Document:

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                                                                    EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "Agreement") is dated as of
May 21, 2003, among Authentidate Holding Corp., a Delaware corporation (the
"Company"), and the purchasers identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and Rule 506 promulgated thereunder, the Company desires
to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

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

                                    ARTICLE I
                                   DEFINITIONS

         1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:

                  "Actual Minimum" means, as of any date, the maximum aggregate
         number of shares of Common Stock then issued or potentially issuable in
         the future pursuant to the Transaction Documents, including any
         Underlying Shares issuable upon exercise or conversion in full of all
         Warrants and Debentures, ignoring any conversion or exercise limits set
         forth therein, and assuming that any previously unconverted Debentures
         are held until the second anniversary of the Closing Date or, if
         earlier, until maturity, and all interest thereon is paid in Common
         Stock.

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

                  "Capital Shares" shall mean the Common Stock and any shares of
         any other class of common stock whether now or hereafter authorized,
         having the right to participate in the distribution of earnings and
         assets of the Company.

                  "Capital Shares Equivalents" shall mean any securities,
         rights, or obligations that are convertible into or exchangeable for or
         give any right to subscribe for or purchase, directly or indirectly,
         any Capital Shares of the Company or any warrants, options or
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         other rights to subscribe for or purchase, directly or indirectly,
         Capital Shares or any such convertible or exchangeable securities.

                  "Closing" means the closing of the purchase and sale of the
         Securities pursuant to Section 2.1.

                  "Closing Date" means the date of the Closing, which date shall
         occur within 10 days from the date hereof.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the common stock of the Company, par
         value $0.001 per share, and any securities into which such common stock
         may hereinafter be reclassified into.

                  "Company Counsel" means Goldstein & DiGioa LLP, outside
         counsel to the Company.

                  "Debentures" means the 7% Convertible Debentures due 36 months
         from their date of issuance, unless otherwise set forth therein, issued
         by the Company to the Purchasers hereunder, in the form of Exhibit A.

                  "Disclosure Schedules" shall have the meaning ascribed to such
         term in Section 3.1.

                  "Effective Date" means the date that the Registration
         Statement is first declared effective by the Commission.

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

                  "FW" means Feldman Weinstein LLP with offices at 420 Lexington
         Avenue, New York, New York 10170.

                  "GAAP" shall have the meaning ascribed to such term in Section
         3.1(h).

                  "Liens" shall have the meaning ascribed to such term in
         Section 3.1(a).

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

                  "Material Adverse Effect" shall have the meaning assigned to
         such term in Section 3.1(b).

                  "Person" means an individual or corporation, partnership,
         trust, incorporated or unincorporated association, joint venture,
         limited liability company, joint stock company, government (or an
         agency or subdivision thereof) or other entity of any kind.

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                  "Principal Market" shall initially mean the NASDAQ National
         Market and shall also include the American Stock Exchange, the New York
         Stock Exchange or the NASDAQ Small-Cap Market, whichever is at the time
         the principal trading exchange or market for the Common Stock, based
         upon share volume.

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

                  "Registration Rights Agreement" means the Registration Rights
         Agreement, dated the Closing Date, among the Company and the
         Purchasers, in the form of Exhibit B.

                  "Required Approvals" shall have the meaning ascribed to such
         term in Section 3.1(e).

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

                  "SEC Reports" shall have the meaning ascribed to such term in
         Section 3.1(h).

                  "Securities" means the Debentures, the Warrants and the
         Underlying Shares.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Subscription Amount" as to each Purchaser, the principal
         amount of Debentures purchased at the Closing as indicated on the
         signature pages hereto below such Purchaser's address for notice.

                  "Subsidiary" means any subsidiary of the Company that is
         required to be listed in Schedule 3.1(a).

                  "Trading Day" shall mean any day during which the Principal
         Market shall be open for business.

                  "Transaction Documents" means this Agreement, the Debentures,
         the Warrants, the Registration Rights Agreement and any other documents
         or agreements executed in connection with the transactions contemplated
         hereunder.

                  "Underlying Shares" means the shares of Common Stock issuable
         upon conversion of the Debentures and upon exercise of the Warrants.

                  "Underlying Shares Registration Statement" or "Registration
         Statement" means a registration statement meeting the requirements set
         forth in the Registration Rights Agreement and covering the resale of
         the Underlying Shares by the Purchasers.

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                  "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies: (a) if the Common Stock is then
         listed or quoted on an Trading Market, the daily volume weighted
         average price of the Common Stock for such date (or the nearest
         preceding date) on the primary Trading Market on which the Common Stock
         is then listed or quoted as reported by Bloomberg Financial L.P. (based
         on a trading day from 9:30 a.m. ET to 4:02 p.m. Eastern Time) using the
         VAP function; (b) if the Common Stock is not then listed or quoted on
         an Trading Market and if prices for the Common Stock are then quoted on
         the OTC Bulletin Board, the volume weighted average price of the Common
         Stock for such date (or the nearest preceding date) on the OTC Bulletin
         Board; (c) if the Common Stock is not then listed or quoted on the OTC
         Bulletin Board and if prices for the Common Stock are then reported in
         the "Pink Sheets" published by the National Quotation Bureau
         Incorporated (or a similar organization or agency succeeding to its
         functions of reporting prices), the most recent bid price per share of
         the Common Stock so reported; or (d) in all other cases, the fair
         market value of a share of Common Stock as determined by a nationally
         recognized-independent appraiser selected in good faith by Purchasers
         holding a majority of the principal amount of Debentures then
         outstanding.

                  "Warrants" means collectively the Common Stock purchase
         warrants, in the form of Exhibit C delivered to the Purchasers at the
         Closing in accordance with Section 2.2.

                                   ARTICLE II
                                PURCHASE AND SALE

         2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
the principal amount of Debentures equal to such Purchaser's Subscription Amount
and the Warrants for an aggregate Subscription Amount of up to $2,725,300. A
list of the Purchasers is set forth on Annex I attached hereto. The Closing
shall take place at the offices of FW immediately following the execution
hereof, or at such other location or time as the parties may agree and in no
event later than 10 days following the date hereof.

         2.2      Closing Deliveries.

                  (a) At or prior to the Closing, the Company shall deliver or
         cause to be delivered to the Company the following:

                           (i) Debentures in the Subscription Amount indicated
                  below such Purchaser's name on the signature page of this
                  Agreement, registered in the name of such Purchaser;

                           (ii) a Warrant to purchase up to a number of shares
                  of Common Stock equal to 40% of the shares underlying the
                  Debentures purchased by such Investor with a term of 5 years
                  and an exercise price (A) with respect to half of Warrants
                  issued, of $2.60 per Warrant Share and (B) with respect to the
                  remaining half of

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                  the Warrants issued, of $2.86 per Warrant Share, both as
                  subject to adjustment therein.

                           (iii) the legal opinion of Company Counsel, in the
                  form of Exhibit D attached hereto, addressed to the
                  Purchasers;

                           (viii) the Registration Rights Agreement duly
                  executed by the Company.

                  (b) At or prior to the Closing, each Purchaser shall deliver
         or cause to be delivered to the Company the following:

                           (i) the Subscription Amount indicated below such
                  Purchaser's name on the signature page of this Agreement, in
                  United States dollars and in immediately available funds, by
                  wire transfer to the instructions set forth on the Company's
                  signature page hereto;

                           (ii) the Registration Rights Agreement duly executed
                  by such Purchaser.

                  (c) All representations and warranties of the other party
         contained herein shall remain true and correct as of the Closing Date;

                  (d) There shall have been no Material Adverse Effect (as
         defined in Section 3.1(b)) with respect to the Company since the date
         hereof; and

                  (e) From the date hereof to the Closing Date, trading in the
         Common Stock shall not have been suspended by the Commission (except
         for any suspension of trading of limited duration agreed to by the
         Company, which suspension shall be terminated prior to the Closing),
         and, at any time prior to the Closing Date, trading in securities
         generally as reported by Bloomberg Financial Markets shall not have
         been suspended or limited, or minimum prices shall not have been
         established on securities whose trades are reported by such service, or
         on the Principal Market, nor shall a banking moratorium have been
         declared either by the United States or New York State authorities, nor
         shall there have occurred any material outbreak or escalation of
         hostilities or other national or international calamity of such
         magnitude in its effect on, or any material adverse change in, any
         financial market which, in each case, in the reasonable judgment of the
         Purchasers, makes it impracticable or inadvisable to purchase the
         Debentures at the Closing.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the disclosure schedules attached hereto (the
"Disclosure Schedules") which Disclosure Schedules shall be deemed a part
hereof, the Company hereby makes the representations and warranties set forth
below to the Purchasers. Any disclosure made in the

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Disclosure Schedules shall be deemed an amendment and disclosure to all the
representations and warranties set forth below.

                  (a) Subsidiaries. The Company has no direct or indirect
         subsidiaries. The Company owns, directly or indirectly, all of the
         capital stock or other equity interests of each Subsidiary free and
         clear of any lien, charge, security interest, encumbrance, right of
         first refusal or other restriction (collectively, "Liens"), and all the
         issued and outstanding shares of capital stock of each Subsidiary are
         validly issued and are fully paid, non-assessable and free of
         preemptive and similar rights. If the Company has no subsidiaries, then
         references in the Transaction Documents to the Subsidiaries will be
         disregarded.

                  (b) Organization and Qualification. Each of the Company and
         the Subsidiaries is an entity duly incorporated or otherwise organized,
         validly existing and in good standing under the laws of the
         jurisdiction of its incorporation or organization (as applicable), with
         the requisite power and authority to own and use its properties and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any Subsidiary is in violation of any of the provisions of
         its respective certificate or articles of incorporation, bylaws or
         other organizational or charter documents. Each of the Company and the
         Subsidiaries is duly qualified to do business and is in good standing
         as a foreign corporation or other entity in each jurisdiction in which
         the nature of the business conducted or property owned by it makes such
         qualification necessary, except where the failure to be so qualified or
         in good standing, as the case may be, could not, individually or in the
         aggregate: (i) adversely affect the legality, validity or
         enforceability of any Transaction Document, (ii) have or result in or
         be reasonably likely to have or result in a material adverse effect on
         the results of operations, assets, prospects, business or condition
         (financial or otherwise) of the Company and the Subsidiaries, taken as
         a whole, or (iii) adversely impair the Company's ability to perform
         fully on a timely basis its obligations under any of the Transaction
         Documents (any of (i), (ii) or (iii), a "Material Adverse Effect").

                  (c) Authorization; Enforcement. The Company has the requisite
         corporate power and authority to enter into and to consummate the
         transactions contemplated by each of the Transaction Documents and
         otherwise to carry out its obligations hereunder or thereunder. The
         execution and delivery of each of the Transaction Documents by the
         Company and the consummation by it of the transactions contemplated
         hereby or thereby have been duly authorized by all necessary action on
         the part of the Company and no further consent or action is required by
         the Company. Each of the Transaction Documents has been (or upon
         delivery will be) duly executed by the Company and, when delivered in
         accordance with the terms hereof, will constitute the valid and binding
         obligation of the Company enforceable against the Company in accordance
         with its terms, subject to applicable bankruptcy, insolvency,
         fraudulent conveyance, reorganization, moratorium and similar laws
         affecting creditors' rights and remedies generally and general
         principles of equity. Neither the Company nor any Subsidiary is in
         violation of any of the provisions of its respective certificate or
         articles of incorporation, by-laws or other organizational or charter
         documents.

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                  (d) No Conflicts. The execution, delivery and performance of
         the Transaction Documents by the Company and the consummation by the
         Company of the transactions contemplated thereby do not and will not:
         (i) conflict with or violate any provision of the Company's or any
         Subsidiary's certificate or articles of incorporation, bylaws or other
         organizational or charter documents, or (ii) subject to obtaining the
         Required Approvals (as defined below), conflict with, or constitute a
         default (or an event that with notice or lapse of time or both would
         become a default) under, or give to others any rights of termination,
         amendment, acceleration or cancellation (with or without notice, lapse
         of time or both) of, any agreement, credit facility, debt or other
         instrument (evidencing a Company or Subsidiary debt or otherwise) or
         other understanding to which the Company or any Subsidiary is a party
         or by which any property or asset of the Company or any Subsidiary is
         bound or affected, or (iii) result, to the Company's knowledge, in a
         violation of any law, rule, regulation, order, judgment, injunction,
         decree or other restriction of any court or governmental authority to
         which the Company or a Subsidiary is subject (including federal and
         state securities laws and regulations), or by which any property or
         asset of the Company or a Subsidiary is bound or affected; except in
         the case of each of clauses (ii) and (iii), such as could not,
         individually or in the aggregate, have or result in a Material Adverse
         Effect.

                  (e) Filings, Consents and Approvals. Neither the Company nor
         any Subsidiary is required to obtain any consent, waiver, authorization
         or order of, give any notice to, or make any filing or registration
         with, any court or other federal, state, local or other governmental
         authority or other Person in connection with the execution, delivery
         and performance by the Company of the Transaction Documents, other than
         (i) the filings required under Section 4.8, (ii) the filing with the
         Commission of the Underlying Shares Registration Statement, (iii) the
         notice and/or application(s) to each applicable Principal Market for
         the issuance and sale of the Debentures and Warrants and the listing of
         the Underlying Shares for trading thereon in the time and manner
         required thereby, and (iv) the filing of Form D with the Commission and
         applicable Blue Sky filings (collectively, the "Required Approvals").

                  (f) Issuance of the Securities. The Securities are duly
         authorized and, when issued and paid for in accordance with the
         applicable Transaction Documents, will be duly and validly issued,
         fully paid and non assessable, free and clear of all Liens. The Company
         has reserved from its duly authorized capital stock a number of shares
         of Common Stock for issuance of the Underlying Shares at least equal to
         the Actual Minimum on the date hereof.

                  (g) Capitalization. The number of shares and type of all
         authorized, issued and outstanding capital stock of the Company is set
         forth in the Disclosure Schedules attached hereto. No securities of the
         Company are entitled to preemptive or similar rights, and no Person has
         any right of first refusal, preemptive right, right of participation,
         or any similar right to participate in the transactions contemplated by
         the Transaction Documents. Except as a result of the purchase and sale
         of the Securities, there are no outstanding options, warrants, script
         rights to subscribe to, calls or commitments of any character
         whatsoever relating to, or securities, rights or obligations
         convertible into or

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         exchangeable for, or giving any Person any right to subscribe for or
         acquire, any shares of Common Stock, or contracts, commitments,
         understandings or arrangements by which the Company or any Subsidiary
         is or may become bound to issue additional shares of Common Stock, or
         securities or rights convertible or exchangeable into shares of Common
         Stock. The issuance and sale of the Securities will not obligate the
         Company to issue shares of Common Stock or other securities to any
         Person (other than the Purchasers) and will not result in a right of
         any holder of Company securities to adjust the exercise, conversion,
         exchange or reset price under such securities.

                  (h) SEC Reports; Financial Statements. The Company has filed
         all reports required to be filed by it under the Securities Act and the
         Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
         the two years preceding the date hereof (or such shorter period as the
         Company was required by law to file such material) (the foregoing
         materials being collectively referred to herein as the "SEC Reports"
         and, together with the Schedules to this Agreement, the "Disclosure
         Materials") on a timely basis or has received a valid extension of such
         time of filing and has filed any such SEC Reports prior to the
         expiration of any such extension. The Company has delivered to the
         Purchasers a copy of all SEC Reports filed within the 10 days preceding
         the date hereof. As of their respective dates, the SEC Reports complied
         in all material respects with the requirements of the Securities Act
         and the Exchange Act and the rules and regulations of the Commission
         promulgated thereunder, and none of the SEC Reports, when filed,
         contained any untrue statement of a material fact or omitted to state a
         material fact required to be stated therein or necessary in order to
         make the statements therein, in light of the circumstances under which
         they were made, not misleading. The financial statements of the Company
         included in the SEC Reports comply in all material respects with
         applicable accounting requirements and the rules and regulations of the
         Commission with respect thereto as in effect at the time of filing.
         Such financial statements have been prepared in accordance with
         generally accepted accounting principles applied on a consistent basis
         during the periods involved ("GAAP"), except as may be otherwise
         specified in such financial statements or the notes thereto, and fairly
         present in all material respects the financial position of the Company
         and its consolidated subsidiaries as of and for the dates thereof and
         the results of operations and cash flows for the periods then ended,
         subject, in the case of unaudited statements, to normal, immaterial,
         year-end audit adjustments.

                  (i) Material Changes. Since the date of the latest audited
         financial statements included within the SEC Reports, except as
         specifically disclosed in the SEC Reports: (i) there has been no event,
         occurrence or development that has had or that could result in a
         Material Adverse Effect, (ii) the Company has not incurred any
         liabilities (contingent or otherwise) other than (A) trade payables and
         accrued expenses incurred in the ordinary course of business consistent
         with past practice and (B) liabilities not required to be reflected in
         the Company's financial statements pursuant to GAAP or required to be
         disclosed in filings made with the Commission, (iii) the Company has
         not altered its method of accounting or the identity of its auditors,
         (iv) the Company has not declared or made any dividend or distribution
         of cash or other property to its stockholders or purchased, redeemed or
         made any agreements to purchase or redeem any shares of its

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         capital stock, and (v) the Company has not issued any equity securities
         to any officer, director or Affiliate, except pursuant to existing
         Company stock option or similar plans.

                  (j) Litigation. There is no action, suit, inquiry, notice of
         violation, proceeding or investigation pending or, to the knowledge of
         the Company, threatened against or affecting the Company, any
         Subsidiary or any of their respective properties before or by any
         court, arbitrator, governmental or administrative agency or regulatory
         authority (federal, state, county, local or foreign) (collectively, an
         "Action") which: (i) adversely affects or challenges the legality,
         validity or enforceability of any of the Transaction Documents or the
         Securities or (ii) could, if there were an unfavorable decision,
         individually or in the aggregate, have or reasonably be expected to
         result in a Material Adverse Effect. Neither the Company nor any
         Subsidiary, nor any director or officer thereof, is or has been the
         subject of any Action involving a claim of violation of or liability
         under federal or state securities laws or a claim of breach of
         fiduciary duty. The Company does not have pending before the Commission
         any request for confidential treatment of information. There has not
         been, and to the knowledge of the Company, there is not pending or
         contemplated, any investigation by the Commission involving the Company
         or any current or former director or officer of the Company. The
         Commission has not issued any stop order or other order suspending the
         effectiveness of any registration statement filed by the Company or any
         Subsidiary under the Exchange Act or the Securities Act.

                  (k) Compliance. Neither the Company nor any Subsidiary: (i) is
         in default under or in violation of (and no event has occurred that has
         not been waived that, with notice or lapse of time or both, would
         result in a default by the Company or any Subsidiary under), nor has
         the Company or any Subsidiary received notice of a claim that it is in
         default under or that it is in violation of, any indenture, loan or
         credit agreement or any other agreement or instrument to which it is a
         party or by which it or any of its properties is bound (whether or not
         such default or violation has been waived), (ii) is in violation of any
         order of any court, arbitrator or governmental body, or (iii) is or has
         been in violation of any statute, rule or regulation of any
         governmental authority, except in each case as could not, individually
         or in the aggregate, have or result in a Material Adverse Effect.

                  (l) Labor Relations. No material labor dispute exists or, to
         the knowledge of the Company, is imminent with respect to any of the
         employees of the Company.

                  (m) Regulatory Permits. The Company and the Subsidiaries
         possess all certificates, authorizations and permits issued by the
         appropriate federal, state, local or foreign regulatory authorities
         necessary to conduct their respective businesses as described in the
         SEC Reports, except where the failure to possess such permits could
         not, individually or in the aggregate, have or reasonably be expected
         to result in a Material Adverse Effect ("Material Permits"), and
         neither the Company nor any Subsidiary has received any notice of
         proceedings relating to the revocation or modification of any Material
         Permit.

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                  (n) Title to Assets. The Company and the Subsidiaries have
         good and marketable title in fee simple to all real property owned by
         them that is material to the business of the Company and the
         Subsidiaries and good and marketable title in all personal property
         owned by them that is material to the business of the Company and the
         Subsidiaries, in each case free and clear of all Liens, except for
         Liens as do not materially affect the value of such property and do not
         materially interfere with the use made and proposed to be made of such
         property by the Company and the Subsidiaries. Any real property and
         facilities held under lease by the Company and the Subsidiaries are
         held by them under valid, subsisting and enforceable leases of which
         the Company and the Subsidiaries are in compliance, except where such
         failure to be in compliance would not have a Material Adverse Effect.

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

                  (p) Insurance. The Company and the Subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are prudent and customary in the
         businesses in which the Company and the Subsidiaries are engaged. A
         list of the Company's insurance contracts and policies are set forth on
         the Disclosure Schedules. The Company has delivered to the Purchasers,
         prior to the Closing, such contracts and policies. To the best of
         Company's knowledge, such insurance contracts and policies are accurate
         and complete. Neither the Company nor any Subsidiary has any reason to
         believe that it will not be able to renew its existing insurance
         coverage as and when such coverage expires or to obtain similar
         coverage from similar insurers as may be necessary to continue its
         business without a significant increase in cost.

                  (q) Transactions With Affiliates and Employees. Except as set
         forth in SEC Reports, none of the officers or directors of the Company
         and, to the knowledge of the Company, none of the employees of the
         Company is presently a party to any transaction with the Company or any
         Subsidiary (other than for services as employees, officers and
         directors), including any contract, agreement or other arrangement
         providing for the furnishing of services to or by, providing for rental
         of real or personal property to or from, or otherwise requiring
         payments to or from any officer, director or such employee or, to the
         knowledge of the Company, any entity in which any officer, director, or
         any such employee has a substantial interest or is an officer,
         director, trustee or partner.

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<PAGE>
                  (r) Internal Accounting Controls. The Company and the
         Subsidiaries maintain a system of internal accounting controls
         sufficient to provide reasonable assurance that (i) transactions are
         executed in accordance with management's general or specific
         authorizations, (ii) transactions are recorded as necessary to permit
         preparation of financial statements in conformity with generally
         accepted accounting principles and to maintain asset accountability,
         (iii) access to assets is permitted only in accordance with
         management's general or specific authorization, and (iv) the recorded
         accountability for assets is compared with the existing assets at
         reasonable intervals and appropriate action is taken with respect to
         any differences. The Company has established disclosure controls and
         procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
         Company and designed such disclosures controls and procedures to ensure
         that material information relating to the Company, including its
         subsidiaries, is made known to the certifying officers by others within
         those entities, particularly during the period in which the Company's
         Form 10-K or 10-Q, as the case may be, is being prepared. The Company's
         certifying officers have evaluated the effectiveness of the Company's
         controls and procedures as of a date within 90 days prior to the filing
         date of the Form 10-Q for the quarter ended September 30, 2002 (such
         date, the "Evaluation Date"). The Company presented in the Form 10-Q
         for the quarter ended September 30, 2002 the conclusions of the
         certifying officers about the effectiveness of the disclosure controls
         and procedures based on their evaluations as of the Evaluation Date.
         Since the Evaluation Date, there have been no significant changes in
         the Company's internal controls (as such term is defined in Item 307(b)
         of Regulation S-K under the Exchange Act) or, the Company's knowledge,
         in other factors that could significantly affect the Company's internal
         controls.

                  (s) Solvency. Based on the financial condition of the Company
         as reflected in the financial statements on Form 10-K for the fiscal
         year ended June 30, 2002 and on Form 10-Q for the quarter ended March
         31, 2003, as of the Closing Date: (i) the Company's fair saleable value
         of its assets exceeds the amount that will be required to be paid on or
         in respect of the Company's existing debts and other liabilities
         (including known contingent liabilities) as they mature; (ii) the
         Company's assets do not constitute unreasonably small capital to carry
         on its business for the current fiscal year as now conducted and as
         proposed to be conducted including its capital needs taking into
         account the particular capital requirements of the business conducted
         by the Company, and projected capital requirements and capital
         availability thereof; and (iii) the current cash flow of the Company,
         together with the proceeds the Company would receive, were it to
         liquidate all of its assets, after taking into account all anticipated
         uses of the cash, would be sufficient to pay all amounts on or in
         respect of its debt when such amounts are required to be paid. The
         Company does not intend to incur debts beyond its ability to pay such
         debts as they mature (taking into account the timing and amounts of
         cash to be payable on or in respect of its debt).

                  (t) Certain Fees. No brokerage or finder's fees or commissions
         are or will be payable by the Company to any broker, financial advisor
         or consultant, finder, placement agent, investment banker, bank or
         other Person with respect to the transactions contemplated by this
         Agreement, and the Company has not taken any action that would

                                      -11-
<PAGE>
         cause any Purchaser to be liable for any such fees or commissions. The
         Company agrees that the Purchasers shall have no obligation with
         respect to any fees or with respect to any claims made by or on behalf
         of any Person for fees of the type contemplated by this Section with
         the transactions contemplated by this Agreement.

                  (u) Private Placement. Assuming the accuracy of the
         representations and warranties of the Purchasers set forth in Sections
         3.2(b)-(f), the offer, issuance and sale of the Securities to the
         Purchasers as contemplated hereby are exempt from the registration
         requirements of the Securities Act. The issuance and sale of the
         Securities hereunder does not contravene the rules and regulations of
         the Principal Market and no shareholder approval is required for the
         Company to fulfill its obligations under the Transaction Documents.

                  (v) Listing and Maintenance Requirements. The Company has not,
         in the 12 months preceding the date hereof, received notice from any
         Principal Market on which the Common Stock is or has been listed or
         quoted to the effect that the Company is not in compliance with the
         listing or maintenance requirements of such Principal Market. The
         Company is, and has no reason to believe that it will not in the
         foreseeable future continue to be, in compliance with all such listing
         and maintenance requirements.

                  (w) Registration Rights. The Company has not granted or agreed
         to grant to any Person any rights (including "piggy-back" registration
         rights) to have any securities of the Company registered with the
         Commission or any other governmental authority that have not been
         satisfied (other than any such rights previously granted to any
         Purchaser); provided, however, in the event that a previously declared
         effective registration statement becomes stale, the Company may be
         required to file a new registration statement with respect to all or
         some of the previously registered transactions.

                  (x) Application of Takeover Protections. The Company and its
         Board of Directors have taken all necessary action, if any, in order to
         render inapplicable any control share acquisition, business
         combination, poison pill (including any distribution under a rights
         agreement) or other similar anti-takeover provision under the Company's
         Certificate of Incorporation (or similar charter documents) or the laws
         of its state of incorporation that is or could become applicable to the
         Purchasers as a result of the Purchasers and the Company fulfilling
         their obligations or exercising their rights under the Transaction
         Documents, including without limitation as a result of the Company's
         issuance of the Securities and the Purchasers' ownership of the
         Securities.

                  (y) Seniority. As of the date of this Agreement, no
         indebtedness of the Company is senior to the Debentures in right of
         payment, whether with respect to interest or upon liquidation or
         dissolution, or otherwise, other than indebtedness secured by purchase
         money security interests (which is senior only as to underlying assets
         covered thereby) and capital lease obligations (which is senior only as
         to the property covered thereby).

                                      -12-
<PAGE>
                  (z) Disclosure. The Company confirms that neither it nor any
         other Person acting on its behalf has provided any of the Purchasers or
         their agents or counsel with any information that constitutes or might
         constitute material, nonpublic information. The Company understands and
         confirms that the Purchasers will rely on the foregoing representations
         in effecting transactions in securities of the Company. All disclosure
         provided to the Purchasers regarding the Company, its business and the
         transactions contemplated hereby, including the Schedules to this
         Agreement, furnished by or on behalf of the Company with respect to the
         representations and warranties made herein are true and correct in all
         material respects with respect to such representations and warranties
         and do not contain any untrue statement of a material fact or omit to
         state any material fact necessary in order to make the statements made
         therein, in light of the circumstances under which they were made, not
         misleading. The Company acknowledges and agrees that no Purchaser makes
         or has made any representations or warranties with respect to the
         transactions contemplated hereby other than those specifically set
         forth in Section 3.2.

         3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:

                  (a) Organization; Authority. Such Purchaser is an entity duly
         organized, validly existing and in good standing under the laws of the
         jurisdiction of its organization with the requisite corporate or
         partnership power and authority to enter into and to consummate the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its obligations thereunder. The purchase by such Purchaser of
         the Securities hereunder has been duly authorized by all necessary
         action on the part of such Purchaser. Each of this Agreement and the
         Registration Rights Agreement has been duly executed by such Purchaser,
         and when delivered by such Purchaser in accordance with the terms
         hereof, will constitute the valid and legally binding obligation of
         such Purchaser, enforceable against it in accordance with its terms.

                  (b) Investment Intent. Such Purchaser is acquiring the
         Securities as principal for its own account for investment purposes
         only and not with a view to or for distributing or reselling such
         Securities or any part thereof, without prejudice, however, to such
         Purchaser's right, subject to the provisions of this Agreement, at all
         times to sell or otherwise dispose of all or any part of such
         Securities pursuant to an effective registration statement under the
         Securities Act or under an exemption from such registration and in
         compliance with applicable federal and state securities laws. Nothing
         contained herein shall be deemed a representation or warranty by such
         Purchaser to hold Securities for any period of time. Such Purchaser is
         acquiring the Securities hereunder in the ordinary course of its
         business. Such Purchaser does not have any agreement or understanding,
         directly or indirectly, with any Person to distribute any of the
         Securities.

                  (c) Purchaser Status. At the time such Purchaser was offered
         the Securities, it was, and at the date hereof it is, and on each date
         on which it exercises any Warrants or converts any Debentures, it will
         be an "accredited investor" as defined in Rule 501(a) under the
         Securities Act. Such Purchaser has not been formed solely for the
         purpose of

                                      -13-
<PAGE>
         acquiring the Securities. Such Purchaser is not a registered
         broker-dealer under Section 15 of the Exchange Act.

                  (d) Experience of such Purchaser. Such Purchaser, either alone
         or together with its representatives, has such knowledge,
         sophistication and experience in business and financial matters so as
         to be capable of evaluating the merits and risks of the prospective
         investment in the Securities, and has so evaluated the merits and risks
         of such investment. Such Purchaser is able to bear the economic risk of
         an investment in the Securities and, at the present time, is able to
         afford a complete loss of such investment. Such purchaser has been
         represented by its own legal counsel with respect to the negotiation
         and preparation of the Transaction Documents.

                  (f) General Solicitation. Such Purchaser is not purchasing the
         Securities as a result of any advertisement, article, notice or other
         communication regarding the Securities published in any newspaper,
         magazine or similar media or broadcast over television or radio or
         presented at any seminar or any other general solicitation or general
         advertisement.

                  (g) Reliance. Such Purchaser understands and acknowledges
         that: (i) the Securities are being offered and sold to it without
         registration under the Securities Act in a private placement that is
         exempt from the registration provisions of the Securities Act and (ii)
         the availability of such exemption depends in part on, and the Company
         will rely upon the accuracy and truthfulness of, the foregoing
         representations and such Purchaser hereby consents to such reliance.

                  (h) Limitations on Short Sales. The Purchasers agree,
         severally and not jointly, that they will not enter into any Short
         Sales (as hereinafter defined) from the period commencing on the
         Closing Date and ending on the date that all of the Debenture have been
         converted and all of the Warrants have been exercised. For purposes of
         this Section 3.2(h), a "Short Sale" by any Purchaser shall mean a sale
         of Common Stock by such Purchaser that is marked as a short sale and
         that is made at a time when there is no equivalent offsetting long
         position in Common Stock held by such Purchaser. For purposes of
         determining whether there is an equivalent offsetting long position in
         Common Stock held by the Purchasers, Underlying Shares that have not
         yet been converted pursuant to the Debenture and that have not yet been
         issued upon exercise of the Warrant shall be deemed to be held long by
         the Purchasers, and the amount of shares of Common Stock held in a long
         position shall be the number of Underlying Shares issuable pursuant to
         the Debenture assuming such holder converted all the outstanding
         principal amount of the Debenture on such date, and (ii) the number of
         Underlying Shares issuable pursuant to the Warrant.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 Transfer Restrictions.

                                      -14-
<PAGE>
                  (a) The Securities may only be disposed of in compliance with
         state and federal securities laws. In connection with any transfer of
         Securities other than pursuant to an effective registration statement,
         to the Company or to an Affiliate of a Purchaser or to an entity
         managed by a Purchaser, the Company may require the transferor thereof
         to provide to the Company an opinion of counsel selected by the
         transferor, the form and substance of which opinion shall be reasonably
         satisfactory to the Company, to the effect that such transfer does not
         require registration of such transferred Securities under the
         Securities Act. As a condition of transfer, any such transferee shall
         agree in writing to be bound by the terms of this Agreement and shall
         have the rights of a Purchaser under this Agreement and the
         Registration Rights Agreement.

                  (b) The Purchasers agree to the imprinting, so long as is
         required by this Section 4.1(b), of the following legend on any
         certificate evidencing Securities:

         [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
         SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH
         THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
         ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
         ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
         AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
         COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
         BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE
         SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
         CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
         SUCH SECURITIES.

                  The Company acknowledges and agrees that a Purchaser may from
         time to time pledge pursuant to a bona fide margin agreement or grant a
         security interest in some or all of the Securities and, if required
         under the terms of such arrangement, such Purchaser may transfer
         pledged or secured Securities to the pledgees or secured parties. If
         required by the Company's transfer agent in order to effect a pledge,
         the Company shall cause its counsel, at no cost to the Purchasers, to
         issue an opinion of counsel to the Company's transfer agent. Further,
         no notice shall be required of such pledge. At the appropriate
         Purchaser's expense, the Company will execute and deliver such
         reasonable documentation as a pledgee or secured party of Securities
         may reasonably request in connection with a pledge or transfer of the
         Securities, including the preparation and filing of any required
         prospectus supplement under Rule 424(b)(3) of the Securities Act or
         other applicable provision of the Securities Act to appropriately amend
         the list of Selling Stockholders thereunder.

                                      -15-
<PAGE>
                  (c) Certificates evidencing Underlying Shares shall not
         contain any legend (including the legend set forth in Section 4.1(b)):
         (i) while a registration statement (including the Underlying Shares
         Registration Statement) covering the resale of such security is
         effective under the Securities Act, or (ii) following any sale of such
         Underlying Shares pursuant to Rule 144, or (iii) if such Underlying
         Shares are eligible for sale under Rule 144(k), or (iv) if such legend
         is not required under applicable requirements of the Securities Act
         (including judicial interpretations and pronouncements issued by the
         Staff of the Commission); provided, however, in connection with the
         issuance of the Underlying Shares, each Purchaser, severally and not
         jointly with the other Purchasers, hereby agrees to adhere to and abide
         by all prospectus delivery requirements under the Securities Act and
         Commission Regulations. If all or any portion of a Debenture or Warrant
         is converted or exercised (as applicable) at a time when there is an
         effective registration statement to cover the resale of the Underlying
         Shares, or if such Underlying Shares may be sold under Rule 144(k) or
         if such legend is not otherwise required under applicable requirements
         of the Securities Act (including judicial interpretations thereof) then
         such Underlying Shares shall be issued free of all legends. The Company
         agrees that following the Effective Date or at such time as such legend
         is no longer required under this Section 4.1(c), it will, no later than
         seven Trading Days following the delivery by a Purchaser to the Company
         or the Company's transfer agent of a certificate representing
         Underlying Securities issued with a restrictive legend, deliver or
         cause to be delivered to such Purchaser a certificate representing such
         shares that is free from all restrictive and other legends. The Company
         may not make any notation on its records or give instructions to any
         transfer agent of the Company that enlarge the restrictions on transfer
         set forth in this Section.

                  (d) In addition to such Purchaser's other available remedies,
         the Company shall pay to a Purchaser, in cash, as liquidated damages
         and not as a penalty, for each $1,000 of Underlying Shares (based on
         the Closing Bid Price of the Common Stock on the date such Securities
         are submitted to the Company's transfer agent) subject to this Section
         4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 3
         Trading Days after such damages have begun to accrue) for each Trading
         Day after such seventh Trading Day until such certificate is delivered.
         Notwithstanding anything herein to the contrary, in the event a
         Purchaser is entitled to collect liquidated damages hereunder and
         liquidated damages pursuant to Sections 4(b)(ii) and/or (iii) of the
         Debenture, the Purchaser shall be limited to collect, at its option, of
         such remedies, only one such remedy on any given occasion.

         4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim that the Company may
have against any Purchaser.

                                      -16-
<PAGE>
         4.3 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any Purchaser, the Company shall deliver to
such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         4.4 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any Principal Market.

         4.5 Reservation and Listing of Securities.

                  (a) The Company shall maintain a reserve from its duly
         authorized shares of Common Stock for issuance pursuant to the
         Transaction Documents in such amount as may be required to fulfill its
         obligations in full under the Transaction Documents.

                  (c) The Company shall: (i) in the time and manner required by
         each Principal Market, prepare and file with such Principal Market such
         application or notification as may be required by such Principal Market
         covering a number of shares of Common Stock at least equal to the
         number of shares of Common Stock issuable pursuant to the terms of the
         Debentures and Warrants, (ii) take all steps that may be necessary to
         cause such shares of Common Stock to be approved for listing on each
         Principal Market as soon as possible thereafter, (iii) provide to the
         Purchasers evidence of such listing, if available, and (iv) maintain
         the listing of such Common Stock on each such Principal Market or
         another Principal Market.

         4.6 Conversion and Exercise Procedures. The form of Election to
Purchase included in the Warrants and the forms of Conversion Notice included in
the Debentures set forth the totality of the procedures required of the
Purchasers in order to exercise the Warrants or convert the Debentures. No
additional legal opinion or other information or instructions shall be required
of the Purchasers to exercise their Warrants or convert their Debentures. The
Company shall honor exercises of the Warrants and conversions of the Debentures
and shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.

                                      -17-
<PAGE>
         4.7 Future Financings. From the date hereof until 90 days after the
Effective Date, other than as contemplated by this Agreement, neither the
Company nor any Subsidiary shall (i) incur, issue, create, guarantee, assume or
otherwise become liable on account of any indebtedness, except in the ordinary
course of business, or (ii) increase any amounts owing or to which such Person
is liable under any existing obligations, except in the ordinary course of
business. Notwithstanding anything to the contrary herein, this Section 4.7
shall not apply to the following (a) the granting of options to employees,
officers and directors of the Company pursuant to any stock option plan duly
adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose, or (b) the exercise of the Debenture or
any other security issued by the Company in connection with the offer and sale
of this Company's securities pursuant to this Agreement, or (c) the exercise of
or conversion of any Convertible Securities, options, or warrants issued and
outstanding on the date hereof, or (d) acquisitions or strategic investments,
the primary purpose of which is not to raise capital, or (e) a one-time private
placement by the Company of its Capital Shares or Capital Shares Equivalents to
Unisys Corporation, of up to, in the aggregate, $10 million.

         4.8 Securities Laws Disclosure; Publicity. The Company shall, within 1
Trading Day after the Closing Date, issue a press release or file a Current
Report on Form 8-K reasonably acceptable to the Purchasers disclosing all
material terms of the transactions contemplated hereby. The Company and the
Purchasers shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby. Notwithstanding the foregoing,
other than in any registration statement filed pursuant to the Registration
Rights Agreement and filings related thereto, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Principal Market, without
the prior written consent of such Purchaser, except to the extent such
disclosure is required by law or Principal Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.

         4.9 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

         4.10 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of (i) any portion of the Company's debt (other than payment of
trade payables, capital lease obligations, up to $1,290,982 relating to the
mortgage and loan held by Central National Bank with respect to the Company's
headquarters and accrued expenses in the ordinary course of the Company's
business and prior practices), (ii) except for the Company's repurchase of its
outstanding shares of Series A Preferred Stock held by the Chairman and CEO of
the Company, to redeem any Company equity or equity-equivalent securities or
(iii) to settle any outstanding litigation.

                                      -18-
<PAGE>
         4.11 Reimbursement. If any Purchaser becomes involved in any capacity
in any Proceeding by or against any Person who is a stockholder of the Company,
solely as a result of such Purchaser's acquisition of the Securities under this
Agreement and without causation by any other activity, obligation, condition or
liability pertaining to such Purchaser and not to the transactions contemplated
by this Agreement, the Company will reimburse such Purchaser for its reasonable
legal and other expenses (including the cost of any investigation, preparation
and travel in connection therewith) incurred in connection therewith, as such
expenses are incurred. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of the
Purchasers who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any), as
the case may be, of the Purchasers and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.

         4.12 Indemnification of Purchasers. The Company will indemnify and hold
the Purchasers and their directors, officers, shareholders, partners, employees
and agents (each, a "Purchaser Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to: (a) any misrepresentation, breach
or inaccuracy, or any allegation by a third party that, if true, would
constitute a breach or inaccuracy, of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents; or (b) any cause of action, suit or claim brought or made
against such Purchaser Party and arising solely out of or solely resulting from
the execution, delivery, performance or enforcement of this Agreement or any of
the other Transaction Documents and without causation by any other activity,
obligation, condition or liability pertaining to such Purchaser and not to the
transactions contemplated by this Agreement. The Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred.

         4.13 Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company
or any other Person that any Purchaser is an "Acquiring Person" under the plan
or in any way could be deemed to trigger the provisions of such plan by virtue
of receiving Securities under the Transaction Documents.

         4.14. Participation in Future Financing. From the date hereof until 6
months after the Effective Date, the Company shall not effect a financing of its
Capital Shares or Capital Shares Equivalents (a "Subsequent Financing") unless
(i) the Company delivers to each of such Purchasers a written notice at least 5
Trading Days prior to the closing of such Subsequent Financing (the "Subsequent
Financing Notice") of its intention to effect such Subsequent Financing, which
Subsequent Financing Notice shall describe in reasonable detail the proposed

                                      -19-
<PAGE>
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Financing is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (ii) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the fifth (5th) Trading Day after its receipt
of the Subsequent Financing Notice of its willingness to provide (or to cause
its designee to provide), subject to completion of mutually acceptable
documentation, all or part of such financing to the Company on the same terms
set forth in the Subsequent Financing Notice; provided, however, if such
Subsequent Financing is by Unisys Corporation as lead investor, such right of
the Purchasers shall only be for an amount equal to a maximum of up to 25%, in
the aggregate, of the amount invested by Unisys Corporation and any other
investors participating along with Unisys Corporation. If one or more Purchasers
shall fail to so notify the Company of their willingness to participate in the
Subsequent Financing, the Company may effect the remaining portion of such
Subsequent Financing on the terms and to the Persons set forth in the Subsequent
Financing Notice; provided that the Company must provide the Purchasers with a
second Subsequent Financing Notice, and the Purchasers will again have the right
of first refusal set forth above in this Section 4.14, if the Subsequent
Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within
60 Trading Days after the date of the initial Subsequent Financing Notice with
the Person identified in the Subsequent Financing Notice. In the event the
Company receives responses to Subsequent Financing Notices from Purchasers
seeking to purchase more than the financing sought by the Company in the
Subsequent Financing such Purchasers shall have the right to purchase their Pro
Rata Portion (as defined below) of the Capital Shares or Capital Shares
Equivalents to be issued in such Subsequent Financing. "Pro Rata Portion" is the
ratio of (x) the principal amount of Debentures purchased by a Purchaser and (y)
the sum of the aggregate principal amount of Debentures issued hereunder. If any
Purchaser no longer holds any Debentures, then the Pro Rata Portions shall be
re-allocated among the remaining Purchasers. Notwithstanding anything to the
contrary herein, this Section 4.14 shall not apply to the following (a) the
granting of options to employees, officers and directors of the Company pursuant
to any stock option plan duly adopted by a majority of the non-employee members
of the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, or (b) the
exercise of the Debenture or any other security issued by the Company in
connection with the offer and sale of this Company's securities pursuant to this
Agreement, or (c) the exercise of or conversion of any Capital Shares, Capital
Shares Equivalents, options or warrants issued and outstanding on the date
hereof, provided such securities have not been materially amended to provide for
an increase in the number of shares of Common Stock issuable upon conversion or
reduction in the effective consideration to be paid per share of Common Stock
since the date hereof, or (d) acquisitions or strategic investments, the primary
purpose of which is not to raise capital.

         Section 4.15 Consent to Company Repurchase of Series A Preferred Stock.
Each Purchaser hereby agrees to consent to the Company's repurchase of 100
shares of Series A Preferred Stock held by the Company's Chairman and Chief
Executive Officer at a purchase price of $850,000.

                                      -20-
<PAGE>
                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third business day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

         5.2 Fees and Expenses. The Company has agreed to reimburse $20,000 to
Omicron Master Trust (of which $10,000 has been received) as reimbursement for
Omicron's legal, administrative and due diligence fees and expenses incurred to
prepare and negotiate the Transaction Documents. Accordingly, in lieu of the
foregoing payments, the Company, on the Closing Date, will direct that the
aggregate amount that Omicron is to pay for the Debentures and Warrants at the
Closing, be reduced by $10,000 (the remaining portion of the $20,000 not yet
paid). Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the issuance of
any Securities.

         5.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
All notices or other communications or deliveries given hereunder, if delivered
via facsimile, shall be followed with a copy delivered by a U.S. nationally
recognized overnight courier service. The addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person. Set forth on the Disclosure Schedule is a list of names and contact
information for the Company's executive officers and corporate counsel,
including, if applicable, in-house counsel, the Company's outside counsel
(including securities counsel, if different than corporate counsel), the
Company's accountants and the Company's transfer agent.

         5.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company

                                      -21-
<PAGE>
and each of the Purchasers or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

         5.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

         5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.

         5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Sections 4.12.

         5.9 Governing Law; Venue; Waiver of Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

                                      -22-
<PAGE>
         5.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities, as applicable.

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

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

         5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

         5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

         5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

         5.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such

                                      -23-
<PAGE>
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

         5.17 Usury. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate of interest
applicable to the Transaction Documents from the effective date forward, unless
such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.

         5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only Omicron Master Trust. The Company has elected to provide
all Purchasers with the same

                                      -24-
<PAGE>
terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.

         5.19 Liquidated Damages. The Company's obligations to pay any
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such liquidated damages or
other amounts are due and payable shall have been canceled.

                             ***********************

                                      -25-
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                           AUTHENTIDATE HOLDING CORP.

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

                                            Address for Notice:
                                            ------------------
                                            2165 Technology Drive
                                            Schenectady, New York 12308
                                            Attn:  Dennis Bunt
                                            Tel:  (518) 346-7799
                                            Fax: (518) 346-3644

With a copy to:                             Goldstein & DiGioia LLP
(which shall not constitute                 45 Broadway - 11th Floor
notice)                                     New York, New York 10006

                                            Tel: (212) 599-3322
                                            Fax: (212) 557-0295

                  Wire Instructions of the Company:
                  --------------------------------

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                      -26-
<PAGE>
                            PURCHASERS SIGNATURE PAGE

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

<TABLE>
<S>                                                           <C>
OMICRON MASTER TRUST                                                   Address for Notice:
                                                                       ------------------
By:  Omicron Capital L.P., as subadvisor                               c/o Omicron Capital L.P.
By:  Omicron Capital Inc., its general partner                         810 Seventh Avenue, 39th Fl.
                                                                       New York, NY 10019
                                                                       Fax: (212) 803-5269
By:                                                                    Attn:
   -------------------------------------------
    Name:
    Title:

Subscription Amount:  $
-------------------

MIDSUMMER INVESTMENT, LTD.                                             Address for Notice:
                                                                       ------------------
                                                                       C/o Midsummer Capital, LLC
                                                                       485 Madison Avenue, 23rd Floor
                                                                       New York, New York 10022
By:                                                                    Tel:  (212) 584-2140
    ------------------------------------------                         Fax: (212) 584-2142
     Director                                                          Attn:

Subscription Amount: $

With a copy to:
--------------
                                                              Feldman Weinstein LLP
                                                              420 Lexington Avenue
                                                              New York, New York 10170
                                                              Attn:  Robert F. Charron
                                                              Tel:  (212) 869-7000
                                                              Fax:  (212) 401-4741
</TABLE>

                      [PURCHASER SIGNATURE PAGE CONTINUES]

                                      -27-
<PAGE>
                     PURCHASERS SIGNATURE PAGE (CONT. . . )

<TABLE>
<S>                                                       <C>
                                                          Address for Notice:
                                                          ------------------

-------------------------
J. David Luce

Subscription  Amount:

GREENER FAIRWAYS, INC.                                    Address for Notice:
                                                          ------------------

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

Subscription Amount:

                                                          Address for Notice:
                                                          ------------------
-------------------------
James M. Temple

Subscription Amount:

J&C RESOURCES, LLC                                        Address for Notice:
                                                          ------------------

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

Subscription Amount:

                                                          Address for Notice:
                                                          ------------------

-------------------------
Ronald Deutsch

Subscription Amount:
</TABLE>

                                      -28-
<PAGE>
                     PURCHASERS SIGNATURE PAGE (CONT. . . )

<TABLE>
<S>                                                       <C>
LAGUNITAS PARTNERS, LP                                    Address for Notice:
                                                          ------------------

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

Subscription Amount:

GRUBER & MCBAINE INTERNATIONAL                            Address for Notice:
                                                          ------------------

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

Subscription Amount:

JON & LINDA GRUBER                                        Address for Notice:
                                                          -------------------

   ------------------------
</TABLE>

Subscription Amount:

                                      -29-
<PAGE>
ANNEX I

Omicron Master Trust
Midsummer Investment, Ltd.
Islandia, L.P.
J. David Luce
Greener Fairways, Inc.
James M. Temple
Charles Johnston/J&C Resources, LLC
Ronald Deutsch
Lagunitas Partners, LP
Gruber & McBaine International
Jon & Linda Gruber

                                      -30-<PAGE>
                                                                    EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 21, 2003, among Authentidate Holding Corp., a Delaware
corporation (the "Company"), and the purchasers signatory hereto (each such
purchaser is a "Purchaser" and all such purchasers are, collectively, the
"Purchasers").

            This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

            The Company and the Purchasers hereby agree as follows:

      1. Definitions

            CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN THAT ARE
DEFINED IN THE PURCHASE AGREEMENT SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN
THE PURCHASE AGREEMENT. As used in this Agreement, the following terms shall
have the following meanings:

                  "Business Day" means any day except Saturday, Sunday and any
            day which shall be a legal holiday or a day on which banking
            institutions in the State of New York or the State of California are
            authorized or required by law or other government actions to close.

                  "Effectiveness Date" means, with respect to the initial
            Registration Statement required to be filed hereunder, the earlier
            of (i) the 60th day following the Closing Date (120th day in the
            event of a "full review" by the Commission) and (ii) the fifth day
            following the date on which the Company is notified by the
            Commission that such Registration Statement will not be reviewed or
            is no longer subject to further review and comments.

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

                  "Filing Date" means, with respect to the initial Registration
            Statement required to be filed hereunder, the 30th day following the
            Closing Date.

                  "Holder" or "Holders" means the holder or holders, as the case
            may be, from time to time of Registrable Securities.

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

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

                                       1
<PAGE>
                  "Prospectus" means the prospectus included in a Registration
            Statement (including, without limitation, a prospectus that includes
            any information previously omitted from a prospectus filed as part
            of an effective registration statement in reliance upon Rule 430A
            promulgated under the Securities Act), as amended or supplemented by
            any prospectus supplement, with respect to the terms of the offering
            of any portion of the Registrable Securities covered by a
            Registration Statement, and all other amendments and supplements to
            the Prospectus, including post-effective amendments, and all
            material incorporated by reference or deemed to be incorporated by
            reference in such Prospectus.

                  "Registrable Securities" means all of the shares of Common
            Stock issuable upon conversion in full of the Debentures, exercise
            in full of the Warrants, shares issuable in lieu of the payment of
            liquidated damages, together with any securities issued or issuable
            in lieu of interest (assuming the Debentures are held until the
            Maturity Date and all interest is paid in shares of Common Stock) or
            upon any stock split, dividend or other distribution
            recapitalization or similar event with respect to the foregoing or
            pursuant to any anti-dilution provisions contained in the Debentures
            or the Warrants.

                  "Registration Statement" means the registration statements
            required to be filed hereunder and any additional registration
            statements contemplated by Section 3(c), including (in each case)
            the Prospectus, amendments and supplements to such registration
            statement or Prospectus, including pre- and post-effective
            amendments, all exhibits thereto, and all material incorporated by
            reference or deemed to be incorporated by reference in such
            registration statement.

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

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

                  "Special Counsel" means one special counsel to the Holders,
            for which the Holders will be reimbursed by the Company pursuant to
            Section 4.

                  "Warrants" shall mean the Common Stock purchase warrants
            issued to the Purchasers pursuant to the Purchase Agreement.

         2. Shelf Registration

                                       2
<PAGE>
            (a) On or prior to each Filing Date, the Company shall prepare and
      file with the Commission a "Shelf" Registration Statement covering the
      resale of all Registrable Securities applicable to such Filing Date for an
      offering to be made on a continuous basis pursuant to Rule 415. The
      Registration Statement shall be on Form S-3 (unless the Company is not
      then eligible to register for resale the Registrable Securities on Form
      S-3, in which case such registration shall be on another appropriate form
      in accordance herewith) and shall contain (except if otherwise directed by
      the Holders) substantially the "Plan of Distribution" attached hereto as
      Annex A. The Company shall use its best efforts to cause the Registration
      Statement to be declared effective under the Securities Act as promptly as
      possible after the filing thereof, but in any event prior to the
      applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act
      until the date which is two years after the date that such Registration
      Statement is declared effective by the Commission or such earlier date
      when all Registrable Securities covered by such Registration Statement
      have been sold or may be sold without volume restrictions pursuant to Rule
      144(k) as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Company's
      transfer agent and the affected Holders (the "Effectiveness Period").

            (b) The Registration Statements to be filed hereunder shall include
      100% of the Registrable Securities.

            (c) If: (i) a Registration Statement is not filed on or prior to its
      Filing Date (if the Company files a Registration Statement without
      affording the Holder the opportunity to review and comment on the same as
      required by Section 3(a), the Company shall not be deemed to have
      satisfied clause (i)), or (ii) the Company fails to file with the
      Commission a request for acceleration in accordance with Rule 461
      promulgated under the Securities Act, within five Trading Days of the date
      that the Company is notified (orally or in writing, whichever is earlier)
      by the Commission that a Registration Statement will not be "reviewed," or
      not subject to further review, or (iii) prior to its Effective Date, the
      Company fails to file a pre-effective amendment and otherwise respond in
      writing to comments made by the Commission in respect of such Registration
      Statement within 20 Trading Days after the receipt of comments by or
      notice from the Commission that such amendment is required in order for a
      Registration Statement to be declared effective, or (iv) a Registration
      Statement filed or required to be filed hereunder is not declared
      effective by the Commission by its Effectiveness Date, or (v) after the
      Effective Date, a Registration Statement ceases for any reason to remain
      continuously effective as to all Registrable Securities for which it is
      required to be effective, or the Holders are not permitted to utilize the
      Prospectus therein to resell such Registrable Securities for 5 consecutive
      Trading Days or in any individual case an aggregate of 10 Trading Days
      during any 12 month period (which need not be consecutive Trading Days)
      (any such failure or breach being referred to as an "Event", and for
      purposes of clause (i) or (iv) the date on which such Event occurs, or for
      purposes of clause (ii) the date on which such five Trading Day period is
      exceeded, or for purposes of clause (iii) the date which such 20 Trading
      Day period is exceeded, or for purposes of clause (v) the date on which
      such 5 or 10 Trading Day period, as applicable, is exceeded being referred
      to as

                                       3
<PAGE>
      "Event Date"), then, on each such Event Date and every monthly anniversary
      thereof until the applicable Event is cured, the Company shall pay to each
      Holder an amount in cash, as liquidated damages and not as a penalty,
      equal to 2.0% of (i) the purchase price paid by such Holder pursuant to
      the Purchase Agreement, and (ii) if the Warrants are "in the money", the
      value of any outstanding Warrants (valued at the difference between the
      average VWAP during the applicable month and the Exercise Price multiplied
      by the number of shares of Common Stock the Warrants are exercisable into)
      for the first month following such Event Date and 2.0% per month
      thereafter; provided, however, that in the event that the Company is
      negotiating a merger, consolidation, acquisition or sale of all or
      substantially all of its assets or a similar transaction and in the
      written opinion of counsel to the Company, the underlying Shares
      Registration Statement would be required to be amended to include
      information concerning such transactions or the parties thereto that is
      not available or may not be publicly disclosed at the time, the Company
      shall be permitted an additional 10 non-consecutive Trading Days under
      clause (v) above during any 12 month period relating to such an event;
      provided, further, the Company must give the Holders notice in writing
      promptly upon knowledge that such an Event will occur (without indicating
      the nature of such Event) and such notice must be acknowledged in writing
      by each Holder. If the Company fails to pay any liquidated damages
      pursuant to this Section in full within seven days after the date payable,
      the Company will pay interest thereon at a rate of 18% per annum (or such
      lesser maximum amount that is permitted to be paid by applicable law) to
      the Holder, accruing daily from the date such liquidated damages are due
      until such amounts, plus all such interest thereon, are paid in full and
      at the option of the Holder, such liquidated damages be paid in shares of
      Common Stock under the Warrant. The liquidated damages pursuant to the
      terms hereof shall apply on a pro-rata basis for any portion of a month
      prior to the cure of an Event.

         3. Registration Procedures

            In connection with the Company's registration obligations hereunder,
      the Company shall:

            (a) Not less than five Business Days prior to the filing of each
      Registration Statement or any related Prospectus or any amendment or
      supplement thereto (including any document that would be incorporated or
      deemed to be incorporated therein by reference), the Company shall, (i)
      furnish to the Holders and their Special Counsel copies of all such
      documents proposed to be filed, which documents (other than those
      incorporated or deemed to be incorporated by reference) will be subject to
      the review of such Holders and their Special Counsel, and (ii) cause its
      officers and directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall
      not file the Registration Statement or any such Prospectus or any
      amendments or supplements thereto to which the Holders of a majority of
      the Registrable Securities and their Special Counsel shall reasonably
      object, provided, the Company is notified of such objection no

                                       4
<PAGE>
      later than 5 Business Days after the Holders have been so furnished copies
      of such documents.

            (b) (i) Prepare and file with the Commission such amendments,
      including post-effective amendments, to a Registration Statement and the
      Prospectus used in connection therewith as may be necessary to keep a
      Registration Statement continuously effective as to the applicable
      Registrable Securities for the Effectiveness Period and prepare and file
      with the Commission such additional Registration Statements in order to
      register for resale under the Securities Act all of the Registrable
      Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible, and in any event within 15 days, to any comments
      received from the Commission with respect to a Registration Statement or
      any amendment thereto and as promptly as reasonably possible provide the
      Holders true and complete copies of all correspondence from and to the
      Commission relating to a Registration Statement; and (iv) comply in all
      material respects with the provisions of the Securities Act and the
      Exchange Act with respect to the disposition of all Registrable Securities
      covered by a Registration Statement during the applicable period in
      accordance with the intended methods of disposition by the Holders thereof
      set forth in such Registration Statement as so amended or in such
      Prospectus as so supplemented.

            (c) If the number of Registrable Securities issuable at any time
      exceeds 85% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file an additional
      Registration Statement covering the resale of by the Holders of not less
      than 100% of the number of Registrable Securities required in order that
      all Underlying Shares and all Warrant Shares issuable upon exercise of the
      Warrants would then be registered in accordance with this Agreement.

            (d) Notify the Holders of Registrable Securities to be sold and
      their Special Counsel as promptly as reasonably possible (and, in the case
      of (i)(A) below, not less than five Business Days prior to such filing)
      and (if requested by any such Person) confirm such notice in writing no
      later than one Business Day following the day (i)(A) when a Prospectus or
      any Prospectus supplement or post-effective amendment to a Registration
      Statement is proposed to be filed; (B) when the Commission notifies the
      Company whether there will be a "review" of such Registration Statement
      and whenever the Commission comments in writing on such Registration
      Statement (the Company shall provide true and complete copies thereof and
      all written responses thereto to each of the Holders); and (C) with
      respect to a Registration Statement or any post-effective amendment, when
      the same has become effective; (ii) of any request by the Commission or
      any other Federal or state governmental authority for amendments or
      supplements to a Registration Statement or Prospectus or for additional
      information; (iii) of the issuance by the Commission of any stop order
      suspending the effectiveness of a Registration Statement covering any or
      all of the Registrable Securities or the initiation of any Proceedings for
      that purpose; (iv) if at any time any of the representations and
      warranties of the Company contained in any agreement contemplated hereby
      ceases to be true and correct in all material respects; (v) of the receipt
      by the Company of any notification with

                                       5
<PAGE>
      respect to the suspension of the qualification or exemption from
      qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (vi) of the occurrence of any event or passage of time that
      makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the
      Prospectus, as the case may be, it will not contain any untrue statement
      of a material fact or omit to state any material fact required to be
      stated therein or necessary to make the statements therein, in light of
      the circumstances under which they were made, not misleading.

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

            (f) Prior to any public offering of Registrable Securities, use its
      best efforts to register or qualify or cooperate with the selling Holders
      and their Special Counsel in connection with the registration or
      qualification (or exemption from such registration or qualification) of
      such Registrable Securities for offer and sale under the securities or
      Blue Sky laws of such jurisdictions within the United States as any Holder
      requests in writing, to keep each such registration or qualification (or
      exemption therefrom) effective during the Effectiveness Period and to do
      any and all other acts or things necessary or advisable to enable the
      disposition in such jurisdictions of the Registrable Securities covered by
      a Registration Statement; provided, that the Company shall not be required
      to qualify generally to do business in any jurisdiction where it is not
      then so qualified or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

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

            (h) Upon the occurrence of any event contemplated this Section 3, as
      promptly as reasonably possible, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or
      deemed to be incorporated therein by reference, and file any other
      required document so that, as thereafter delivered, neither a Registration
      Statement nor such Prospectus will contain an untrue statement of a
      material fact or omit to state a

                                       6
<PAGE>
      material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were
      made, not misleading.

            (i) Comply with all applicable rules and regulations of the
      Commission.

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

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

         4. Registration Expenses. All fees and expenses incident to the
      performance of or compliance with this Agreement by the Company shall be
      borne by the Company whether or not any Registrable Securities are sold
      pursuant to the Registration Statement. The fees and expenses referred to
      in the foregoing sentence shall include, without limitation, (i) all
      registration and filing fees (including, without limitation, fees and
      expenses (A) with respect to filings required to be made with the
      Principal Market on which the Common Stock is then listed for trading, and
      (B) in compliance with applicable state securities or Blue Sky laws
      (including, without limitation, fees and disbursements of counsel for the
      Company in connection with Blue Sky qualifications or exemptions of the
      Registrable Securities and determination of the eligibility of the
      Registrable Securities for investment under the laws of such jurisdictions
      as requested by the Holders), (ii) printing expenses (including, without
      limitation, expenses of printing certificates for Registrable Securities
      and of printing prospectuses requested by the Holders), (iii) messenger,
      telephone and delivery expenses, (iv) fees and disbursements of counsel
      for the Company and Special Counsel for the Holders (which fees of Special
      Counsel shall not exceed $7,500) and (v) fees and expenses of all other
      Persons retained by the Company in connection with the consummation of the
      transactions contemplated by this Agreement. In addition, the Company
      shall be responsible for all of its internal expenses incurred in
      connection with the consummation of the transactions contemplated by this
      Agreement (including, without limitation, all salaries and expenses of its
      officers and employees performing legal or accounting duties), the expense
      of any annual audit and the fees and expenses incurred in connection with
      the listing of the Registrable Securities on any securities exchange as
      required hereunder.

         5. Indemnification

            (a) Indemnification by the Company. The Company shall,
      notwithstanding any termination of this Agreement, indemnify and hold
      harmless each Holder, the officers,

                                       7
<PAGE>
      directors, agents, counsel, investment advisors and employees of each of
      them, each Person who controls any such Holder (within the meaning of
      Section 15 of the Securities Act or Section 20 of the Exchange Act) and
      the officers, directors, agents and employees of each such controlling
      Person, to the fullest extent permitted by applicable law, from and
      against any and all losses, claims, damages, liabilities, costs
      (including, without limitation, costs of preparation and attorneys' fees)
      and expenses (collectively, "Losses"), as incurred, arising out of or
      relating to any untrue or alleged untrue statement of a material fact
      contained in a Registration Statement, any Prospectus or any form of
      prospectus or in any amendment or supplement thereto or in any preliminary
      prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to
      make the statements therein (in the case of any Prospectus or form of
      prospectus or supplement thereto, in light of the circumstances under
      which they were made) not misleading, except to the extent, but only to
      the extent, that (1) such untrue statements or omissions or alleged untrue
      statements or omissions are based solely upon information regarding such
      Holder furnished in writing to the Company by such Holder expressly for
      use therein, or to the extent that such information relates to such Holder
      or such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in a Registration Statement, such Prospectus or such
      form of Prospectus or in any amendment or supplement thereto or (2) in the
      case of an occurrence of an event of the type specified in Section
      3(d)(ii)-(vi), the use by such Holder of an outdated or defective
      Prospectus after the Company has notified such Holder in writing that the
      Prospectus is outdated or defective and prior to the receipt by such
      Holder of the Advice contemplated in Section 6(e). The Company shall
      notify the Holders promptly of the institution, threat or assertion of any
      Proceeding of which the Company is aware in connection with the
      transactions contemplated by this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
      jointly, indemnify and hold harmless the Company, its directors, officers,
      agents, counsel and employees, each Person who controls the Company
      (within the meaning of Section 15 of the Securities Act and Section 20 of
      the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable
      law, from and against all Losses (as determined by a court of competent
      jurisdiction in a final judgment not subject to appeal or review) arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in any Registration Statement, any Prospectus, or any form of
      prospectus, or in any amendment or supplement thereto, or arising solely
      out of or based solely upon any omission of a material fact required to be
      stated therein or necessary to make the statements therein not misleading
      to the extent, but only to the extent, that such untrue statement or
      omission is contained in any information so furnished in writing by such
      Holder to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or to the extent that (1) such untrue
      statements or omissions are based solely upon information regarding such
      Holder furnished in writing to the Company by such Holder expressly for
      use therein, or to the extent that such information relates to such Holder
      or such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such

                                       8
<PAGE>
      form of Prospectus or in any amendment or supplement thereto or (2) such
      Holder's failure to comply with the prospectus delivery requirements of
      the Securities Act, including in the case of an occurrence of an event of
      the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an
      outdated or defective Prospectus after the Company has notified such
      Holder in writing that the Prospectus is outdated or defective and prior
      to the receipt by such Holder of the Advice contemplated in Section 6(e).
      In no event shall the liability of any selling Holder hereunder be greater
      in amount than the dollar amount of the net proceeds received by such
      Holder upon the sale of the Registrable Securities giving rise to such
      indemnification obligation.

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

            An Indemnified Party shall have the right to employ separate counsel
      in any such Proceeding and to participate in the defense thereof, but the
      fees and expenses of such counsel shall be at the expense of such
      Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
      in writing to pay such fees and expenses; or (2) the Indemnifying Party
      shall have failed promptly to assume the defense of such Proceeding and to
      employ counsel reasonably satisfactory to such Indemnified Party in any
      such Proceeding; or (3) the named parties to any such Proceeding
      (including any impleaded parties) include both such Indemnified Party and
      the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a conflict of interest is likely to exist if the same
      counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying
      Party in writing that it elects to employ separate counsel at the expense
      of the Indemnifying Party, the Indemnifying Party shall not have the right
      to assume the defense thereof and such counsel shall be at the expense of
      the Indemnifying Party). The Indemnifying Party shall not be liable for
      any settlement of any such Proceeding effected without its written
      consent, which consent shall not be unreasonably withheld. No Indemnifying
      Party shall, without the prior written consent of the Indemnified Party,
      effect any settlement of any pending Proceeding in respect of which any
      Indemnified Party is a party, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on
      claims that are the subject matter of such Proceeding.

                                       9
<PAGE>
            All fees and expenses of the Indemnified Party (including reasonable
      fees and expenses to the extent incurred in connection with investigating
      or preparing to defend such Proceeding in a manner not inconsistent with
      this Section) shall be paid to the Indemnified Party, as incurred, within
      ten Business Days of written notice thereof to the Indemnifying Party
      (regardless of whether it is ultimately determined that an Indemnified
      Party is not entitled to indemnification hereunder; provided, that the
      Indemnifying Party may require such Indemnified Party to undertake to
      reimburse all such fees and expenses to the extent it is finally
      judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder).

            (d) Contribution. If a claim for indemnification under Section 5(a)
      or 5(b) is unavailable to an Indemnified Party (by reason of public policy
      or otherwise), then each Indemnifying Party, in lieu of indemnifying such
      Indemnified Party, shall contribute to the amount paid or payable by such
      Indemnified Party as a result of such Losses, in such proportion as is
      appropriate to reflect the relative fault of the Indemnifying Party and
      Indemnified Party in connection with the actions, statements or omissions
      that resulted in such Losses as well as any other relevant equitable
      considerations. The relative fault of such Indemnifying Party and
      Indemnified Party shall be determined by reference to, among other things,
      whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact, has been taken or made by, or relates to information supplied by,
      such Indemnifying Party or Indemnified Party, and the parties' relative
      intent, knowledge, access to information and opportunity to correct or
      prevent such action, statement or omission. The amount paid or payable by
      a party as a result of any Losses shall be deemed to include, subject to
      the limitations set forth in Section 5(c), any reasonable attorneys' or
      other reasonable fees or expenses incurred by such party in connection
      with any Proceeding to the extent such party would have been indemnified
      for such fees or expenses if the indemnification provided for in this
      Section was available to such party in accordance with its terms.

            The parties hereto agree that it would not be just and equitable if
      contribution pursuant to this Section 5(d) were determined by pro rata
      allocation or by any other method of allocation that does not take into
      account the equitable considerations referred to in the immediately
      preceding paragraph. Notwithstanding the provisions of this Section 5(d),
      no Holder shall be required to contribute, in the aggregate, any amount in
      excess of the amount by which the proceeds actually received by such
      Holder from the sale of the Registrable Securities subject to the
      Proceeding exceeds the amount of any damages that such Holder has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission.

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

         6. Miscellaneous

                                       10
<PAGE>
            (a) Amendments and Waivers. The provisions of this Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented, and waivers or consents to departures from the provisions
      hereof may not be given, unless the same shall be in writing and signed by
      the Company and the Holders of at least two-thirds of the then outstanding
      Registrable Securities. Notwithstanding the foregoing, a waiver or consent
      to depart from the provisions hereof with respect to a matter that relates
      exclusively to the rights of Holders and that does not directly or
      indirectly affect the rights of other Holders may be given by Holders of
      at least a majority of the Registrable Securities to which such waiver or
      consent relates; provided, however, that the provisions of this sentence
      may not be amended, modified, or supplemented except in accordance with
      the provisions of the immediately preceding sentence.

            (b) No Inconsistent Agreements. Neither the Company nor any of its
      subsidiaries has entered, as of the date hereof, nor shall the Company or
      any of its subsidiaries, on or after the date of this Agreement, enter
      into any agreement with respect to its securities, that would have the
      effect of impairing the rights granted to the Holders in this Agreement or
      otherwise conflicts with the provisions hereof. Except as and to the
      extent specified in the Disclosure Schedule to the Purchase Agreement,
      neither the Company nor any of its subsidiaries has previously entered
      into any agreement granting any registration rights with respect to any of
      its securities to any Person that have not been satisfied in full.

            (c) No Piggyback on Registrations. Except as and to the extent
      specified in the Disclosure Schedule attached to the Purchase Agreement,
      neither the Company nor any of its security holders (other than the
      Holders in such capacity pursuant hereto) may include securities of the
      Company in the Registration Statement other than the Registrable
      Securities, and the Company shall not after the date hereof enter into any
      agreement providing any such right to any of its security holders.

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

            (e) Discontinued Disposition. Each Holder agrees by its acquisition
      of such Registrable Securities that, upon receipt of a notice from the
      Company of the occurrence of any event of the kind described in Sections
      3(d), such Holder will forthwith discontinue disposition of such
      Registrable Securities under a Registration Statement until such Holder's
      receipt of the copies of the supplemented Prospectus and/or amended
      Registration Statement contemplated by Section 3(h), or until it is
      advised in writing (the "Advice") by the Company that the use of the
      applicable Prospectus may be resumed, and, in either case, has received
      copies of any additional or supplemental filings that are incorporated or
      deemed to be incorporated by reference in such Prospectus or Registration
      Statement. The Company may provide appropriate stop orders to enforce the
      provisions of this paragraph. The Company agrees and acknowledges that any
      periods during which the Holder is required to discontinue the disposition
      of the Registrable Securities hereunder shall be subject to the provisions
      of Section 2(c).

                                       11
<PAGE>
            (f) Piggy-Back Registrations. If at any time during the
      Effectiveness Period there is not an effective Registration Statement
      covering all of the Registrable Securities and the Company shall determine
      to prepare and file with the Commission a registration statement relating
      to an offering for its own account or the account of others under the
      Securities Act of any of its equity securities, other than on Form S-4 or
      Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in
      connection with any acquisition of any entity or business or equity
      securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall send to each Holder written notice
      of such determination and, if within fifteen days after receipt of such
      notice, any such Holder shall so request in writing, the Company shall
      include in such registration statement all or any part of such Registrable
      Securities such holder requests to be registered; provided, that, the
      Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(f) that are eligible for resale pursuant to
      Rule 144(k) promulgated under the Securities Act.

            (g) Notices. Any and all notices or other communications or
      deliveries required or permitted to be provided hereunder shall be
      delivered as set forth in the Purchase Agreement.

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

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

            (j) Governing Law. All questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be
      governed by and construed and enforced in accordance with the internal
      laws of the State of New York, without regard to the principles of
      conflicts of law thereof. Each party hereby irrevocably submits to the
      exclusive jurisdiction of the state and federal courts sitting in the City
      of New York, borough of Manhattan, for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated
      hereby or discussed herein, and hereby irrevocably waives, and agrees not
      to assert in any suit, action or proceeding, any claim that it is not
      personally subject to the jurisdiction of any such court, that such suit,
      action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any
      such suit, action or proceeding by

                                       12
<PAGE>
      mailing a copy thereof to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute
      good and sufficient service of process and notice thereof. Nothing
      contained herein shall be deemed to limit in any way any right to serve
      process in any manner permitted by law. Each party hereto hereby
      irrevocably waives, to the fullest extent permitted by applicable law, any
      and all right to trial by jury in any legal proceeding arising out of or
      relating to this Agreement or the transactions contemplated hereby. If
      either party shall commence a Proceeding to enforce any provisions of this
      Agreement, then the prevailing party in such Proceeding shall be
      reimbursed by the other party for its attorneys fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of
      such Proceeding.

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

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

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

            (n) Independent Nature of Purchasers' Obligations and Rights. The
      obligations of each Purchaser hereunder is several and not joint with the
      obligations of any other Purchaser hereunder, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser hereunder. Nothing contained herein or in any other agreement or
      document delivered at any closing, and no action taken by any Purchaser
      pursuant hereto or thereto, shall be deemed to constitute the Purchasers
      as a partnership, an association, a joint venture or any other kind of
      entity, or create a presumption that the Purchasers are in any way acting
      in concert with respect to such obligations or the transactions
      contemplated by this Agreement. Each Purchaser shall be entitled to
      protect and enforce its rights, including without limitation the rights
      arising out of this Agreement, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose.

                              ********************

                                       13
<PAGE>
      IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                   AUTHENTIDATE HOLDING CORP.

                                   By: ____________________________________
                                       Name:
                                       Title:

                                   OMICRON MASTER TRUST
                                   By: Omicron Capital L.P., as subadvisor
                                   By: Omicron Capital Inc., its general partner

                                   By: ____________________________________
                                         Name:  Bruce Bernstein
                                         Title: President

                                   MIDSUMMER INVESTMENT, LTD.

                                   By: _____________________________________
                                         Name:
                                         Title:

                                   ISLANDIA, L.P.

                                   By: _____________________________________
                                          Name:
                                          Title:

                     [PURCHASER SIGNATURE PAGE RR CONTINUES]

                                       14
<PAGE>
                                   PURCHASERS SIGNATURE PAGE RR (CONT. . . )

                                   __________________________
                                   J. David Luce

                                   GREENER FAIRWAYS, INC.

                                   By: ______________________
                                           Name:
                                           Title:

                                   __________________________
                                   James M. Temple

                                   J&C RESOURCES, LLC

                                   By: ______________________
                                           Name:
                                           Title:

                                   __________________________
                                   Ronald Deutsch

                                       15
<PAGE>
LAGUNITAS PARTNERS, LP                      Address for Notice:

By: ______________________
      Name:
      Title:

GRUBER & MCBAINE INTERNATIONAL              Address for Notice:

By: ______________________
      Name:
      Title:

JON & LINDA GRUBER                          Address for Notice:

__________________________

                                       16
<PAGE>
                              PLAN OF DISTRIBUTION

            The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

      -     ordinary brokerage transactions and transactions in which the
            broker-dealer solicits purchasers;

      -     block trades in which the broker-dealer will attempt to sell the
            shares as agent but may position and resell a portion of the block
            as principal to facilitate the transaction;

      -     purchases by a broker-dealer as principal and resale by the
            broker-dealer for its account;

      -     an exchange distribution in accordance with the rules of the
            applicable exchange;

      -     privately negotiated transactions;

      -     short sales

      -     broker-dealers may agree with the Selling Stockholders to sell a
            specified number of such shares at a stipulated price per share;

      -     a combination of any such methods of sale; and

      -     any other method permitted pursuant to applicable law.

      The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.

      The selling stockholder may from time to time pledge or grant a security
interest in some or all of the Shares or common stock or Warrant owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to

                                       17
<PAGE>
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.

      The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.

      The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders have
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.

      The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

                                       18

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