statute now existing or hereafter adopted.

                                       7
<PAGE>

         7.4    The Secured Party shall give the Debtor 10 days' written notice
of its intention to make any such public or private sale or sale at a broker's
board or on a securities exchange, which notice period is deemed by the Debtor
and by the Secured Party to be commercially reasonable. Such notice, in case of
a public sale, shall state the time and place fixed for such sale, and in case
of sale at a broker's board or on a securities exchange, shall state the board
or exchange at which such sale is to be made and the day on which the
Collateral, or the portion thereof so being sold, shall first be offered for
sale at such board or exchange. Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the
Secured Party may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Secured Party may determine. The Secured Party may, without notice or
publication, adjourn the sale from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Secured Party until the selling price is paid by the purchaser
thereof, but the Secured Party shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like notice.

         7.5    The Secured Party may sell the Collateral without giving any
warranties of any kind. The Secured Party may specifically disclaim any
warranties of title or the like and warranties of fitness and merchantability.
The disclaimer of warranties by the Secured Party shall not be deemed to affect
adversely the commercial reasonableness of any disposition of the Collateral.

         7.6    The Secured Party, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interest and sell the Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent jurisdiction.

                                  ARTICLE VIII
              RIGHT OF SECURED PARTY TO USE AND OPERATE COLLATERAL

         During the existence of an Event of Default, the Secured Party shall
have the right and power to take possession of all or any part of the
Collateral, and to exclude the Debtor and all persons claiming under the Debtor
wholly or partly therefrom, and thereafter to hold, store, use, operate, manage
or control the same. Upon taking possession, the Secured Party may, from time to
time, at the expense of the Debtor, make all such repairs, replacements,
alterations, additions, and improvements to and of the Collateral as the Secured
Party may reasonably deem proper. The Secured Party shall have the right to
manage and control the Collateral and to carry on the business and to exercise
all rights and powers of the Debtor in respect thereto as the Secured Party
shall reasonably deem best, including the right to enter into any agreements
with respect to the leasing or operation of the Collateral or any part thereof,
and the Secured Party shall be

                                       8
<PAGE>

entitled to collect and receive all rents, issues, profits, fees, revenues, and
other income of the same and every part thereof. Such rents, issues, profits,
fees, revenues, and other income shall be applied to pay the expenses of holding
and operating the Collateral and of conducting the business thereof, and of all
maintenance, repairs, replacements, alterations, additions, and improvements,
and to make all payments which the Secured Party may be required or may elect to
make, if any, for taxes, assessments, insurance, and other charges upon the
Collateral or any part thereof, and all other payments which the Secured Party
may be required or authorized to make under any provisions of this Agreement
(including reasonable attorneys' fees). The remainder of such rents, issues,
profits, fees, revenues, and other income shall be applied to the payment of the
Obligations in such order of priority as the Secured Party shall determine
(subject to the provisions of Article X).

                                   ARTICLE IX
                                POWER OF ATTORNEY

         After an Event of Default that remains uncured, upon demand by the
Secured Party for payment of the Obligations in full or acceleration of the
Obligations by any holder of the Notes, the Debtor does hereby irrevocably make,
constitute and appoint the Secured Party and any of its officers, employees or
agents as the true and lawful attorneys of the Debtor with power to:

         9.1    sign the name of the Debtor on any notice or other similar
document which, in the Secured Party's opinion, must be filed to perfect or
continue perfected the Security Interests;

         9.2    receive, endorse, assign and deliver, in the name of the Debtor
or in the name of the Secured Party, all checks, notes, drafts and other
instruments relating to any Collateral and to notify postal authorities to
change the address for delivery of mail to such address as the Secured Party may
designate;

         9.3    notify all or any Account Debtors of the Security Interest
created hereby and direct such Account Debtors to make all payments on the
Collateral to, or as directed by, the Secured Party; and

         9.4    do all other things reasonably necessary to carry out the
provisions of this Agreement.

The Secured Party shall not be liable for any act of commission or omission,
except for its own gross negligence or willful misconduct. This power of
attorney is coupled with an interest and is irrevocable so long as this
Agreement is in effect.

                                       9
<PAGE>

                                    ARTICLE X
                     APPLICATION OF COLLATERAL AND PROCEEDS

         10.1 The proceeds of any disposition of, or other realization upon, all
or any part of the Collateral shall be applied in the following order of
priorities:

                  10.1.1 first, to pay the expenses of such disposition or other
         realization, including reasonable expenses of the Secured Party and its
         agents, attorneys' fees, costs, and expenses reasonably incurred in
         enforcing the Obligations and the Security Interest, and all expenses,
         liabilities and advances reasonably incurred or made by the Secured
         Party in connection therewith, and any other unreimbursed expenses for
         which the Secured Party is to be reimbursed pursuant to Article XI;

                  10.1.2 second, to the payment of the amount then owing or
         unpaid on the Notes, with application to be made first to the unpaid
         interest thereon, and second, to the unpaid principal thereof; and

                  10.1.3 third, to the payment of the balance or surplus, if
         any, to the Debtor, its successors and assigns, or to whomever may be
         lawfully entitled to receive the same.

         If the Secured Party sells any of the Collateral upon credit, the
Debtor shall receive credit only when payments are actually made by the
purchaser, received by the Secured Party and applied to the Obligations.

                                   ARTICLE XI
                         EXPENSES; SECURED PARTY'S LIEN

         The Debtor shall promptly upon demand pay to the Secured Party:

         11.1   the amounts of any taxes, assessments or other amounts which the
Secured Party may have been required to pay to free any of the Collateral from
any lien thereon; and

         11.2   reasonable fees and disbursements of its counsel and of any
agents which the Secured Party may incur in connection with the collection, sale
or other disposition of any of the Collateral or any Event of Default on the
Debtor's part hereunder.

                                   ARTICLE XII
             TERMINATION OF SECURITY INTEREST; RELEASE OF COLLATERAL

         Upon the repayment and performance in full, or other extinguishment, of
all the Obligations the Security Interest shall terminate and all rights to the
Collateral shall revert to the Debtor. Upon any such termination of the Security
Interest or release of the Collateral, the

                                       10
<PAGE>

Secured Party shall execute and deliver to the Debtor such documents as the
Debtor shall reasonably request to evidence the termination of the Security
Interest or the release of such Collateral, as the case may be.

                                  ARTICLE XIII
                                  MISCELLANEOUS

         13.1   This Agreement and the Schedules hereto set forth the entire
understanding of the parties with respect to the subject matter hereof and
supersede all existing agreements among them concerning such subject matter.

         13.2   Any provisions of this Agreement may be modified, amended, or
waived if, but only if, such modification, amendment or waiver is in writing and
is signed by the Debtor and the Secured Party.

         13.3   Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by Federal Express,
Express Mail, or similar overnight delivery or courier service, or delivered (in
person or by telecopy, telex, or similar telecommunications equipment) against
receipt to the party to whom it is to be given,

                (a)     if to the Debtor:

                        UTIX Group, Inc.
                        170 Cambridge Street
                        Burlington, MA 01803
                        Attn:  Anthony G. Roth, President
                        Facsimile No. (781) 229-8886

                        with a copy to:

                        Stephen A. Weiss, Esq.
                        Gersten Savage Kaplowitz Wolf & Marcus, LP
                        101 East 52nd Street
                        New York, NY 10022
                        Facsimile No. 212-980-5192

                (b)     if to the Secured Party:

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

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

                         ------------------------
                         Attn:
                               ------------------
                         Facsimile No.
                                       ----------

                                       11
<PAGE>

                         with a copy to:

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

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

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

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

                         Facsimile No.
                                       ----------


         or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 13.3. Any notice shall be
deemed given at the time of receipt thereof.

         13.4   Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. The rights, powers, and remedies of the Secured
Party provided in this Agreement are cumulative and not exclusive of any right,
power, or remedy provided by law or equity.

         13.5   No party may sell, assign, transfer, or otherwise convey any of
its rights or delegate any of its duties under this Agreement, except as
hereinafter provided, and this Agreement shall be binding upon and inure to the
benefit of the parties hereto and the respective permitted successors and
assigns. Nothing herein shall restrict any Note Purchasers from assigning his,
her or its rights under this Agreement to any permitted transferee of such Note
Purchasers's Notes. Any attempted sale, assignment, transfer, conveyance, or
delegation in violation of this Section 13.5 shall be void. The provisions of
this Agreement shall inure to the benefit of each indemnified party and its
successors and assigns.

         13.6   If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect.

         13.7   The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.

         13.8   This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

         13.9   This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without regard to principles
of conflicts of law.

                                       12
<PAGE>

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

                                DEBTOR:
                                UTIX GROUP, INC.



                                By:
                                   ---------------------------------------------
                                   Name:
                                   Title:



                                SECURED PARTY:


                                -----------------------------------------------,
                                as Agent for the Note Purchasers


                                By:
                                   ---------------------------------------------
                                   Name:
                                   Title:







                                       13
<PAGE>


                                                               Schedule 2.1.2(b)

                 GERSTEN, SAVAGE, KAPLOWITZ, WOLF & MARCUS, LLP
                               101 EAST 52 STREET
                                    9TH FLOOR
                            NEW YORK, NEW YORK 10022
                               TEL: (212) 752-9700
                               FAX: (212) 980-5192

                                                                    May 21, 2004

New York Holdings, Ltd.
Sol Kest, Robert Kornstein,
Avner Maloul, Avner Lowy and
Great Court Capital, LLC
c/o Great Court Capital LLC
380 Madison Avenue
New York, NY 10017

           RE: SALE OF 15% SENIOR SECURED NOTES OF UTIX GROUP, INC.

Gentlemen:

We have acted as special counsel to Utix Group, Inc, a Delaware corporation (the
"COMPANY"), in connection with that certain securities purchase agreement, dated
of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),  among the Company,
Great Court Capital,  LLC, a New York limited liability company ("GREAT COURT"),
and the other  purchasers  party  thereto  (collectively  with Great Court,  the
"PURCHASERS").

           This opinion is being  delivered to the  Purchasers at the request of
the Company pursuant to Section 2.1.2(iii) of the Securities Purchase Agreement,
and is  given  with its  consent.  Terms  are  used  herein  as  defined  in the
Securities Purchase Agreement, unless otherwise defined herein.

           In  rendering  the  following  opinions,  we have  assumed  that  the
representations  and  warranties  made  by the  Purchasers  in  the  Transaction
Documents (as defined below) are true and correct. Whenever an opinion herein is
qualified by the phrase "to our knowledge" or similar  phrases,  such opinion is
based  solely on the  actual  knowledge  of the  attorneys  in this firm who are
currently  involved in the substantive  legal  representation  of the Company in
this transaction and, while such attorneys have not been informed by the Company
that the matters  stated are factually  incorrect,  we have made no  independent
investigation of such matters.


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Great Court Capital, LLC, et. al.
May 21, 2004
Page 2

         In  rendering  the  opinions  expressed  below,  we have  reviewed  the
following instruments, documents and agreements, each of which is dated the date
of this opinion:

     o    The Securities Purchase Agreement;

     o    The Warrants;

     o    The Notes; and

     o    The Security Agreement.



The  Securites  Purchase  Agreement,  the  Warrants,  the Notes and the Security
Agreement are collectively referred to herein as the "TRANSACTION DOCUMENTS").

         In addition to the Transaction Documents,  in rendering our opinion, we
have also examined and relied upon:

     o    a certified copy dated May [ ], 2004, of the Articles of Incorporation
          of the Company from the Delaware  Secretary of State (the "ARTICLES OF
          INCORPORATION");

     o    a  certified  copy of the  Bylaws of the  Company  effective  [ ] (the
          "BYLAWS");

     o    a  certificate  of good  standing  dated May [ ], 2004 for the Company
          from the Massachusetts Secretary of the Commonwealth; and

     o    Consent and  resolutions  dated [ ], 2004 of the board of directors of
          the Company;

     o    The  active  shareholder  report  of [ ],  the  transfer  agent of the
          Company,  as of May [ ],  2004  (the  "TRANSFER  AGENT  REPORT");  and

     o    Periodic  reports  filed  by the  Company  under  the  Securities  and
          Exchange Act of 1934, as amended (collectively, the "PUBLIC FILINGS").

         Based  upon  and  subject  to  the   foregoing,   and  subject  to  the
assumptions,  qualifications  and limitations  stated in this opinion letter, we
are of the opinion that:

         1.       The  Company  is  a  corporation  duly  incorporated,  validly
existing  and in good  standing  under the laws of the State of  Delaware,  with
corporate  power to own its properties and assets and to conduct its business as
currently conducted.


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Great Court Capital, LLC, et. al.
May 21, 2004
Page 3

         2.       The Company has the  corporate  power to execute,  deliver and
perform the  Transaction  Documents.  The  Transaction  Documents have been duly
executed,  have been authorized by all requisite corporate action by the Company
and constitute the valid and binding obligations of the Company,  enforceable in
accordance  with their terms,  except (a) as limited by  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or other laws of  general  application
affecting enforcement of creditors' rights, and (b) general principles of equity
that restrict the availability of equitable or legal remedies.

         3.       The execution,  delivery and  performance  of the  Transaction
Documents by the Company and the consummation of the  transactions  contemplated
thereby,  will not,  with or without the giving of notice or the passage of time
or both:

                  (a) conflict  with or violate the  provisions of the Company's
articles  of  incorporation  or  bylaws  or  other   organizational  or  charter
documents, as applicable; or

                  (b) to the best of our knowledge, result in a violation of any
law, rule, regulation, order, judgment,  injunction, decree or other restriction
of any court or  governmental  authority  to which the  Company is subject or by
which any property or asset of the Company is bound or affected.

         4.       The  Notes,  Warrants  and  Warrants  Shares  have  been  duly
authorized  and, when issued,  and paid for in accordance  with the  Transaction
Documents, will be duly and validly issued, fully paid and non-assessable,  free
and clear of all liens and shall not be subject to preemptive  rights or similar
rights of stockholders.

         For  purposes of the  foregoing  opinions,  we have  assumed all of the
following:

     o    the legal capacity of each natural person;

     o    the legal existence of all parties to the transaction,  other than the
          Company;

     o    the power and  authority  of each  person,  other than the  Company or
          person(s)  acting on behalf of the  Company,  to execute,  deliver and
          perform each document  executed and delivered and to do each other act
          done or to be done by such person;

     o    the authorization,  execution and delivery by each person,  other than
          the  Company or  person(s)  acting on behalf of the  Company,  of each
          document  executed and  delivered  or to be executed and  delivered by
          such person;

     o    the legality,  validity,  binding effect and enforceability as to each
          person,  other than the Company,  or person(s) acting on behalf of the
          Company, of each document executed and delivered or to be executed and
          delivered and of each other act done or to be done by such person;


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Great Court Capital, LLC, et. al.
May 21, 2004
Page 4

     o    the payment of all required documentary stamps, taxes and fees imposed
          upon the execution, filing or recording of documents;

     o    there have been no undisclosed  modifications  of any provision of any
          document  reviewed by us in  connection  with the  rendering  of these
          opinions  and no  undisclosed  prior  waiver  of any  right or  remedy
          contained in any of the documents;

     o    the genuineness of each signature,  other than that of the Company, or
          person(s)  acting on behalf of the Company,  the  completeness of each
          document reviewed by us as an original, the conformity to the original
          of each document  reviewed by us as a copy and the authenticity of the
          original of each document received by us as a copy;

     o    the accuracy on the date of the opinion  letter as well as of the date
          stated in all governmental certifications of each statement as to each
          factual matter contained in such governmental certifications;

     o    Great  Court  Capital,  LLC  and  other  parties  to  the  Transaction
          Documents,  other than the Company,  have acted in good faith, without
          notice of adverse  claims,  and have complied with all laws applicable
          to them that affect the transaction;

     o    the  transaction  complies with all tests of good faith,  fairness and
          conscionability required by law;

     o    routine procedural matters such as service of process or qualification
          to do business in the relevant  jurisdictions will be satisfied by the
          parties  seeking to enforce  any  agreements  in  connection  with the
          transaction;

     o    all statutes,  judicial and  administrative  decisions,  and rules and
          regulations of governmental agencies constituting the law for which we
          are  assuming  responsibility  are  published  (E.G.,  reported  court
          decisions  and the  specialized  reporting  services  of BNA,  CCH and
          Prentice-Hall)  or  otherwise  generally  accessible  (E.G.,  LEXIS or
          WESTLAW) in each case in a manner generally  available (I.E., in terms
          of  access  and   distribution   following   publication)  to  lawyers
          practicing in our judicial circuit;

     o    agreements  related to the  transaction  (other  than the  Transaction
          Documents) will be enforced as written;

     o    no action,  discretionary or otherwise,  will be taken by or on behalf
          of the Company in the future that might result in a violation of law;


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Great Court Capital, LLC, et. al.
May 21, 2004
Page 5

     o    there are no other agreements or understandings among the parties that
          would modify the terms of the Transaction  Documents or the respective
          rights or obligations of the parties to those documents;

     o    with respect to the transaction and the Transaction  Documents,  there
          has been no  mutual  mistake  of fact  and  there  exists  no fraud or
          duress;

     o    the constitutionality  and validity of all relevant laws,  regulations
          and  agency  actions  unless a  reported  case has  otherwise  held or
          widespread  concern has been expressed by commentators as reflected in
          materials which lawyers routinely consult; and

     o    the Transaction Documents have been duly executed and delivered by the
          parties thereto, other than by the Company.

         We have made no  assumptions  other than those  expressly  set forth in
this opinion letter.

         Notwithstanding the foregoing, we do not express any opinion concerning
the  following  types  of  laws:  usury  laws;   Federal  Reserve  Board  margin
regulations;  pension and employee  benefit laws and regulations  such as ERISA;
Federal and state antitrust and unfair competition laws and regulations; Federal
and  state  regulations   concerning  filing   requirements  other  than  filing
requirements  applicable  to  filings  related  to  articles  of  incorporation,
articles of merger, financing statements and the like; compliance with fiduciary
duty  requirements;  Federal  and  state  laws and  regulations  concerning  the
priority  of  security  interests;   Federal  and  state  laws  and  regulations
concerning the priority or enforcement of security interests;  Federal and state
environmental  laws  and  regulations;  Federal  and  state  land  use  laws and
regulations;  and local laws (including statutes,  administrative decisions, and
rules and regulations of county, municipal and political subdivisions).

         This opinion  letter is  furnished to you by us, as special  counsel to
the Company,  and is rendered solely in connection with the transaction to which
this opinion letter relates.  This opinion letter may be relied upon by you only
in  connection  with this  transaction  and may not be relied  upon by any other
person without our prior written consent.

         This  opinion  letter is limited  to the  matters  expressly  set forth
herein and no opinion is implied or may be inferred beyond the matters expressly
set forth herein.

         We are admitted to practice in the State of New York, and we express no
opinion herein as to any matters governed by any laws other than the laws of the
State of New York, the Delaware General  Corporation law and the federal laws of
the United States.


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Great Court Capital, LLC, et. al.
May 21, 2004
Page 6

         This opinion letter is rendered as of the date hereof.  We disclaim any
obligation  to advise you of any changes that  thereafter  may be brought to our
attention.

                                                     Sincerely yours,

                                                     GERSTEN SAVAGE KAPLOWITZ
                                                     WOLF & MARCUS, LLP


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                                 SCHEDULE 3.1.6
                            UTIX GROUP CAPITALIZATION

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of Utix Group, Inc. (the "Company") consists of
60,000,000 shares, of which

         (a)      50,000,000 are shares of Common Stock, par value $0.001 per
                  share, 17,468,391 shares of which are issued and outstanding
                  as of March 31, 2004, and, on a pro forma basis, 29,111,248
                  shares shall be outstanding, giving effect to (i) the offer
                  and sale of all 12,000,000 shares of Common Stock under a
                  registration statement on Form SB-2 in connection with the
                  U.S. Common Stock Offering, (ii) the issuance of 1,142,857
                  shares to SD Partners under an advisory agreement of even
                  date, and (iii) the repurchase and cancellation in May 2004 of
                  1,500,000 shares of Common Stock by the Company from a
                  stockholder;

         (b)      10,000,000 of which are shares of preferred stock, par value
                  $.001 per share of which no shares are issued and outstanding.

Since March 31, 2004, the Company has engaged in the following transaction for
the repurchase of its Common Stock

In May 2004, the Company repurchased 1,500,000 shares of its Common Stock from
Joel Pensley, former president and principal stockholder of the Company, and
subsequently cancelled such shares.

COMMON STOCK EQUIVALENTS

As partial consideration for the stock repurchase from Mr. Pensley, the Company
issued to Mr. Pensley a five-year warrant to purchase up to 750,000 shares of
Common Stock at an exercise price of $0.15 per share.

As of March 31, 2004, there were outstanding options and warrants to acquire
2,572,000 and 1,829,688 shares of Common Stock, respectively, and notes
convertible into 1,614, 534 shares of Common Stock.

PRINCIPAL STOCKHOLDERS.

Reference is made to the draft of Amendment No. 2 to the Company's registration
statement in connection with the U.S. Common Stock Offering to be filed with the
SEC following the Initial Notes Closing Date.

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                          SCHEDULE 3.1.12 CERTAIN FEES

The Company has agreed to pay the following finders' fees:

         (a)      To Great Court Capital LLC - a cash finders fee equal to 10%
                  of the gross proceeds received from the sale of the Notes, up
                  to a maximum of $100,000 in the aggregate; payable in pro rata
                  amounts on the Initial Notes Closing Date and the Final Notes
                  Closing Date.

         (b)      To William Hayde - a five year warrant to purchase up to
                  500,000 shares of Company Common Stock at an exercise price of
                  $0.25 per share, and containing substantially the same terms
                  and conditions as the Warrants issued to the Purchasers.



<PAGE>

                       3.1.16 EXISTING REGISTRATION RIGHTS

The Company has granted registration rights to the following persons:

Joel Pensley, with respect to 970,000 shares of common stock of the Company and
750,000 shares underlying warrants. The Company has agreed to file a
registration statement with the SEC for such shares within 30 days after the
effective date of the registration on Form SB-2 filed on April 12, 2004 with the
SEC. Mr. Pensley has agreed not to effect a public distribution of such
securities prior to June 30, 2005; provided that he is permitted to sell up to
10% of his registrable securities every 30 days, commencing on the effective
date of the registration statement.

The Company has granted registration rights to other holders of its securities,
all of which securities are being registered in the U.S. Common Stock Offering
registration statement, but subject to the lock up provisions set forth therein.



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                                  SCHEDULE 4.6

                               PLACES OF BUSINESS

Debtor's sole place of business is located at 170 Cambridge Street, Burlington,
MA 01803-2933















                                       1
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                                  SCHEDULE 4.7

                          LOCATION OF BOOKS AND RECORDS

Debtor's books and records are located at 170 Cambridge Street, Burlington, MA
01803-2933














                                       1

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                               4.7 USE OF PROCEEDS



The net proceeds from the sale of the Notes, net of transaction costs and
expenses, will be used solely to (a) provide a security deposit to
DISCOVER/Novus under its escrow and payment account arrangements to, and (b) to
purchase additional inventories of gift tickets and packaging; in each case to
facilitate the launch of the Company's Spring 2004 Giftix program.