Document:

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                                                                     EXHIBIT 4.3

THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

                         NOTIFY TECHNOLOGY CORPORATION

                    WARRANT TO PURCHASE ___________ SHARES
                            (SUBJECT TO ADJUSTMENT)
                                OF COMMON STOCK

                       (Void after ______________, 2008)

No: _______________

          This certifies that for value Commonwealth Associates, L.P., or
registered assigns ("Holder"), is entitled, subject to the terms set forth
                     ------
below, at any time from and after ____________, 2001 (the "Original Issuance
Date") and before 5:00 p.m., Eastern Time, on ________________, 2008, to
purchase from Notify Technology Corporation, a California corporation (the
"Company"), _____________ shares (subject to adjustment as described herein), of
--------
the Common Stock, par value $0.001 per share (which authorized class of shares
is herein called the "Common Stock") of the Company, as constituted on the
                      ------------
Original Issuance Date, upon surrender hereof, at the principal office of the
Company referred to below, with a duly executed subscription form in the form
attached hereto as Exhibit A and simultaneous payment therefor in lawful money
                   ---------
of the United States or otherwise as hereinafter provided, at the price per
share equal to $______ per share, as may be adjusted as provided herein (the
"Purchase Price"). The number and character of such shares of Common Stock are
---------------
subject to further adjustment as provided below, and the term "Common Stock"
shall include, unless the context otherwise requires, the stock and other
securities and property at the time receivable upon the exercise of this
Warrant. The term "Warrants" as used herein shall include this Warrant and any
warrants delivered in substitution or exchange therefor as provided herein. The
term "Series A Warrants" shall mean those warrants, including this Warrant,
issued concurrently with the Series A Preferred (defined below).
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     1.   Exercise.
          --------

          A.   This Warrant may be exercised at any time or from time to time
from and after the Original Issuance Date and before 5:00 p.m., Eastern Time, on
___________, 2008, on any business day, for the full number of shares of Common
Stock called for hereby, by surrendering it at the principal office of the
Company, at 1054 S. DeAnza Boulevard (Suite 105), San Jose, California 95129,
with the subscription form duly executed, together with payment in an amount
equal to (a) the number of shares of Common Stock called for on the face of this
Warrant, as adjusted in accordance with the preceding paragraph of this Warrant
(without giving effect to any further adjustment herein) multiplied (b) by the
Purchase Price. Payment of this amount may be made at Holder's choosing either
(1) by payment in cash or by corporate check, payable to the order of the
Company, or (2) by the Company not issuing that number of shares of Common Stock
subject to this Warrant having a Fair Market Value (as defined below) on the
date of exercise equal to such sum. This Warrant may be exercised for less than
the full number of shares of Common Stock at the time called for hereby, except
that the number of shares receivable upon the exercise of this Warrant as a
whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon a partial exercise of this Warrant in
accordance with the terms hereof, this Warrant shall be surrendered, and a new
Warrant of the same tenor and for the purchase of the number of such shares not
purchased upon such exercise shall be issued by the Company to Holder without
any charge therefor. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date.
Within two business days after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Common Stock issuable upon such exercise,
together with cash, in lieu of any fraction of a share, equal to such fraction
of the then Fair Market Value on the date of exercise of one full share of
Common Stock.

          B.   "Fair Market Value" shall mean, as of any date, (i) if shares of
the Common Stock are listed on a national securities exchange, the average of
the closing prices as reported for composite transactions during the ten (10)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the closing
bid and asked prices on such exchange on such trading day; (ii) if shares of the
Common Stock are not so listed but are traded on the Nasdaq SmallCap Market
"NSCM"), the average of the closing prices as reported on the NSCM during the
------
ten (10) consecutive trading days preceding the trading day immediately prior to
such date or, if no sale occurred on a trading day, then the mean between the
highest bid and lowest asked prices as of the close of business on such trading
day, as reported on the NSCM; or if applicable, the Nasdaq National Market
("NNM"), or if not then included for quotation on the  NNM or NSCM, the average
  ---
of the highest reported bid and lowest reported asked prices as reported by the
OTC Bulletin Board or the National Quotations Bureau, as the case may be, or
(iii) if the shares of the Common Stock are not then publicly traded, the fair
market price, not less than book value thereof, of the Common Stock as
determined in good faith by the independent members of the Board of Directors of
the Company (the "Board").
                  -----

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     2.   Shares Fully Paid; Payment of Taxes. All shares of Common Stock issued
          -----------------------------------
upon the exercise of a Warrant shall be validly issued, fully paid and non-
assessable, and the Company shall pay all taxes and other governmental charges
(other than income taxes to the holder) that may be imposed in respect of the
issue or delivery thereof.

     3.   Transfer and Exchange. This Warrant and all rights hereunder are
          ---------------------
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its principal office referred to above by Holder in person or by
duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached as Exhibit B,
                                                               ----------
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer and an opinion of counsel reasonably acceptable the Company
stating that such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended. Upon any partial transfer, the Company will
issue and deliver to Holder a new Warrant or Warrants with respect to the shares
of Common Stock not so transferred. Each taker and holder of this Warrant, by
taking or holding the same, consents and agrees that this Warrant when endorsed
in blank shall be deemed negotiable and that when this Warrant shall have been
so endorsed, the holder hereof may be treated by the Company and all other
persons dealing with this Warrant as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered Holder hereof as the owner for all purposes.

          This Warrant is exchangeable at such office for Warrants for the same
aggregate number of shares of Common Stock, each new Warrant to represent the
right to purchase such number of shares as the Holder shall designate at the
time of such exchange.

     4.   Anti-Dilution Provisions.
          ------------------------

          A.   Adjustment for Dividends in Other Stock and Property
Reclassifications. In case at any time or from time to time the holders of the
Common Stock (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received, or, on or after the
record date fixed for the determination of eligible shareholders, shall have
become entitled to receive, without payment therefor,

               (1)  other or additional stock or other securities or property
(other than cash) by way of dividend,

               (2)  any cash or other property paid or payable out of any source
other than retained earnings (determined in accordance with generally accepted
accounting principles), or

               (3)  other or additional stock or other securities or property
(including cash) by way of stock-split, spin-off, reclassification, combination
of shares or similar corporate rearrangement, (other than (x) additional shares
of Common Stock or any other stock or securities into which such Common Stock
shall have been changed, (y) any other stock or securities convertible into or
exchangeable for such Common Stock or such other stock or securities or (z) any
Stock Purchase Rights, issued as a stock dividend or stock-split, adjustments

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in respect of which shall be covered by the terms of Section 4.C, 4.D, 4.E or 6,
                                                     ---------
then and in each such case Holder, upon the exercise hereof as provided in
Section 1, shall be entitled to receive the amount of stock and other securities
---------
and property (including cash in the cases referred to in clauses (2) and (3)
above) which such Holder would hold on the date of such exercise if on the
Original Issuance Date Holder had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant, as adjusted in
accordance with the first paragraph of this Warrant, and had thereafter, during
the period from the Original Issuance Date to and including the date of such
exercise, retained such shares and/or all other or additional stock and other
securities and property (including cash in the cases referred to in clause (2)
and (3) above) receivable by it as aforesaid during such period, giving effect
to all adjustments called for during such period by Section 4.A and Section 4.B.
                                                    ---------       -----------

          B.   Adjustment for Reorganization, Consolidation and Merger. In case
               -------------------------------------------------------
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into
another corporation or entity or convey all or substantially all its assets to
another corporation or entity, then and in each such case Holder, upon the
exercise hereof as provided in Section 1 at any time after the consummation of
                               ---------
such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise of this Warrant prior to such consummation, the stock or other
securities or property to which such Holder would have been entitled upon such
consummation if Holder had exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided in Sections 4.A, 4.B, 4.C, 4.D, 4.E
                                             ----------
and 4.H; in each such case, the terms of this Warrant shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
this Warrant after such consummation.

          C.   Sale of Shares Below Fair Market Value and Above Purchase Price.
               ---------------------------------------------------------------

          (1)  If at any time or from time to time on or after the Original
Issuance Date, the Company issues or sells, or is deemed by the express
provisions of this Section 4.C to have issued or sold, Additional Shares of
                   -----------
Common Stock (as hereinafter defined), other than as a dividend or other
distribution on any class of stock as provided in Section 4.D and other than
                                                  -----------
upon a subdivision or combination of shares of Common Stock as provided in
Section 4.E, for an Effective Price (as hereinafter defined) less than the Fair
-----------
Market Value but greater than the  then existing Purchase Price, then and in
each such case

               (A)  the Holder of this Warrant shall be entitled to receive, in
lieu of the number of shares theretofore receivable upon the exercise of this
Warrant, a number of shares of Common Stock determined by (i) dividing the
original Purchase Price by the Purchase Price as adjusted as a result of such
issue or sale (as provided below), and (ii) multiplying the resulting quotient
by the number of shares of Common Stock called for on the face of this Warrant,
as adjusted in accordance with the first paragraph of this Warrant; and

               (B)  the then existing Purchase Price shall be reduced, as of the
opening of business on the date of such issue or sale, as follows: the Purchase
Price shall be reduced to a price determined by multiplying that Purchase Price
by a fraction (i) the numerator

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of which shall be (a) the number of shares of Common Stock outstanding at the
close of business on the day next preceding the date of such issue or sale, plus
(b) the number of shares of Common Stock which the aggregate consideration
received (or by the express provisions hereof deemed to have been received) by
the Company for the total number of Additional Shares of Common Stock so issued
would purchase at such Fair Market Value, plus (c) the number of shares of
Common Stock into which all outstanding shares of Series A Preferred Stock, par
                                                  ------------------------
value $0.001 per share, of the Company (the "Series A Preferred") are
convertible at the close of business on the date next preceding the date of such
issue or sale, plus (d) the number of shares of Common Stock for which all
Series A Warrants and all other options and warrants outstanding as of the
Original Issuance Date that are exercisable for shares of Common Stock are
exercisable at the Purchase Price in effect at the close of business on the date
next preceding the date of such issue or sale, plus (e) the number of shares of
Common Stock underlying all Other Securities (as hereinafter defined) at the
close of business on the date next preceding the date of such issue or sale, and
(ii) the denominator of which shall be (a) the number of shares of Common Stock
outstanding at the close of business on the date of such issue or sale after
giving effect to such issue of Additional Shares of Common Stock, plus (b) the
number of shares of Common Stock into which all outstanding shares of Series A
Preferred of the Company are convertible at the close of business on the date
next preceding the date of such issue or sale, plus (c) the number of shares of
Common Stock for which all Series A Warrants and all other options and warrants
outstanding on the Original Issuance Date that are exercisable for shares of
Common Stock are exercisable at the Purchase Price in effect at the close of
business on the date next preceding the date of such issue or sale, plus (d) the
number of shares of Common Stock underlying the Other Securities at the close of
business on the date next preceding the date of such issue or sale.

          (2) For the purpose of making any adjustment required under this
Section 4.C, the consideration received by the Company for any issue or sale of
-----------
securities shall (i) to the extent it consists of cash be computed at the amount
of cash received by the Company, (ii) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board, (iii) if Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined) or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for a
consideration which covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options, and (iv) be computed after reduction for all expenses payable
by the Company in connection with such issue or sale.

          (3) For the purpose of the adjustment required under this Section 4.C,
                                                                    -----------
if the Company issues or sells any rights or options for the purchase of, or
stock or other securities convertible into or exchangeable for, Additional
Shares of Common Stock (such convertible or exchangeable stock or securities
being hereinafter referred to as "Convertible Securities") and if the Effective
                                  ----------------------
Price of such Additional Shares of Common Stock is less than either the Fair
Market Value or the Purchase Price then in effect, then in each case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise, conversion or exchange thereof and to have
received as consideration for the

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<PAGE>

issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance of such rights
or options or Convertible Securities, plus, in the case of such rights or
options, the minimum amounts of consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion or exchange thereof. No further
adjustment of the Purchase Price, adjusted upon the issuance of such rights,
options or Convertible Securities, shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such rights
or options or the conversion or exchange of any such Convertible Securities. If
any such rights or options or the conversion or exchange privilege represented
by any such Convertible Securities shall expire without having been exercised,
the Purchase Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Purchase Price which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion or exchange of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted or
exchanged, plus the consideration, if any, actually received by the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) on the conversion or exchange of such Convertible
Securities.

          (4)  For the purpose of the adjustment required under this Section
                                                                     -------
4.C, if the Company issues or sells, or is deemed by the express provisions of
---
this subsection to have issued or sold, any rights or options for the purchase
of Convertible Securities and if the Effective Price of the Additional Shares of
Common Stock underlying such Convertible Securities is less than either the Fair
Market Value or the Purchase Price then in effect, then in each such case the
Company shall be deemed to have issued at the time of the issuance of such
rights or options the maximum number of Additional Shares of Common Stock
issuable upon conversion or exchange of the total amount of Convertible
Securities covered by such rights or options and to have received as
consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by the Company for
the issuance of such rights or options, plus the minimum amounts of
consideration, if any, payable to the Company upon the exercise of such rights
or options and plus the minimum amount of consideration, if any, payable to the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) upon the conversion or exchange of such Convertible
Securities. No further adjustment of the Purchase Price, adjusted upon the
issuance of such rights or options, shall be made as a result of the actual
issuance of the Convertible Securities upon the exercise of such rights or
options or upon the actual issuance of Additional Shares of Common Stock upon
the conversion or exchange of such Convertible Securities. The provisions of
paragraph (3) above for the readjustment of the Purchase Price upon the
expiration of rights or options or the rights of conversion or exchange of
Convertible Securities shall apply mutatis mutandis to the rights, options and
Convertible Securities referred to in this paragraph (4).

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          (5)  "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company on or after the Original Issuance Date,
whether or not subsequently reacquired or retired by the Company other than (i)
shares of Common Stock issued upon conversion of the Series A Preferred in
accordance with the Company's Series A Designation (as defined below), (ii)
shares of Common Stock issuable upon exercise of this Warrant and the Series A
Warrants, (iii) shares of Common Stock issuable upon exercise of warrants,
options or other convertible securities to purchase Common Stock issued and
outstanding as of the Original Issuance Date (provided that the exercise price
and other terms of such warrants, options or other convertible securities  are
not modified after the Original Issuance Date to adjust the exercise price),
(iv) shares of Common Stock issued to individuals who are or were employees or
directors of or consultants and advisors to the Company or any subsidiary
pursuant to stock purchases or stock option plans or other arrangements approved
by the Board or pursuant to guidelines approved by the Board, or upon exercise
of options, stock purchase rights or warrants granted to such parties pursuant
to any such plan or arrangement, (v) shares of Common Stock issued in connection
with bona fide acquisitions, mergers, joint ventures and other similar
transactions approved by the Board and (vi) shares of Common Stock issued
pursuant to any event for which adjustment is made to the conversion price under
the anti-dilution provisions provided for in Section 3(e) of the Company's
                                             ------------
certificate of determination for the Series A Preferred (the "Series A
                                                              --------
Designation"), or to the Purchase Price under the anti-dilution provisions under
-----------
Section 4 of this Warrant or the Series A Warrants, (vii) shares of Common Stock
---------
issued in a Qualified Public Offering, (viii) shares of Common Stock issued or
issuable to customers, suppliers or other strategic partners provided that such
issuance is approved by the Board of Directors, (ix) shares of Common Stock
issued or issuable to banks, equipment lessors or other financial institutions
pursuant to a commercial leasing or debt financing transaction approved by the
Board of Directors, and (x) shares of Common Stock issued to suppliers or third
party service providers in connection with the provision of goods or services
pursuant to transactions approved by the Board of Directors. The "Effective
                                                                  ---------
Price" of Additional Shares of Common Stock shall mean the quotient determined
-----
by dividing the total number of Additional Shares of Common Stock issued or
sold, or deemed to have been issued or sold by the Company under this Section
                                                                      -------
4.C, into the aggregate consideration received, or deemed to have been received,
---
by the Company for such issue under this Section 4.C, for such Additional Shares
                                         -----------
of Common Stock. "Other Securities" with respect to an issue or sale of
                  ----------------
Additional Shares of Common Stock shall mean Convertible Securities other than
the Series A Preferred, and the Series A Warrants including this Warrant; "the
                                                                           ---
number of shares of Common Stock underlying Other Securities" on a particular
------------------------------------------------------------
date shall mean the number of shares of Common Stock issuable upon the exercise,
conversion or exchange, as the case may be, of such Other Securities at the
close of business on such date.

          (6) Other than a reduction pursuant to its applicable anti-dilution
provisions, any reduction in the conversion price of any Convertible Security,
whether outstanding on the Original Issuance Date or thereafter, or the
subscription price of any option, warrant or right to purchase Common Stock or
any Convertible Security (whether such option, warrant or right is outstanding
on the Original Issuance Date or thereafter), to an Effective Price less than
the Fair Market Value or the then Purchase Price shall be deemed to be an
issuance of such Convertible Security and the issuance of all such options,
warrants or subscription rights, and the provisions of Sections 4.C.(3), (4) and
                                                       ------------
(5) shall apply thereto mutatis mutandis.

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          (7)  In case any shares of stock or other securities, other than
Common Stock, shall at the time be receivable upon the exercise of this Warrant,
and in case any additional shares of such stock or any additional such
securities (or any stock or other securities convertible into or exchangeable
for any such stock or securities) shall be issued or sold for a consideration
per share such as to dilute the purchase rights evidenced by this Warrant, then
and in each such case the Purchase Price shall forthwith be adjusted,
substantially in the manner provided for above in this Section 4.C, so as to
                                                       -----------
protect the Holder of this Warrant against the effect of such dilution.

          (8) In case the Company shall take a record of the holders of shares
of its stock of any class for the purpose of entitling them (a) to receive a
dividend or a distribution payable in Common Stock or in Convertible Securities,
or (b) to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the Additional Shares of Common Stock issued or sold or
deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution, or the date of the granting of such rights of
subscription, purchase or other acquisition, as the case may be.

          (9) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments which by reason of this
            --------  -------
Section 4 are not required to be made shall be carried forward and taken into
---------
account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 4 shall be made to the nearest cent or to the
                        ---------
nearest one-hundredth of a share, as the case may be.

          D.   Adjustment for Certain Dividends and Distributions. If the
               --------------------------------------------------
Company at any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event

          (1) the Purchase Price then in effect shall be decreased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Purchase Price then in
effect by a fraction (A) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (B) the denominator
of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date as the case may be, plus the number of shares of
Common Stock issuable in payment of such dividend or distribution; provided,
                                                                   --------
however, that if such record date is fixed and such dividend is not fully paid
-------
or if such distribution is not fully made on the date fixed therefor, the
Purchase Price shall be recomputed accordingly as of the close of business on
such record date, and thereafter the Purchase Price shall be adjusted pursuant
to this Section 4.D as of the time of actual payment of such dividends or
        -----------
distributions; and

          (2)  the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be increased, as of the time of such issuance
or, in the

                                       8
<PAGE>

event such record date is fixed, as of the close of business on such record
date, in inverse proportion to the decrease in the Purchase Price.

          E.   Stock Split and Reverse Stock Split. If the Company at any time
               -----------------------------------
or from time to time effects a reverse stock split or subdivision of the
outstanding Common Stock, the Purchase Price then in effect immediately before
that stock split or subdivision shall be proportionately decreased and the
number of shares of Common Stock theretofore receivable upon the exercise of
this Warrant shall be proportionately increased. If the Company at any time or
from time to time effects a reverse stock split or combines the outstanding
shares of Common Stock into a smaller number of shares, the Purchase Price then
in effect immediately before that reverse stock split or combination shall be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section 4.E shall become effective at the close of
                           -----------
business on the date the stock split, subdivision, reverse stock split or
combination becomes effective.

          F.   No Impairment. The Company will not, by amendment of its Amended
               -------------
and Restated Articles of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
        ---------
appropriate in order to protect the rights of the Holders of the Warrants
against impairment.

          G.   Certificate as to Adjustments. Upon the occurrence of each
               -----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
                                                                    ---------
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of a
Warrant a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of any holder of a Warrant,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) Purchase Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the exercise of the
Warrant.

          H.   Sale of Shares Below Fair Market Price and Below Purchase Price.
               ---------------------------------------------------------------
If at any time or from time to time following the Original Issuance Date, the
Company issues or sells, or is deemed by the express provisions of this Section
                                                                        -------
4 hereof to have issued or sold, Additional Shares of Common Stock, other than
-
as a dividend or other distribution on any class of stock and other than upon a
subdivision or combination of shares of Common Stock, in either case as provided
in Section 4D and Section 4E above, for an Effective Price that is less than the
   ----------     ----------
Fair Market Value and the Purchase Price then in effect, then in each such case
(i) the Purchase Price then in effect, shall be reduced such that it is equal to
the lowest Effective Price at which any Additional Shares of Common Stock are
issued, and (ii) the number of shares of Common Stock issuable upon exercise of
the Warrant (sometimes hereinafter referred to as "Warrant Shares"), shall be
                                                   --------------
increased to a number determined by multiplying the number of the applicable
Warrant Shares purchasable immediately prior to the applicable Purchase Price
reduction hereunder by a

                                       9
<PAGE>

fraction, the numerator of which shall be the Purchase Price per share in effect
prior to the applicable Purchase Price reduction hereunder, and the denominator
of which shall be the Purchase Price as so reduced.

     5.   Notices of Record Date. In case:
          ----------------------

          A.   the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right, or

          B.   of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or

          C.   of any voluntary dissolution, liquidation or winding-up of the
Company,

then, and in each such case, the Company will mail or cause to be mailed to each
holder of a Warrant at the time outstanding a notice specifying, as the case may
be, (a) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is expected to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up, such
notice shall be mailed at least twenty (20) days prior to the date therein
specified.

     6.   Stock Purchase Rights. If at any time or from time to time, the
          ---------------------
Company grants or issues to the record holders of the Common Stock any options,
warrants or subscription rights (collectively, the "Stock Purchase Rights")
                                                    ---------------------
entitling a holder to purchase Common Stock or any security convertible into or
exchangeable for Common Stock or to purchase any other stock or securities of
the Company, the Holder shall be entitled to acquire, upon the terms applicable
to such Stock Purchase Rights, the aggregate Stock Purchase Rights which Holder
could have acquired if Holder had been the record holder of the maximum number
of shares of Common Stock issuable upon exercise of this Warrant on both (x) the
record date for such grant or issuance of such Stock Purchase Rights, and (y)
the date of the grant or issuance of such Stock Purchase Rights.

     7.   Loss or Mutilation. Upon receipt by the Company of evidence
          ------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.

                                      10
<PAGE>

     8.   Reservation of Common Stock. The Company shall at all times reserve
          ---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.

     9.   Placement Agency Agreement and Registration Rights Agreement. This
          ------------------------------------------------------------
Warrant has been issued pursuant to a Placement Agency Agreement dated as of
April 25, 2001 between the Company and Commonwealth Associates, L.P. (the
"Agency Agreement"). The Holder of this Warrant and the Common Stock issuable
-----------------
upon the exercise hereof are entitled to have such Common Stock registered under
the Securities Act of 1933 in accordance with the Registration Rights Agreement
between the Company and Commonwealth Associates, L.P. (the "Registration Rights
                                                            -------------------
Agreement") referred to in the Agency Agreement and to such remedies for
---------
breaches of, or defaults under, such Registration Rights Agreement, as are
provided below in Section 10.
                  ----------

     10.  Remedies for Breaches of Certain Registration Rights.
          ----------------------------------------------------

          (a) As partial relief for a Registration Statement Default, and for
the damages to any Holder by reason of any such delay in or reduction of its
ability to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity) the number of Warrant
Shares shall be increased by five (5%) percent for each aggregate thirty (30)
day period (or pro rated amounts thereof for partial thirty (30) day periods)
that (A) the Registration Statement is not declared effective by the SEC
following the Effectiveness Deadline, and/or (B) after the Registration
Statement is declared effective by the SEC, each Registration Statement is not
available for the sale of at least all of the Registrable Securities required to
be included in such Registration Statement. The capitalized terms used in this
Section 10(a) but not defined herein shall have the meanings given such terms in
-------------
the Registration Rights Agreement or in the Agency Agreement.

          (b) In the event of any Rule 144 Default by the Company, then, as
partial relief for damages to any Holder by reason of any delay or inability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity), (i) the exercise price of the
Preferred Warrants as set forth herein shall be reduced by five (5%) percent for
each aggregate thirty (30) day period (or pro rated amounts thereof for partial
thirty (30) day periods) that the Holder is delayed from selling, or unable to
sell, Registrable Securities under Rule 144 due to (A) the Company's failure to
promptly provide the requisite legal opinion as referenced in Section 3.19 of
the Registration Rights Agreement, or (B) the Company's failure to comply with
the filing and other requirements under Rule 144 necessary to make such Rule
available to the Holders, and (ii) the number of Warrant Shares shall be
increased to a number determined by multiplying the number of applicable Warrant
Shares purchasable immediately prior to the applicable Purchase Price reduction
hereunder by a fraction, the numerator of which shall be the Purchase Price in
effect prior to the applicable Purchase Price reduction hereunder and the
denominator of which shall be the Purchase Price as so reduced; provided,
                                                                --------
however, that upon the first Rule 144 Default (which means a Rule 144 Default
-------
with regard to either the Warrant Shares and/or the shares of Common Stock
issuable upon conversion of the Series A Preferred), the Company shall have up
to a thirty (30) consecutive day period to cure such Rule 144 Default without
incurring the above damage

                                      11
<PAGE>

payments and if after such thirty (30) day period expires the Rule 144 Default
has not been cured, the above described damage payments shall apply and be
applied retroactively to the first day of such Rule 144 Default; provided,
                                                                 --------
further, that the Company shall not have any right to a cure period of a Rule
-------
144 Default other than the first Rule 144 Default. Notwithstanding the
foregoing, so long as the Company is in a Registration Statement Default, the
exercise price of the Preferred Warrants and the number of Warrant Shares shall
not be adjusted due to a Rule 144 Default. The capitalized terms used in this
Section 10(b) but not defined herein shall have the meanings given such terms in
-------------
the Registration Rights Agreement.

     11.  No Redemption of Warrant. This Warrant may not be redeemed.
          ------------------------

     12.  Notices. All notices and other communications from the Company to the
          -------
Holder of this Warrant shall be mailed by first class, registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by the
last holder of this Warrant who shall have furnished an address to the Company
in writing.

     13.  Change; Modifications; Waiver. The terms of this Warrant may be
          -----------------------------
amended, waived or modified by agreement of the Company, Commonwealth
Associates, L.P. and a committee to be designated by Commonwealth Associates,
L.P. whose members hold in the aggregate not less than twenty (20%) percent of
the outstanding Series A Warrants; provided, however, that no such amendment,
                                   --------  -------
modification or waiver which would decrease the number of Warrant Shares
purchasable upon the exercise of any Series A Warrants, or increase the Purchase
Price therefor (other than as a result of the waiver or modification of any
anti-dilution provisions) shall be made without the consent in writing of the
holders of not less than fifty (50%) percent of the outstanding Series A
Warrants.

     14.  Headings. The headings in this Warrant are for purposes of convenience
          --------
in reference only, and shall not be deemed to constitute a part hereof.

                 [Remainder of page intentionally left blank]

                                      12
<PAGE>

     15.  Law Governing. This Agreement shall be governed by and construed in
          -------------
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the in personam jurisdiction
                                                      -- --------
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with respect
                                      -- --------
thereto. In the event of any such action or proceeding, the party prevailing
therein shall be entitled to payment from the other party hereto of its
reasonable counsel fees and disbursements in an amount judicially determined.

Dated:_____________________

                              NOTIFY TECHNOLOGY CORPORATION

                              By:___________________________
                                    Name:
                                    Title:

                                      13
<PAGE>

                                   EXHIBIT A

                               SUBSCRIPTION FORM
                               -----------------

                 (To be executed only upon exercise of Warrant)

     The undersigned registered owner of this Warrant irrevocably exercises this
Warrant and purchases _______ of the number of shares of Common Stock of Notify
Technology Corporation, purchasable with this Warrant, and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant.

Dated:__________________

                              ________________________________
                              (Signature of Registered Owner

                              _________________________________
                              (Street Address)

                              _________________________________
                              (City / State / Zip Code)

                                      14
<PAGE>

                                   EXHIBIT B

                              FORM OF ASSIGNMENT
                              ------------------

     FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:

Name of Assignee         Address              No. of Shares
----------------         -------              -------------

and does hereby irrevocably constitute and appoint __________________________
Attorney to make such transfer on the books of Notify Technology Corporation,
maintained for the purpose, with full power of substitution in the premises.

Dated:_____________________

                                                  ____________________________
                                                  (Signature)

                                                   ___________________________
                                                  (Witness)

     The undersigned Assignee of the Warrant hereby makes to Notify Technology
Corporation, as of the date hereof, with respect to the Assignee, all of the
representations and warranties made by the Holder, and the undersigned Assignee
agrees to be bound by all the terms and conditions of the Warrant and the
Registration Rights Agreement, dated  _________, 2001, by and between Notify
Technology Corporation and Commonwealth Associates, L.P.

Dated:___________________

                                    _______________________________
                                    (Signature)

                                      15<PAGE>

                                                                    EXHIBIT 10.1

                         REGISTRATION RIGHTS AGREEMENT

          REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of July 20,
                                              ---------
2001, by and between Notify Technology Corporation, a California corporation
(the "Company"), and each of the investors identified on Schedule 1 hereto (as
      -------
such schedule may be updated from time to time) and signatory hereto (each, an

"Investor," and collectively, the "Investors") or their permitted assigns (each,
---------                          ---------
a "Holder" and collectively, the "Holders").
   ------                         -------

          WHEREAS, this Agreement is being entered into in connection with the
financing extended by the Investors to the Company (the "Financing") in which,
                                                         ---------
pursuant to the terms of subscription agreements entered into between the
Company and each Investor (collectively, the "Subscription Agreement"), each
                                              ----------------------
Investor will receive (a) shares of the Company's Series A Convertible
Redeemable Preferred Shares, par value $0.001 per share (the "Preferred
                                                              ---------
Shares"), that is convertible into shares of common stock, par value $0.001 per
share (the "Common Stock"), of the Company (the "Conversion Shares"), and (b)
            ------------                         -----------------
warrants ("Preferred Warrants") to purchase shares of Common Stock (the "Warrant
           ------------------                                            -------
Shares"); and
------

          WHEREAS, the terms of the Preferred Shares and Preferred Warrants
contemplate that the Conversion Shares and the Warrant Shares, as the case may
be, are entitled to registration rights.

          NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties and covenants and agreements contained
herein, the Company and each of the Investors hereto, intending to be legally
bound hereby agree as follows:

I.        DEFINITIONS

          The following additional definitions shall apply for purposes of this
Agreement:

          1.1    The term "Holder" means an Investor and any transferee or
assignee thereof to whom an Investor assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 6.2.
     -----------

          1.2    The term "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a government or any department or agency thereof.

          1.3    The term "Prospectus" means the Prospectus included in any
Registration Statement (including without limitation, a Prospectus that
discloses information previously omitted from a Prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated under
the 1933 Act), as amended or supplemented by any amendment or Prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.

          1.4    The terms "Register," "Registered," and "Registration" refer to
a registration effected by preparing and filing one or more Registration
Statements, (as defined below) or
<PAGE>

similar document in compliance with the Securities Act of 1933, as amended (the
                                                                            ---
"1933 Act"), and Rule 415 thereunder or any successor rule providing for the
 --------
offering for resale of securities on a continuous or delayed basis ("Rule 415"),
                                                                     --------
and the declaration or ordering of effectiveness of such Registration Statement
or document by the United States Securities and Exchange Commission (the "SEC").
                                                                          ---

          1.5    The term "Registrable Securities" means (a) the Warrant Shares
and any other securities of the Company issuable upon the exercise of the
Warrants, (b) the Conversion Shares, and any other securities of the Company,
issued or issuable upon the conversion of the Preferred Shares, and (c) any
shares of capital stock or other securities issued or issuable with respect to
the Warrant Shares or the Preferred Shares, as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on the exercises of the Preferred Warrants or
conversion of the Preferred Shares; provided, however, that any securities
                                    --------  -------
deemed Registrable Securities in accordance herewith shall cease to be
Registrable Securities (i) upon the sale of such securities pursuant to a
Registration Statement, (ii) upon the sale of such securities pursuant to Rule
144 promulgated under the 1933 Act, (iii) on the date on which such securities
become available for sale under Rule 144(k), or (iv) on the date when such
Holder may sell all Registrable Securities held by such Holder in a three (3)
month period in the public markets pursuant to Rule 144.

          1.6    The term "Registration Statement" means a registration
statement on Form S-1 or Form S-3 or any similar or successor form then
appropriate for or applicable to the offer and sale of the Registrable
Securities and filed under the 1933 Act.

II.       REGISTRATION

          2.1    Right to Include Registrable Stock. If the Company proposes to
register any of its securities under the 1933 Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the offer and sale of non-convertible, non-exchangeable debt
securities or a registration on Form S-4 or Form S-8, or any successor or
similar forms) (a "Piggyback Registration"), whether for the account of the
                   ----------------------
Company or otherwise, it will promptly, but not later than thirty (30) days
before the anticipated date of filing such Registration Statement, give written
notice to each Holder. Upon the written request of any of the Holders made
within fifteen (15) days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Holders and the intended method of distribution thereof), the Company will use
its best efforts to effect the registration under the 1933 Act of all
Registrable Securities which the Company has been requested to register by any
of the Holders in accordance with the intended methods of distribution specified
in such request; provided, however, that (a) if, at any time after giving
                 --------  -------
written notice of its intention to register any securities and prior to the
effective date of the Registration Statement filed in connection with such
registration, the Company determines for any reason not to proceed with such
registration, the Company may, at its election, give written notice of such
determination to the Holders and, thereupon, will be relieved of its obligation
to register any Registrable Securities in connection with such registration, and
(b) in case of a determination by the Company to delay registration of its
securities, the Company will be permitted to delay the registration of
Registrable Securities for the same period as the delay in

                                       2
<PAGE>

registering such other securities; provided, however, that the provisions of
                                   --------  -------
this Article II will not be deemed to limit or otherwise restrict the rights of
the Holders under Article III.

          2.2    Mandatory Registration. Notwithstanding the foregoing, the
Company shall prepare and file with the SEC on or before the three (3) month
anniversary of the Initial Closing (as defined in the Agency Agreement), (the
"Filing Deadline"), a Registration Statement or Registration Statements, as
 ---------------
necessary, on Form S-3 covering the resale of all of the Holders' Registrable
Securities. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration,
subject to the provisions of Section 2.5. The Company shall use its best efforts
                             -----------
to cause such Registration Statement to be declared effective by the SEC on or
before the date which is the three (3) month anniversary of the Filing Deadline
(the "Effectiveness Deadline").
      -----------------------

          2.3    Priority. If the managing underwriter for a registration (other
than with respect to a Registration Statement filed pursuant to Section 2.2)
                                                                -----------
involving an underwritten offering advises the Company in writing that, in its
opinion, the number of securities of the Company (including without limitation,
Registrable Securities) requested to be included in such registration by the
holders thereof exceeds the number of securities of the Company (the "Sale
                                                                      ----
Number") which can be sold in an orderly manner in such offering within a price
------
range acceptable to the Company, the Company will include (a) first, all
securities of the Company that the Company proposes to register for its own
account, and (b) second, to the extent that the number of securities of the
Company to be included by the Company is less than the Sale Number, a number of
the Registrable Securities equal to the number derived by multiplying (i) the
difference between the Sale Number and the securities proposed to be sold by the
Company, and (ii) a fraction the numerator of which is the number of Registrable
Securities originally requested to be registered by the Holders, and the
denominator of which shall be the aggregate number of all securities requested
to be registered by all holders of the Company's securities (other than
securities being registered by the Company itself); provided, however, that
                                                    --------  -------
notwithstanding anything to the contrary provided herein or elsewhere, in
connection with any underwritten offering, the number of Registrable Securities
included in any such registration and offering shall not be reduced below an
amount equal to twenty-five (25%) percent of the total shares of capital stock
included in such registration. The Company hereby agrees that it will not grant
registration rights to any other holder that are more favorable to such holder
than the registration rights granted hereunder.

          2.4    Legal Counsel. Subject to Section 6.1 hereof, the Investors
                                           -----------
holding a majority of the Registrable Securities shall have the right to select
one legal counsel to review and oversee any offering pursuant to this Article II
("Legal Counsel"), which shall be Gusrae, Kaplan & Bruno, PLLC or such other
  -------------
counsel as thereafter designated by the holders of a majority of the Registrable
Securities. The Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement.

          2.5    Ineligibility of Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (a) register the resale of the Registrable
Securities on another appropriate form, and (b) undertake to register the resale
of the Registrable Securities on Form S-3 as soon as such form is available;
provided, however, that the Company shall maintain the effectiveness of the
Registration Statement then in

                                       3
<PAGE>

effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.

          2.6    Effect of Failure to File and Obtain and Maintain Effectiveness
of Registration Statement. If (a) a Registration Statement covering all the
Registrable Securities and required to be filed by the Company pursuant to this
Agreement is not declared effective by the SEC on or before the applicable
Effectiveness Deadline; (b) on any day after the Registration Statement has been
declared effective by the SEC, sales of all the Registrable Securities required
to be included on such Registration Statement cannot be made pursuant to the
Registration Statement (including without limitation, because of a failure to
keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, or to
register sufficient shares of Common Stock), or (c) the Company fails at any
time to fully comply with the rules and regulations of the applicable Nasdaq
market and the Nasdaq staff notifies the Company of such non-compliance,
including the standards for continued listing of the Company's Common Stock on
the applicable Nasdaq market, then the Company shall be in breach of this
Agreement (such a breach being a "Registration Statement Default"). As partial
                                  ------------------------------
relief for any Registration Statement Default and for the damages to any Holder
by reason of any such delay in or reduction of its ability to sell the
Registrable Securities, the remedy shall be as provided for by and in the
Preferred Warrants and the Certificate of Designation (which remedy shall not be
exclusive of any other remedies available at law or in equity). Notwithstanding
the foregoing, the Company shall have thirty (30) days to cure a Registration
Statement Default after the date of its occurrence and to deliver a written
statement to the holders of Registrable Securities certifying that such
Registration Statement Default has been so cured; and if such cure is timely
effected and such statement is timely delivered, the Company shall not be
subject to the remedies for a Registration Statement Default.

          2.7    Sufficient Number of Shares Registered. In the event the number
of shares available under a Registration Statement filed pursuant to Section 2.2
                                                                     -----------
is insufficient to cover all of the Registrable Securities which such
Registration Statement is required to cover, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 100% of the
Registrable Securities (based on the market price of the Common Stock on the
trading day immediately preceding the date of filing of such amendment or new
Registration Statement), in each case, as soon as practicable, but in any event
not later than fifteen (15) business days after the necessity therefor arises.
The Company shall cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if the number of Registrable Securities issued or
issuable upon conversion of the Preferred Shares and exercise of the Preferred
Warrants covered by such Registration Statement is greater than the number of
shares of Common Stock available for resale under the Registration Statement to
cover shares issued or issuable upon conversion of the Preferred Shares and
exercise of the Preferred Warrants. For purposes of the calculation set forth in
the foregoing sentence, any restrictions on the conversion of the Preferred
Shares and the exercise of the Preferred Warrants shall be disregarded and such
calculation shall assume that the Preferred Shares is then convertible into
shares of Common Stock at the then prevailing Conversion Price (as defined in
the Company's Certificate of Designation for the Preferred Shares) and the
Preferred Warrants are then exercisable for shares

                                       4
<PAGE>

of Common Stock at the then prevailing applicable Exercise Price (as defined in
the applicable Preferred Warrant).

III.      OBLIGATIONS OF THE COMPANY

          Whenever required under this Agreement to effect the registration of
any Registrable Securities, the Company will, as expeditiously as possible,
fulfill the following obligations:

          3.1    Registration Statement. The Company shall promptly prepare and
file with the SEC a Registration Statement with respect to the Registrable
Securities (but in no event later than the Filing Deadline) and use its best
efforts to cause such Registration Statement to become effective (but in no
event later than the applicable Effectiveness Deadline). The Company will keep
such Registration Statement effective for up to three (3) years from its
effective date, but not in any event after such securities cease being
Registrable Securities (the "Registration Period"). The Registration Statement
                             -------------------
(including any amendments or supplements thereto and Prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading. The Company shall submit to the SEC, within three (3) business days,
unless Legal Counsel withholds approval as provided in Section 3.3, after the
                                                       -----------
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than 2
business days after the submission of such request.

          3.2    Registration Statement Amendments and Supplements. The Company
shall prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3.2) by reason of the Company filing a
                            -----------
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall
                                                  --------
have incorporated such report by reference into the Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement the Registration Statement.

          3.3    Legal Counsel. The Company shall (a) permit Legal Counsel to
review and comment upon (i) those sections of a Registration Statement relating
to the Investors at least five (5) business days prior to its filing with the
SEC, and (ii) all other sections of a Registration Statement and all amendments
and supplements to all Registration Statements, which are applicable to the
Investors (except for Annual Reports on Form 10-KSB, Quarterly Reports on Form
10-QSB, Current Reports on Form 8-K and any similar or successor report and
registration statements on Form S-8) at least four (4) business days prior to
their filing with the SEC, and

                                       5
<PAGE>

(b) not file any document in a form to which Legal Counsel reasonably objects.
The Company shall not submit a request for acceleration of the effectiveness of
a Registration Statement or any amendment or supplement thereto without the
prior approval of Legal Counsel, which consent shall not be unreasonably
withheld. The Company shall furnish to Legal Counsel, without charge, (a) any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (b) promptly after the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules and
all exhibits and (c) upon the effectiveness of any Registration Statement, one
copy of the Prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Article
III.

          3.4    Notification. As promptly as practicable give notice to the
Holders and Legal Counsel (a) when the Registration Statement or any post-
effective amendment has been declared effective, (b) of the issuance by the SEC
or any other federal or state governmental authority of any stop order or other
suspension of the effectiveness of the Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceedings for that
purpose, (c) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (d) of the occurrence of (but
not the nature of or details concerning) a Material Event (defined in Section
                                                                      -------
3.7), and (e) of the determination by the Company that a post-effective
---
amendment to the Registration Statement will be filed with the SEC, which notice
may, at the discretion of the Company (or as required pursuant to Section 3.7),
                                                                  -----------
state that it constitutes a Deferral Notice, in which event the provisions of

Section 3.7 shall apply.
-----------

          3.5    Prospectuses. The Company shall deliver to each Holder in
connection with any sale of Registrable Securities pursuant to the Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary Prospectus)
and any amendment or supplement thereto as such Holder may reasonably request,
and the Company hereby consents (except during such periods that a Deferral
Notice is outstanding and has not been revoked) to the use of such Prospectus or
each amendment or supplement thereto by each Holder in connection with any
offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto in the manner set forth therein.

          3.6    Blue Sky Laws. The Company shall, prior to any public offering
of the Registrable Securities pursuant to the Registration Statement, register
or qualify or cooperate with the Holders 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 Holder reasonably
requests in writing, and keep each such registration or qualification (or
exemption therefrom) effective during the Registration Period in connection with
such Holder's offer and sale of Registrable Securities pursuant to such
registration or qualification (or exemption therefrom) and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
Registration Statement

                                       6
<PAGE>

and the related Prospectus; provided, however, that the Company will not be
                            --------  -------
required to (a) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to qualify but for
this Agreement, or (b) take any action that would subject it to general service
of process in suits or to taxation in any such jurisdiction where it is not then
so subject. The Company shall promptly notify Legal Counsel and each Holder who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or "Blue Sky" laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

          3.7    Stop Orders; Material Events. The Company shall use
commercially reasonable efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction. Upon (a) any issuance by the SEC of a stop order or other
suspension of the effectiveness of the Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction despite the Company's commercially reasonable efforts to prevent
such stop order or suspension, or the initiation of proceedings with respect to
the Registration Statement under Section 8(d) or Section 8(e) of the 1933 Act;
                                 ------------    ------------
(b) the occurrence of any event or the existence of any fact (a "Material
                                                                 --------
Event") as a result of which the Registration Statement shall 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 not misleading, or
any Prospectus shall 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; or (c) the occurrence or existence of any pending
corporate development, public filing with the SEC or other similar event with
respect to the Company that, in the reasonable discretion of the Company, makes
it appropriate to suspend the availability of the Registration Statement and the
related Prospectus, the Company shall (i) in the case of clause (b) above,
subject to the next sentence, as promptly as practicable prepare and file, if
necessary pursuant to applicable law, a post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that would
be incorporated by reference into such Registration Statement and Prospectus so
that such Registration Statement does 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 not misleading, and such Prospectus
does 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, and, in the case of a post-effective amendment to a Registration
Statement, subject to the next sentence, use its reasonable efforts to cause it
to be declared effective as promptly as is practicable; and (ii) give notice to
the Holders and Legal Counsel that the availability of the Registration
Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral
                           ---------------
Notice, each Holder agrees not to sell any Registrable Securities pursuant to
the Registration Statement until such Holder's receipt of copies of the
supplemented or amended Prospectus provided for in clause (i) above, or until it
is advised in writing by the Company that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use
commercially reasonable efforts to ensure that the use of the Prospectus may be
resumed (x) in

                                       7
<PAGE>

the case of clause (a) above, as promptly as is practicable, (y) in the case of
clause (b) above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or contrary to the
interests of the Company or, if necessary to avoid unreasonable burden or
expense, as soon as practicable thereafter, and (z) in the case of clause (c)
above, as soon as, in the discretion of the Company, such suspension is no
longer appropriate (such period, during which the availability of the
Registration Statement and any Prospectus is suspended being a "Deferral
                                                                --------
Period"). Notwithstanding the foregoing, no Deferral Period instituted pursuant
------
to clause (b) or clause (c) above shall last for a period of time in excess of
thirty (30) days from the date of the Material Event or other occurrence or
state of facts on account of which such Deferral Period is instituted, and the
Company shall institute no more than one (1) Deferral Period in the aggregate
pursuant to clause (b) or clause (c) above in any consecutive twelve (12) month
period. The Company shall use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a Registration Statement
or the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction
in which they have been qualified for sale, in either case as promptly as
practicable.

          3.8    Listing or Quotation. The Company shall either (a) cause all
the Registrable Securities covered by a Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (b) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market or the Nasdaq SmallCap
Market, or, if the Company is unsuccessful in satisfying the preceding clauses
(a) or (b), (c) the Company shall secure the inclusion for quotation on The
American Stock Exchange, Inc. or if it is unable to, the NASD Bulletin Board for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two (2) market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
                                                   ----
to such Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3.8.
                                                     -----------

          3.9    Access to Information. The Company shall make documents, files,
books, records, officers, directors and employees of the Company reasonably
available to any Holder, Legal Counsel and one firm of accountants or other
agents retained by the Holders and provided the underwriters, if any, shall have
agreed to be bound by the provisions of this Section 3.9, to such underwriters
                                             -----------
(collectively, the "Inspectors"), and make such other accommodations as are
                    ----------
reasonably necessary for the Inspectors, if any, to perform a due diligence
review of the Company; provided, however, that all such information

("Confidential Information") will be kept confidential and not utilized by the
--------------------------
Inspectors except as contemplated herein and except as required by law or court
order. The term "Confidential Information" does not include information that (a)
                 ------------------------
is already in possession of such other party (other than that which is subject
to another confidentiality agreement), (b) becomes generally available to the
public, or (c) becomes available on a non-confidential basis from a source other
than the Company. Each Holder agrees that it shall, upon learning that
disclosure of such Confidential Information is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake

                                       8
<PAGE>

appropriate action to prevent disclosure of, or to obtain a protective order
for, the information deemed confidential.

          3.10    Non-Disclosure. The Company shall hold in confidence and not
make any disclosure of information concerning any Holder provided to the Company
unless (a) disclosure of such information is necessary to comply with federal or
state securities laws, (b) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (c)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, (d) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement, or (e) such Holder consents to the form and content of any such
disclosure. The Company agrees that it shall, upon learning that disclosure of
such information concerning any Holder is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Holder and allow such Holder, at the Holder's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.

          3.11    Certificates. The Company shall cooperate with each of the
Holders who hold Registrable Securities being offered, and to the extent
applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Holders may
reasonably request and registered in such names as the Holders may request.

          3.12    Transfer Agent and Registrar. The Company shall provide a
transfer agent and registrar of all such Registrable Securities not later than
the effective date of such Registration Statement.

          3.13    Amendments and Supplements Requested by Holders. If requested
by any Holder, the Company shall (a) as soon as practicable incorporate in a
Prospectus supplement or post-effective amendment such information as such
Holder requests to be included therein relating to the sale and distribution of
Registrable Securities, including without limitation, information with respect
to the number of Registrable Securities being offered or sold, the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, (b) as soon as practicable make all
required filings of such Prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment, and (c) supplement or make amendments to any
Registration Statement if reasonably requested by any Holder of such Registrable
Securities.

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

          3.15    Earnings Statements. The Company shall make generally
available to its security holders as soon as practical, but not later than
ninety (90) days after the close of the

                                       9
<PAGE>

period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve (12) month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement, provided that the
Company shall be deemed to satisfy its obligations under this Section 3.15 if it
                                                              ------------
timely makes all required filings under the 1934 Act and does not change its
fiscal year.

     3.16  SEC Compliance. The Company shall otherwise comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

     3.17  Confirmation of Registration. Within two (2) business days after a
Registration Statement which covers applicable Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement and to Legal Counsel) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.

     3.18  Actions for Public Offering. The Company shall provide such opinions,
certifications, indemnifications, and take such other actions, including without
limitation, entering into such agreements (including underwriting agreements),
as are reasonably required and appropriate, to permit the Holders to make a
public offering of the Registrable Securities requested to be registered.

     3.19  Rule 144 Requirements. The Company covenants that it shall file the
reports required to be filed by it under the 1933 Act and the 1934 Act, and the
rules and regulations adopted by the SEC thereunder, provided, however, the
Company may delay any such filing but only pursuant to Rule 12b-25 under the
1934 Act, and the Company shall take such further action as any Holder of
Registrable Securities may reasonably request (including without limitation,
promptly obtaining any required legal opinions from Company counsel necessary to
effect the sale of Registrable Securities under Rule 144 and paying the related
fees and expenses of such counsel), all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the 1933 Act within the limitation of the exemptions provided by (a) Rule 144
under the Act, as such Rule may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. Upon the request of any Holder
of Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements. If the Company
fails to satisfy its covenants and obligations under this Section 3.19, then it
                                                          ------------
shall be in breach of this Agreement (such a breach being a "Rule 144 Default").
                                                             ----------------
As partial relief for any Rule 144 Default and for damages to any Holder by
reason of any delay or inability to sell the underlying shares of Common Stock,
the remedy shall be as provided for by the Preferred Warrants and the
Certificate of Designation (which remedy shall not be exclusive of any other
remedies available at law or in equity).

IV.  OBLIGATIONS OF THE HOLDERS

     4.1   Furnish Information. The Company's obligation to cause any
Registration Statement to become effective in connection with distribution of
any Registrable Securities

                                       10
<PAGE>

pursuant to this Agreement is contingent upon each Holder, with reasonable
promptness, furnishing to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities, as is required pursuant to Regulation S-K promulgated under the
1933 Act, to effect the registration of the Registrable Securities. Each Holder
agrees, by acquisition of the Registrable Securities, that it shall not be
entitled to sell any of such Registrable Securities pursuant to the Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
misleading in a material respect and any other information regarding such Holder
and the distribution of such Registrable Securities as the Company may from time
to time reasonably request. Any sale of any Registrable Securities by any Holder
shall constitute a representation and warranty by such Holder that the
information relating to such Holder and its plan of distribution is as set forth
in the Prospectus delivered by such Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to or provided by such Holder or relating
to its plan of distribution and that such Prospectus does not as of the time of
such sale omit to state any material fact relating to or provided by such Holder
or relating to its plan of distribution necessary to make the statements in such
Prospectus, in the light of the circumstances under which they were made, not
misleading.

V.   INDEMNIFICATION

     In the event of any registration under this Agreement:

     5.1   Indemnification by the Company. The Company will indemnify and hold
harmless each Holder and its officers, directors, partners and affiliates (and
their officers, directors and partners), any underwriter (as defined in the 1933
Act) for each Holder and each person (and its officers, directors, partners and
affiliates), if any, who controls any Holder or underwriter within the meaning
of the 1933 Act or the 1934 Act (each a "Company Indemnified Person"), against
                                         --------------------------
any losses, claims, damages, expenses or liabilities, joint or several, or
actions in respect thereof ("Losses") to which they may become subject under the
                             ------
1933 Act, the 1934 Act, or other federal or state law, insofar as such Losses
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (a) any untrue statement or alleged
                            ---------
untrue statement of a material fact contained in such Registration Statement,
including any preliminary Prospectus or final Prospectus contained therein or
any amendments or supplements thereto, (b) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (c) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any state securities law, or any rule or
regulation promulgated under the 1933 Act, the 1934 Act, or any state securities
law, and the Company will pay to each such Company Indemnified Person, as
incurred, any legal or other expenses reasonably incurred by or on behalf of him
in connection with investigating or defending any such Loss; provided, however,
that the indemnity agreement contained in this Section 5.1 shall not apply to
                                               -----------
amounts paid in settlement of any such Loss if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor will the Company be liable in any such case for any such Loss to
the extent that it arises out of or is based upon (a) a Violation which occurs
solely as the result of the

                                       11
<PAGE>

written information furnished by any Holder, underwriter or controlling person
seeking indemnification hereunder, as applicable, expressly for inclusion in the
Registration Statement, or (b) with respect to any underwriter and controlling
person of such underwriter (and their respective officers and directors), a
Violation which results from the fact that there was not sent or given to a
person who bought Registrable Securities, at or prior to the written
confirmation of the sale, a copy of the final Prospectus, as then amended or
supplemented, if the Company had previously furnished copies of such Prospectus
hereunder and such Prospectus corrected the misstatement or omission forming the
basis of the Violation.

     5.2   Indemnification by Holders. Each Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter and any controlling person of any
such underwriter or other holder (each a "Holder Indemnified Person"), against
                                          -------------------------
any Losses to which any of the foregoing persons may become subject, under the
1933 Act, the 1934 Act, or other federal or state law, insofar as such Losses
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs solely as a result of the written
information furnished by each Holder expressly for inclusion in the applicable
Registration Statement, and such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any Holder Indemnified Person intended to
be indemnified pursuant to this Section 5.2, in connection with investigating or
                                -----------
defending any such Loss; provided, however, that any Holder's liability pursuant
to this Section 5.2 shall be limited to the amount of the net proceeds received
        -----------
by such Holder from the sale of the Registrable Securities sold by it, and
further provided that the indemnity agreement contained in this Section 5.2 does
                                                                -----------
not apply to amounts paid in settlement of any such Loss if such settlement is
effected without the consent of such Holder, which consent shall not be
unreasonably withheld.

     5.3   Indemnification Procedures. Promptly after receipt by an indemnified
party under this Article V of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Article
V, deliver to the indemnifying party a written notice of the commencement of
such action and the indemnifying party will have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) will have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of the indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between the indemnified party and any other party represented by such
counsel in the same proceeding. If the indemnifying party shall fail to defend
the action, or conducts a defense which is not reasonably adequate in light of
the circumstances, the indemnified party may conduct its own defense and shall
be entitled to reimbursement for the costs of such defense. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Agreement, except to the extent
that the indemnifying party is materially prejudiced by such failure. The
omission so to deliver written notice to the indemnifying party does not relieve
it of any liability

                                       12
<PAGE>

that it may have to any indemnified party otherwise than under this Agreement.
No indemnifying party under this Agreement will enter into any settlement or
consent to any entry of judgment without the indemnified party's written consent
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the indemnified party of a release from all liability
in respect of such claim or litigation.

     5.4   Contribution. If the indemnification provided for in this Article V
is held by a court of competent jurisdiction to be unavailable to an indemnified
party or is insufficient to indemnify an indemnified party with respect to any
Loss, then the indemnifying party, in lieu of or in addition to, as appropriate,
indemnifying such indemnified party hereunder, will contribute to the amount
paid or payable by such indemnified party as a result of such Loss in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such Loss as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and of the indemnified party will be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The obligation of any Holder to make a contribution
pursuant to this Section 5.4 shall be limited to the net proceeds received by
                 -----------
such Holder from the sale of the Registrable Securities sold by it, less any
amounts paid pursuant to Section 5.2. To the extent any indemnification by an
                         -----------
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Article V to the fullest extent permitted by
law; provided, however, that: (a) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
                                                    -------------
Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation, and (b) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities
pursuant to such Registration Statement.

     5.5   Survival. The indemnity and contribution provisions contained in this
Article V shall remain operative and in full force and effect regardless of (a)
any termination of this Agreement, (b) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company, and (c)
the sale of any Registrable Securities by any Holder.

VI.  MISCELLANEOUS

     6.1   Expenses. The Company shall bear all fees and expenses incurred in
connection with the performance by the Company of its obligations under this
Agreement (including without limitation, all registration and filing fees, fees
with respect to filings required to be made with the National Association of
Securities Dealers, Inc., fees and expenses of compliance with securities or
"Blue Sky" laws, printing expenses, messenger, telephone and distribution
expenses associated with the preparation and distribution of any Registration
Statement, all fees and expenses associated with the listing of any Registrable
Securities on any securities exchange or exchanges, the fees and disbursements
of counsel for the Company and its accountants and any

                                       13
<PAGE>

underwriting discounts and/or commissions relating to primary issuances by the
Company of its securities. Each seller of Registrable Securities shall pay all
of its underwriting discounts and selling commissions as well as the fees and
expenses of its own special counsel, if any, applicable to any Registrable
Securities registered and sold by such seller.

     6.2   Assignment of Registration Rights. The rights under this Agreement
shall be automatically assignable by any Holder to any transferee of all or any
portion of Registrable Securities if: (a) such Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee, and (ii) the securities with respect to which such registration rights
are being transferred or assigned; (c) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(d) at or before the time the Company receives the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and (e) at
least 100,000 shares of Common Stock (or the equivalent number of Preferred
Shares that would convert into that number of shares of Common Stock or the
equivalent number of Preferred Warrants that are exercisable for that number of
shares of Common Stock) are transferred by such Holder to the transferee of the
Registrable Securities contemplated by this Section 6.2.
                                            -----------

     6.3   "Market Stand-Off" Agreement.

           (a) Agreement to be Bound. To the extent requested by the Company and
               ---------------------
the managing underwriters, if any, of securities of the Company, each Holder
hereby agrees that it will not, during the period commencing on the effective
date of a Registration Statement of the Company filed under the 1933 Act with
respect to a public offering of the Company's securities and ending on the date
specified by the Company and the managing underwriter (such period not to exceed
180 calendar days), sell, offer, contract to sell, assign, transfer, convey,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, pledge, hypothecate
or otherwise transfer or dispose of, directly or indirectly, any Registrable
Securities; provided, however, that the Company agrees to use its commercially
            --------  -------
reasonable efforts to cause such period not to exceed ninety (90) calendar days;
provided, further, however, that in no event shall the period for any Holder
--------  -------  -------
exceed the period for any other person who is either an officer, director and/or
holder of at least five (5%) percent of the then outstanding capital stock of
the Company. The foregoing provisions of this Section 6.3(a) shall only be
                                              --------------
applicable to the Holders if all other persons with registration rights (whether
or not pursuant to this Agreement) and all officers, directors and holders of
more than five (5%) percent of the then outstanding voting capital stock of the
Company enter into identical agreements.

VII. GENERAL

     7.1   Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated

                                       14
<PAGE>

and kept on file by the sending party), or (c) one (1) business day after
deposit with an overnight courier service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for such
communications shall be:

     If to the Company:

          Notify Technology Corporation
          1054 S. DeAnza Boulevard (Suite 105)
          San Jose, California 95129
          Attention: President
          Telephone: (408) 777-7920
          Facsimile: (408) 996-7404

     With a copy to:

          Wilson Sonsini Goodrich & Rosati, Professional Corporation
          650 Page Mill Road
          Palo Also, California 94304
          Telephone: (650) 493-9300
          Facsimile: (650) 493-6811
          Attention: Henry P. Massey, Jr.

     If to a Holder, to its most recent address and facsimile number provided to
the Company five (5) days prior to the effectiveness of any change thereof,
together with a copy to Commonwealth Associates, L.P., 830 Third Avenue, New
York, New York 10022.

     Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clauses (a), (b) or (c) above, respectively.

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

     7.3   Consents. All consents and other determinations to be made by the
Holders pursuant to this Agreement shall be made, unless otherwise specified in
this Agreement, by Holders holding a majority of the Registrable Securities,
determined as if all the Preferred Shares then outstanding have been converted
into Registrable Securities and all the Preferred Warrants then outstanding have
been exercised for Registrable Securities without regard for any limitations on
conversion of the Preferred Shares or exercise of the Preferred Warrants.

                                       15
<PAGE>

     7.4   Additional Parties. The parties hereto agree that additional holders
of Preferred Shares (or warrants to acquire Preferred Shares) of the Company
may, with the consent only of the Company, be added as parties to this Agreement
with respect to any or all securities of the Company held by them, and shall
thereupon be deemed for all purposes "Holders" hereunder; provided, however,
that from and after the date of this Agreement, the Company shall not without
the prior written consent of holders of majority of the outstanding Conversion
Shares enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the grant to such holder of rights
superior to those granted herein. Any such additional party shall execute a
counterpart of this Agreement, and upon execution by such additional party and
by the Company, shall be considered a Holder for purposes of this Agreement.

     7.5   Specific Performance. Each of the parties hereto acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to the
other parties hereto and that the other parties hereto will not have an adequate
remedy at law. Therefore, the obligations of each of the parties hereto under
this Agreement shall be enforceable by a decree of specific performance issued
by any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.

     7.6   Entire Agreement; Amendment. This Agreement supersedes all other
prior oral or written agreements among the parties, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein. No
provision of this Agreement may be amended or waived other than by an instrument
in writing signed by the Company and the Holders of at least a majority of the
Registrable Securities then outstanding. 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 Holders of Registrable Securities whose
securities are being sold pursuant to the Registration Statement and that does
not directly or indirectly affect the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement.
Each Holder of Registrable Securities outstanding at the time of any such
amendment, modification, supplement, waiver or consent or thereafter shall be
bound by any such amendment, modification, supplement, waiver or consent
effected pursuant to this Section 7.6, whether or not any notice, writing or
                          -----------
marking indicating such amendment, modification, supplement, waiver or consent
appears on the Registrable Securities or is delivered to such Holder.

     7.7   Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

     7.8   Termination. This Agreement and the obligations of the parties
hereunder shall terminate as of the end of the Registration Period except for
Article V hereof which shall survive and remain in full force and effect in
accordance with its terms.

                                       16
<PAGE>

     7.9   Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of New York or, if
it has or can acquire jurisdiction, in the United States District Court for the
Southern District of New York, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.

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

     7.11  Successors and Assigns; No Third Party Beneficiaries. Subject to
Section 6.2, this Agreement shall be binding upon and inure to the benefit of
-----------
the parties and their respective successors and permitted assigns. Nothing in
this Agreement shall create or be deemed to create any third-party beneficiary
rights in any person not a party to this Agreement except as provided below and
in Section 6.2. Upon any assignment, the references in this Agreement to any
   -----------
Holder shall also apply to any such assignee unless the context otherwise
requires.

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

     7.13  No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

     7.14  Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which 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; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

                 [Remainder of page intentionally left blank]

                                       17
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.

                              NOTIFY TECHNOLOGY CORPORATION

                              By:________________________________________
                                    Name:
                                    Title:

THE FOREGOING AGREEMENT IS
HEREBY ACCEPTED AS OF THE
DATE FIRST ABOVE WRITTEN:

By:_________________________
     Name:
     Title:

                                       18
<PAGE>

                                  SCHEDULE I

     This Schedule I shows the names and addresses of the Investors under the
Registration Rights Agreement.

     [NAME OF INVESTOR]

     Address for all communications, including written confirmation of such wire
transfers:

     [TO BE PROVIDED]

     Telecopy No.

     Telephone No.

     Tax ID #

                                       19
<PAGE>

                                   EXHIBIT A

           Form of Notice of Effectiveness of Registration Statement

[Transfer Agent]

Attention:

               Re:  Notify Technology Corporation
                    -----------------------------
Gentlemen:

     We are counsel to Notify Technology Corporation, a California corporation
(the "Company"), and have represented the Company in connection with those
      -------
certain Subscription Agreements (the "Subscription Agreements") entered into by
                                      -----------------------
and among the Company and the Investors named therein (collectively, the
"Holders") pursuant to which the Company issued to the Holders shares of its
 -------
Series A Convertible Preferred Shares (the "Preferred Shares") convertible into
                                            ----------------
shares of the Company's common stock, par value $0.001 per share (the "Common
                                                                       ------
Stock") and warrants (the "Warrants") to purchase shares of the Company's Common
-----                      --------
Stock. Pursuant to the above mentioned agreements, the Company also has entered
into a Registration Rights Agreement with the Holders (the "Registration Rights
                                                            -------------------
Agreement") pursuant to which the Company agreed, among other things, to
---------
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon conversion of the
Preferred Shares and the shares of Common Stock issuable upon exercise of the
Preferred Warrants, under the Securities Act of 1933, as amended (the "1933
                                                                       ----
Act"). In connection with the Company's obligations under the Registration
---
Rights Agreement, on ____________________, 200__, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
-----------------------
"SEC") relating to the Registrable Securities which names each of the Holders as
 ---
a selling stockholder thereunder.

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

                                    Very truly yours,

                                    [Issuer's Counsel]

                                    By:__________________________________

cc:  [List Names of Holders]

                                       20

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