Document:

EXHIBIT 10.78
                                                                   -------------

                       NORTH COAST SECURITIES CORPORATION
                           100 SPEAR STREET, SUITE 850
                             SAN FRANCISCO, CA 94105

                                  July 31, 2003

Performance Health Technologies, Inc.
Second Floor
6654 Gunpark Drive
Boulder, Colorado 80301

Attn: Marc R. Silverman
      CEO, President & Director

Dear Marc:

We are pleased to confirm our mutual understanding regarding the retention of
North Coast Securities Corporation ("Agent") by Performance Health Technologies,
Inc. (collectively with its affiliates, the "Company"), subject to the terms and
conditions of this agreement (the "Agreement").

1. Agent will act as the Company's Agent in connection with the private
placement of up to 3,700 Units at a price of $1,000 per Unit. Each Unit will
consist of an 8.5% Convertible Note of the Company in the principal amount of
$1,000 and 250 shares of the Company's Common Stock. The Units, 8.5% Convertible
Notes, and Common Stock will be collectively referred to as the "Securities."
The Units will be issued only to accredited investors (as defined in Rule 501
under the Securities Act of 1933, as amended), on terms mutually agreeable
between the parties hereto, certain of which terms are set forth on Exhibit A,
annexed hereto and incorporated herein by reference (such private placement
referred to as the "Offering"). The Offering will be made on a best efforts
basis subject to the terms and conditions set forth herein. Agent will act as
the non-exclusive Agent for the Offering and sale of the Securities constituting
the Offering.

2. Agent will provide the Company with the following services in connection with
the Offering:

     A.   Assisting the Company in preparation of an Offering Memorandum and
          related materials in connection with the Offering, and acting as the
          Agent in connection with such Offering;

     B.   Coordinating the marketing effort for the sale of the Securities;

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Performance Health Technologies, Inc.
July 31, 2003
Page 2

     C.   Assisting the Company in formulating transaction terms and in
          preparing transaction documents, including those evidencing the terms
          of the Securities;

     D.   Assisting the Company in negotiating transaction terms with potential
          investors in the Securities; and

     E.   Providing such other advice, assistance or services as may be
          reasonably requested by the Company in connection with the Offering
          and as mutually agreed upon by Agent and the Company.

3. Agent's compensation for acting as Agent for the Company in connection with
the Offering pursuant to this Agreement will be as follows:

     A.   A fee equal to 10% of the gross proceeds raised in the Offering by
          Agent (the "Offering Amount"), payable on the Offering Amount
          subscribed for and accepted at each Closing of the Offering, PROVIDED,
          HOWEVER, no fee will be payable with respect to the conversion of
          principal and interest due under Company's Note dated December 31,
          2001 payable to The Holding Company in the principal amount of
          $350,000 (the "THC Note"), it being understood the conversion of the
          THC Note shall occur on the first closing of the Offering.

     B.   Warrants to purchase up to 75 shares of Common Stock for each Unit
          sold by Agent at each Closing, such Warrants to be exercisable for
          three years after the Closing at an exercise price of $1.50 per share
          of Common Stock (the "Warrants"). The Warrants will contain weighted
          average anti-dilution provisions, cashless exercise provisions, and
          other terms and conditions customary to the warrants previously issued
          by the Company to Agent. The Warrants and any Securities underlying
          them issued to Agent and/or its designees will have customary demand
          and "piggy-back" registration rights.

     C.   At each Closing of the Offering, the Company shall pay to Agent, a
          non-accountable expense allowance in the amount equal to 2% of the
          Offering Amount subscribed for and accepted at that Closing; PROVIDED,
          HOWEVER, no fee will be payable with respect to the conversion of
          principal and interest due under the THC Note.

     D.   A fee payable upon execution of this Agreement in the amount of
          $20,000.

4. The Company will pay all expenses incurred by or on behalf of the Company in
connection with the preparation and printing of the Offering Memorandum, the
certificates for

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Performance Health Technologies, Inc.
July 31, 2003
Page 3

the Securities, blue sky filings and fees and all other documents and
instruments required in connection with the Offering. PROVIDED, the legal
expenses incurred by Agent in the preceding sentence for which the Company shall
be responsible to Agent for shall be to the extent of only $25,000.

5. The Company represents that its capitalization is currently as follows:

     Common Stock Issued and
     Outstanding                      32,399,311 shares.

     Stock Options                    6,000,000 shares to be issued upon
                                      exercise of Options issued or to be
                                      issued under the Company's Stock Option
                                      Plan. Options to purchase 3,973,355
                                      shares of Common Stock currently
                                      outstanding.

     Warrants                         Up to 12,428,700 shares of
                                      Common Stock issuable upon
                                      exercise of warrants.

The Company will have the same capitalization on the date hereof as immediately
prior to the Offering, except the Company may issue shares of its common stock
upon the exercise of any of the foregoing options and warrants.

6. During the period of two years from the signing of this Agreement:

     A.   If the Company receives a bona fide offer from a financial advisor or
          manager for a proposed financing transaction, Agent will have the
          option to serve as the Company's financial advisor or manager for the
          proposed financing transaction under the terms set forth in the offer.
          Agent will have 20 business days in which to exercise its option after
          the bona fide offer has been communicated to Agent in writing. Failure
          to notify the Company in writing of Agent's election to exercise the
          option within such 20-day period shall be deemed a failure to exercise
          the option and the Company shall be entitled to accept the offer
          without further obligation to Agent with respect to the proposed
          financing transaction.

     B.   The Company may offer to retain Agent as its financial advisor or
          manager with respect to a proposed financing transaction by notifying
          Agent in writing of the

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Performance Health Technologies, Inc.
July 31, 2003
Page 4

          proposed financing transaction and the proposed compensation to Agent
          in connection therewith. Agent shall have 20 business days in which to
          accept or reject the offer. Failure to notify the Company in writing
          of Agent's acceptance of the offer within such 20-day period shall be
          deemed a rejection of the offer and the Company shall be entitled to
          enter into arrangements with other financial advisors or managers with
          respect to the proposed financing transaction, subject to Agent's
          right of first refusal under Section 6.A. above.

     C.   After closing of the Offering and at the option of Agent, management
          of the Company will use reasonable efforts to increase the size of the
          Company's Board of Directors by one and to cause such additional seat
          to be filled by a nominee of Agent who is reasonably acceptable to
          management of the Company.

7. In connection with Agent's activities on the Company's behalf, the Company
will cooperate with Agent and will furnish Agent with all information and data
concerning the Company which Agent reasonably believes appropriate to the
performance of services contemplated by this Agreement (all such information so
furnished being the "Information") and will provide Agent with reasonable access
to the Company's officers, directors, employees, independent accountants and
legal counsel. The Company recognizes and confirms that Agent (i) will use and
rely primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by the
Agreement, without having independently verified same, (ii) does not assume
responsibility for the accuracy or completeness of the Information and such
other information and (iii) will not make an independent appraisal of any of the
Company's assets. The Information to be furnished by the Company, when
delivered, will be, to the best of the Company's knowledge, true and correct in
all material respects and will not contain any material misstatements of fact or
omit to state any material fact necessary to make the statements contained
therein not misleading. The Company will promptly notify Agent if it learns of
any material inaccuracy or misstatement in, or material omission from any
information thereto delivered to Agent. Agent agrees to keep the Information
confidential and only to release the Information with the consent of the Company
(except for such Information as set forth in the Offering memorandum). At the
Closing, the Company shall deliver to Agent an officer certificate and opinion
of counsel reasonably acceptable to the Company and Agent. If the transaction
contemplated by this Agreement is not completed for whatever reason, Agent will
return the Information (without keeping any copies thereof) forthwith on demand
by the Company. Agent on its part represents, warrants, and agrees that it has
and at all times while it is performing services under this Agreement it will
comply with all laws, rules, and regulations applicable to it in connection with
the services it performs under this Agreement, such compliance to include all
licenses in all applicable jurisdictions it and its agents are required to
maintain for purposes of its activities under this Agreement.

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Performance Health Technologies, Inc.
July 31, 2003
Page 5

8. It is understood that the Company hereby engages Agent on a non-exclusive
basis to act as Agent in connection with the Offering for a six-month period
(the "Term") commencing on the execution hereof; provided, however, that the
Term shall be automatically renewed for successive six-month periods unless
either party gives notice to the other within 60 but not less than 30 days prior
to the expiration of the Term or any successive six-month period, if applicable,
of its desire that this engagement expire. It is expressly understood that the
provisions relating to the payment of fees and expenses and indemnification will
survive any such termination or expiration of this Agreement or completion of
Agent services. Notwithstanding the foregoing, either party may terminate this
Agreement upon 30 days prior written notice. In the event the Company terminates
this Agreement and the effective date of such termination is prior to the
expiration of the Term or any aforementioned, successive six-month period
(except if such termination is the result of Agent's inability to consummate the
Offering), the Company hereby agrees to pay Agent a termination fee (a
"Termination Fee"), equal to $75,000 plus any and all amounts payable to Agent
pursuant to Section 4 hereof. In addition, in the event there has been a
material adverse change affecting the Company, Agent may terminate this
Agreement forthwith upon notice to the Company, notwithstanding the 30 day
notice requirement set forth above. The parties hereto hereby further agree that
in the event the Company terminates this Agreement and the effective date of
such termination is prior to the expiration of the Term or any aforementioned,
successive six-month period, and in the event the Company consummates a
transaction within 12 months after the effective date of such termination with
any person (the "Investor"), who was directly or indirectly introduced to the
Company by Agent and had not theretofore had a relationship as an employee,
stockholder, lender, or officer of the Company, the Company shall pay to Agent
the compensation payable hereunder (not theretofore paid) with respect only
however to the amount of gross proceeds raised from such Investor. Agent will
bear the burden of demonstrating, to the Company's reasonable satisfaction, that
a particular Investor was introduced by or through Agent to the Company.

9. The Company agrees that Agent has the right to place "tombstone" or other
advertisements describing its services to the Company under this Agreement in
financial and other newspapers and journals, provided the Company consents to
the same, and which consent shall not be unreasonably withheld, and provided
further that any such advertisement complies with applicable law.

10. The Company agrees to indemnify Agent in accordance with the indemnification
provisions (the "Indemnification Provisions") attached to this Agreement, as
Exhibit B, and which Indemnification Provisions are incorporated herein and made
a part hereof and which shall survive the termination or expiration of this
Agreement.

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Performance Health Technologies, Inc.
July 31, 2003
Page 5

11. The validity and interpretation of this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
applicable to agreements made and to be fully performed therein (excluding the
conflicts of laws rules).

12. The benefits of this Agreement shall inure to the parties hereto, their
respective successors and assigns and to the indemnified parties hereunder and
their respective successors and assigns and representatives, and the obligations
and liabilities assumed in this Agreement by the parties hereto shall be binding
upon their respective successors and assigns.

13. Each of the Company and Agent (and, to the extent permitted by law, on
behalf of their respective equity holders and creditors) hereby knowingly,
voluntarily and irrevocably waives any right it may have to a trial by jury in
respect of any claim based upon, arising out of or in connection with this
Agreement and the transactions contemplated hereby. Each of the Company and
Agent hereby certify that no representative or agent of the other party has
represented expressly or otherwise that such party would not seek to enforce the
provisions of this waiver. Further each of the Company and Agent acknowledges
that each party has been induced to enter this Agreement by, inter alia, the
provisions of this Section.

14. If it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired
and shall remain in full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of such invalid
or unenforceable term or provision.

15. This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any and all prior agreements, arrangements and
understanding relating to the matters provided for herein. No alteration,
waiver, amendment, change or supplement hereto shall be binding or effective
unless the same is set forth in writing signed by a duly authorized
representative of each party.

16. The Company has all requisite corporate power and authority to enter into
this Agreement and the transactions contemplated hereby. This Agreement has been
duly and validly authorized by all necessary corporate action on the part of the
Company and has been duly executed and delivered by the Company and constitutes
a legal, valid and binding agreement of the Company, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws).

17. Agent has all requisite corporate power and authority to enter into this
Agreement, once executed by Agent's Officers. This Agreement has been duly and
validly authorized by all

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Performance Health Technologies, Inc.
July 31, 2003
Page 7

necessary corporate action on the part of Agent and has been duly executed and
delivered by Agent and constitutes a legal, valid and binding agreement of
Agent, enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws).

18. This Agreement does not create, and shall not be construed as creating,
rights enforceable by any person or entity not a party hereto, except those
entitled thereto by virtue of the Indemnification Provisions hereof. The Company
acknowledges and agrees that with respect to the services to be rendered by
Agent, Agent is not and shall not be construed as a fiduciary of the Company and
shall have no duties or liabilities to the equity holders or creditors of the
Company or any other person by virtue of this Agreement and the retention of
Agent hereunder, all of which are hereby expressly waived. The Company also
agrees that Agent shall not have any liability (including without limitation,
liability for losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses or disbursements resulting from any
negligent act or omission of Agent, whether direct or indirect, in contract,
tort or otherwise) to the Company or to any person (including, without
limitation, equity holders and creditors of the Company) claiming through the
Company for or in connection with the engagement of Agent, this Agreement and
the transactions contemplated hereby, except for liabilities which arise as a
result of the gross negligence or willful misconduct of Agent. The Company
acknowledges that Agent was induced to enter into this Agreement by, INTER ALIA,
the provisions of this Section.

19. For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall be,
and shall be deemed to be, an original instrument, but all such counterparts
taken together shall constitute one and the same Agreement.

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Performance Health Technologies, Inc.
July 31, 2003
Page 8

     If the foregoing correctly sets forth our agreement, we would appreciate
your signing the enclosed copy of this letter in the space provided and
returning it to us.

                                          Very truly yours,

                                          NORTH COAST SECURITIES CORPORATION

                                          By:
                                          Name: ________________________
                                          Title: _______________________

Confirmed and agreed to
this _____ day of July, 2003

PERFORMANCE HEALTH TECHNOLOGIES, INC.

By: __________________________
    Marc R. Silverman
    CEO, President & Director

<PAGE>

                                    EXHIBIT A

                      SUMMARY OF CERTAIN TERMS OF OFFERING

Offering Price                   $1,000 per Unit.

Units                            Each Unit will consist of an 8.5% Convertible
                                 Note (the "Convertible Note") in the principal
                                 amount of $1,000 and 250 shares of the
                                 Company's Common Stock.

Convertible Notes                The Convertible Notes will be issued in
                                 increments of $1,000. The principal balance of
                                 each Convertible Note will be payable on the
                                 fifth anniversary of the closing with respect
                                 to the Convertible Note. The holder of each
                                 Convertible Note may elect to convert the
                                 principal and interest of the Convertible Note
                                 into shares of Common Stock at the rate of one
                                 share per $2.00 converted. Each Convertible
                                 Note will bear interest at 8.5% per annum which
                                 will be payable annually at the option of the
                                 Company in cash, Common Stock (at the rate of
                                 one share per $2.00 of interest paid with
                                 Common Stock), or a combination of cash and
                                 Common Stock.

Minimum                          Closing $1,000,000 (which amount includes the
                                 Units issued in connection with the conversion
                                 of the principal and interest under the THC
                                 Note).

Maximum Closing                  $3,700,000.

Agent Fees

     o    Commission             10% commission (no commission on the conversion
                                 of the THC Note).

     o    Expenses               Non-accountable expense allowance in the amount
                                 equal to 2% of the Offering Amount (no expenses
                                 on the conversion of the THC Note)

     o    Warrants               Warrants to purchase 75 shares of Common Stock
                                 per Unit at $1.50 per share.

                                       A-1
<PAGE>

     o    Fee                    $20,000

     o                           Legal Fees The Company will pay up to $25,000
                                 of the legal fees incurred by Agent in
                                 connection with the Offering.

Qualified Investors              Accredited investors only.

Other                            Terms The following will require the mutual
                                 consent of the Company and Agent: (i) closing
                                 of the offering; (ii) waiver of the minimum;
                                 and (iii) extension of the term of the
                                 offering.

                                       A-2
<PAGE>

                                    EXHIBIT B

                           INDEMNIFICATION PROVISIONS

     Capitalized terms used herein that are not defined in these indemnification
provisions ("Indemnification Provisions") have the meaning set forth in the
engagement letter agreement dated July 31, 2003, between North Coast Securities
Corporation ("Agent") and Performance Health Technologies, Inc., as such a
agreement may be amended from time to time (the "Agreement").

     The Company agrees to indemnify and hold harmless Agent, to the fullest
extent permitted by law, from and against any and all losses, claims, damages,
liabilities, obligations, penalties, judgments, awards, costs, expenses and
disbursements (and any and all actions, suits, proceedings and investigations in
respect thereof and any and all legal and other costs, expenses and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, suit, proceeding or investigation (whether or not in connection
with litigation in which Agent is a party), directly or indirectly, caused by,
relating to, based upon, arising out of or in connection with (a) Agent's acting
for the Company, including, without limitation, any act or omission by Agent in
connection with its acceptance of or the performance or nonperformance of its
obligations under the Agreement, (b) any untrue statement or alleged untrue
statement of a material fact contained in, or omissions or alleged omissions
from, the Offering memorandum or similar statements or omissions in or from any
other information furnished to Agent by the Company or (c) any Offering;
provided, however, such indemnity agreement shall not apply to any portion of
any such loss, claim, damage, obligation, penalty, judgment, award, liability,
cost, expense or disbursement to the extent it is found in a final judgment by a
court of competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of Agent.

     These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to Agent or the persons indemnified below
in this sentence and shall extend to the following Agent its affiliated
entities, directors, officers, employees, legal counsel, agents and controlling
persons (within the meaning of the federal securities laws). All references to
Agent in these Indemnification Provisions shall be understood to include any and
all of the foregoing.

     If any action, suit, proceeding or investigation is commenced, as to which
Agent proposes to demand indemnification, it shall notify the Company with
reasonable promptness; provided, however, that the Company shall be relieved
from its obligations hereunder to the extent a failure by Agent to notify the
Company with reasonable promptness results in a significant increase in the
Company's obligations hereunder. Agent shall have the right to retain counsel of
its own choice to represent it, which counsel shall be reasonably acceptable to
the Company, and the Company shall pay the fees, expenses and disbursements of
such counsel; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Company and

                                       B-1
<PAGE>

any counsel designated by the Company. The Company shall be liable for any
settlement of any claim against Agent made with the Company's written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the prior written consent of Agent, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof, unless such
settlement, compromise or consent includes, as an unconditional term thereof,
the giving by the claimant to Agent of an unconditional and irrevocable release
from all liability in respect of such claim.

     In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and Agent, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Agent, on the other hand, and also the relative
fault of the Company, on the one hand, and Agent, on the other hand, in
connection with the statement, acts or omissions which resulted in such losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses or disbursements and the relevant equitable considerations shall also
be considered. No person found liable for a fraudulent misrepresentation shall
be entitled to contribution from any person who is not also found liable for
such fraudulent misrepresentation. Notwithstanding the foregoing, Agent shall
not be obligated to contribute any amount hereunder that exceeds the amount of
fees previously received by Agent pursuant to the Agreement.

     Neither termination nor completion of the engagement of Agent referred to
above shall affect these Indemnification Provisions which shall then remain
operative and in full force and effect.

                                       B-2EXHIBIT 10.79
                                                                   -------------

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of August 17, 2001 by and between SportsTrac Systems, Inc., a Delaware
corporation (the "Company"), and First Allied Securities, Inc., a New York
corporation (the "Investor").

                                  INTRODUCTION

         The Company executed in favor of the Investor a Warrant dated the date
hereof between the Company and the Investor, the form of which is attached
hereto as Exhibit A (the "Warrant Agreement"), pursuant to which the Investor
may acquire from the Company certain units of the Company's securities, which
units are composed of Common Stock and certain other warrants to purchase Common
Stock (the Warrant Agreement and the certain other warrants underlying the units
are hereinafter referred to as the "Warrants"). This Agreement has been executed
and delivered pursuant to the Warrant Agreement.

         1. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:

         Commission: The Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.

         Common Stock: The shares of Common Stock, par value $0.01 per share, of
the Company as existing on the date hereof.

         Company: As defined in the first paragraph of this Agreement.

         Exchange Act: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. Reference to a particular section of
the Exchange Act shall include a reference to the comparable section, if any, of
any such similar Federal statute.

         Form S-3: Form S-3 or any comparable or successor form or forms adopted
under the Securities Act.

         Holder: Any Investor who holds Registrable Securities and any holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 8 hereof.

         Initiating Holders: Any holder or holders of Registrable Securities
holding greater than or equal to 25% of the Registrable Securities (by number of
shares at the time issued and outstanding) and initiating a request pursuant to
Section 2.1 hereof for the registration of all or part of such holder's or
holders' Registrable Securities.

         Other Stockholders: Persons other than Holders who, by virtue of
agreements with the Company, are entitled or permitted to include their
securities in certain registrations hereunder.
<PAGE>

         Person: A corporation, an association, a partnership, an organization,
business, an individual, a governmental or political subdivision thereof or a
governmental agency.

         Registrable Securities: (a) any shares of Common Stock issued or
issuable pursuant to the Warrant Agreement (including without limitation shares
issued or issuable upon exercise of the Warrants whether issued on the date
hereof or hereafter pursuant to a right in the Warrant Agreement) and (b)
securities issued or issuable with respect to any Common Stock referred to in
the foregoing subdivision (a) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) they shall have
been distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (iv) they shall have ceased to be
outstanding.

         register, registered and registration: These terms shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

         Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2 hereof, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, the reasonable fees and
disbursements of not more than one counsel retained collectively by the holder
or holders of more than 50% of the Registrable Securities being registered, and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts, commissions, and
non-accountable expense allowance and transfer taxes, if any, provided that, in
any case where Registration Expenses are not to be borne by the Company, such
expenses shall not include salaries of the Company personnel or general overhead
expenses of the Company, auditing fees, premiums or other expenses relating to
liability insurance required by underwriters of the Company or other expenses
for the preparation of financial statements or other data normally prepared by
the Company in the ordinary course of its business or which the Company would
have incurred in any event.

         Securities Act: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. References to a particular section of the
Securities Act shall include a reference to the comparable section, if any, of
any such similar Federal statute.

                                       2
<PAGE>

          2.       Registration under Securities Act, etc.

          2.1      Demand Registration.

          (a) Request. Upon the written request of one or more Initiating
Holders requesting that the Company effect the registration under the Securities
Act of all or part of such Initiating Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect the registration under the Securities Act of:

                  (i) the Registrable Securities which the Company has been so
         requested to register by such Initiating Holders for disposition in
         accordance with the intended method of disposition stated in such
         request;

                  (ii) all other Registrable Securities the holders of which
         shall have made a written request to the Company for registration
         thereof within 30 days after the giving of such written notice by the
         Company (which request shall specify the intended method of disposition
         of such Registrable Securities); and

                  (iii) all shares of Common Stock which the Company and any
         Other Stockholders may elect to register in connection with the
         offering of Registrable Securities pursuant to this Section 2.1, all to
         the extent requisite to permit the disposition (in accordance with the
         intended methods thereof as aforesaid) of the Registrable Securities
         and the additional shares of Common Stock, if any, so to be registered;

provided that the Company shall not be required to effect (i) more than one
registration pursuant to this Section 2.1, (ii) the registration of Registrable
Securities pursuant to this Section 2.1 unless the aggregate number of shares of
Registrable Securities requested to be registered by all holders of Registrable
Securities is equal to or greater than 25% of the Registrable Securities
originally issuable under the Warrant Agreement or have a market value (based
upon the closing price of such Registrable Securities quoted on the securities
exchange or over-the-counter quotation system on which such Registrable
Securities are listed or quoted, as the case may be, on the trading day
immediately preceding any request pursuant to this Section 2.1) of at least $5
million at the close of the last trading day prior to such request, (iii) during
the period starting with the date thirty (30) days prior to the Company's good
faith estimate of the date of filing of, and ending on a date ninety (90) days
after the effective date of, a Company-initiated registration (provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective), and (iv) the registration of
Registrable Securities pursuant to this Section 2.1 if (x) in the good faith
judgment of the board of directors of the Company, such registration would be
seriously detrimental to the Company and the board of directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (y) the Company shall furnish to such
Holders a certificate signed by the president of the Company stating that in the
good faith judgment of the

                                       3
<PAGE>

board of directors of the Company, it would be seriously detrimental to the
Company for such registration statement to be filed in the near future and that
it is, therefore, essential to defer the filing of such registration statement,
then the Company shall have the right to defer such filing for the period during
which such registration would be seriously detrimental (provided that the
Company may not defer the filing for a period of more than one hundred eighty
(180) days after receipt of the request of Initiating Holders, and, provided
further, that the Company shall not defer its obligation in this manner more
than once in any twelve-month period).

         (b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.1.

         (c) Effective Registration Statement. The registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after the Company
has filed a registration statement with respect thereto solely by reason of the
refusal to proceed of the Initiating Holders (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to the
Company) shall be deemed to have been effected by the Company at the request of
such Initiating Holders unless the Initiating Holders shall have elected to pay
all Registration Expenses in connection with such registration, (ii) if, after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason (other than a stop order, injunction or other
order or requirement resulting from some act or omission by the Initiating
Holders), or (iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by such Initiating
Holders.

         (d) Underwritten Offering. If any offering of Registrable Shares
pursuant to this Section 2.1 involves an underwritten offering, the Company
shall (after first consulting with the Initiating Holders) select the investment
banking firm or firms to manage the underwritten offering.

         The right of any Holder to registration pursuant to this Section 2.1
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of Initiating
Holders and such Holder with respect to such participation and inclusion) to the
extent provided herein. A Holder may elect to include in such underwriting all
or a part of the Registrable Securities held by such Holder.

         If the Company shall request inclusion in any registration pursuant to
this Section 2.1 of securities being sold for its own account, or if an Other
Stockholder shall request inclusion in any registration pursuant to this Section
2.1, the Initiating Holders shall, on behalf of all Holders, offer to include
such securities in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Agreement (including
without limitation Section 2.6 hereof). In such event, the Company shall
(together with all Holders and other persons proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders. If a person who has

                                       4
<PAGE>

requested inclusion in such registration as provided above does not agree to the
terms of any such underwriting, such person shall be excluded therefrom by
written notice from Company, the underwriter or Initiating Holders. The
securities so excluded shall also be withdrawn from registration. Any
Registrable Securities or other securities excluded shall also be withdrawn from
such registration.

         (e) Priority in Demand Registrations. Notwithstanding any other
provision of this Section 2.1, if any financial advisor retained by the
Initiating Holders or the Company shall advise the Company in writing that, in
its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in the contemplated offering
within a price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering the Registrable Securities requested to
be included in such registration by the holder or holders of Registrable
Securities, the securities the Company proposes to sell and other securities of
the Company included in such registration by the holders thereof, pro rata among
such holders on the basis of the number of such securities requested to be
included by such holders and the Company.

         2.2      Piggyback Registration.

         (a) Right to Include Registrable Securities. If the Company at any time
proposes to register any of its securities under the Securities Act (other than
by a registration on Form S-4, S-8, S-14 or S-15 or any successor or similar
forms and other than pursuant to Section 2.1 or 2.3 hereof), whether or not for
sale for its own account, it will each such time give prompt written notice to
all holders of Registrable Securities of its intention to do so and of such
holders' rights under this Section 2.2. Upon the written request of any such
holder made within 10 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to request that such
registration be effected as a registration under Section 2.1 hereof, and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to, effect any registration upon
request under Section 2.1

                                       5
<PAGE>

hereof. In no event shall the Company be required to effect more than two
registrations of Registrable Securities pursuant to this Section 2.2.

         (b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.2.

         (c) Piggyback Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by this Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in this Section 2.2 and subject to the
provisions of Section 2.2(d) hereof, use its reasonable best efforts to arrange
for such underwriters to include all the Registrable Securities to be offered
and sold by such holder among the securities to be distributed by such
underwriters.

          The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law. (d) Priority in Piggyback Registrations. If (i) a registration pursuant
to this Section 2.2 involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment, best efforts or other basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction and (ii) the managing underwriter of such
underwritten offering shall inform the Company and holders of the Registrable
Securities requesting inclusion of their Registrable Securities in such
registration by letter of its belief that the distribution of all or a specified
number of the securities requested to be included in such registration
concurrently with the securities being distributed by such underwriters would
interfere with the successful marketing of the securities being distributed by
such underwriters (such writing to state the basis of such belief and the
approximate number of such securities which may be distributed without such
effect), then the Company will be obligated to include in such registration
statement the Registrable Shares of the Holders in sequence, in accordance with
the following:

                   (x) in the case of an offering by the Company for its own
         account, (A) first, any and all securities for sale by the Company, and
         (B) second, Registrable Shares requested to be included in such
         registration by the Holders and securities requested to be included in
         such registration statement by Other Stockholders pursuant to any other
         registration rights that may have been, or may hereafter be, granted by
         the Company, pro rata based on the number of such securities requested
         to be included by such Holders and such Other Stockholders;

                                       6
<PAGE>

                  (y) in the case of an offering by the Company for the account
         of any of its securityholders (other than the Holders), (A) first,
         securities requested to be registered by any such securityholder
         pursuant to the exercise of demand registration rights, and (B) second,
         Registrable Shares requested to be registered by the Holders,
         securities for the account of the Company and securities requested to
         be included in such registration statement by Other Stockholders
         pursuant to any other registration rights that may have been, or may
         hereafter be, granted by the Company, pro rata based on the number of
         such securities requested to be included by such Holders, the Company
         and such Other Stockholders.

                  2.3       Registration on Form S-3.

                  (a) After the closing of an initial public offering of any
security of the Company pursuant to an effective registration statement under
the Securities Act, the Company shall use its best efforts to qualify for
registration on Form S-3. If the Company has qualified for the use of Form S-3,
in addition to the rights contained in Sections 2.1 and 2.2 hereof, Holders of
Registrable Securities shall have the right to request registrations on Form S-3
(such requests shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended methods of
dispositions of such shares by such Holder or Holders); provided, however, that
the Company shall not be obligated to effect any such registration if Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) on Form S-3 at an aggregate price to the public of
less than $1,000,000; further provided, however, that in no event shall the
Company be required to effect more than two registrations of Registrable
Securities pursuant to this Section 2.3.

                  (b) If a request complying with the requirements of Section
2.3(a) hereof is delivered to the Company, the provisions of Sections
2.1(a)(ii), 2.1(b), 2.1(c), 2.1(d) and 2.1(e) hereof shall apply to such
registration.

         2.4 Registration Procedures. Notwithstanding any other provision of
this Agreement, the Company will have no obligation to effect the registration
of any Registrable Securities under the Securities Act as provided in Sections
2.1, 2.2 and 2.3 hereof unless and until such Registrable Securities shall have
been issued by the Company, and the Company agrees to immediately issue the
Registrable Securities when required to do so under the Warrants. If and
whenever the Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities Act as provided
in Sections 2.1, 2.2 and 2.3 hereof, the Company shall, as expeditiously as
possible:

                  (i) prepare and (within 90 days after the end of the period
         within which requests for registration may be given to the Company, or
         in any event as soon thereafter as possible, and in the case of a
         registration pursuant to Section 2.1 hereof such filing to be made
         within 90 days after the initial request of one or more Initiating
         Holders of Registrable Securities or in any event as soon thereafter as
         possible) file with the Commission the requisite registration statement
         to effect such registration (including such audited financial
         statements as may be required

                                       7
<PAGE>

         by the Securities Act or the rules and regulations promulgated
         thereunder) and thereafter use its best efforts to cause such
         registration statement to become and remain effective, provided,
         however, that the Company may discontinue any registration of its
         securities which are not Registrable Securities (and, under the
         circumstances specified in Section 2.2(a), its securities which are
         Registrable Securities) at any time prior to the effective date of the
         registration statement relating thereto, and further provided that
         before filing such registration statement or any amendments thereto,
         the Company will furnish to the counsel selected by the holders of
         Registrable Securities which are to be included in such registration
         copies of all such documents proposed to be filed, which documents will
         be subject to the review of such counsel;

                  (ii) prepare and file with the Commission such amendments and
         supplements to such registration statement and the prospectus used in
         connection therewith as may be necessary and to comply with the
         provisions of the Securities Act with respect to the disposition of all
         securities covered by such registration statement, and use best efforts
         to keep such registration statement effective until the earlier of such
         time as all of such securities have been disposed of in accordance with
         the intended methods of disposition by the seller or sellers thereof
         set forth in such registration statement or (A) in the case of a
         registration pursuant to Section 2.1 or 2.2 hereof , the expiration of
         180 days after such registration statement becomes effective (provided,
         however, that such 180-day period shall be extended for a period of
         time equal to the period Holder refrains from selling any securities
         included in such registration at the request of an underwriter of
         common stock (or other securities) of the Company) or (B) in the case
         of a registration pursuant to Section 2.3 hereof which are intended to
         be offered on a continuous or delayed basis, such 120-day period shall
         be extended, if necessary, to keep the registration statement effective
         until all such Registrable Securities are sold, provided that Rule 145,
         or any successor rule under the Securities Act, permits an offering on
         a continuous or delayed basis, and provided further that applicable
         rules under the Securities Act governing the obligation to file a
         post-effective amendment permit, in lieu of filing a post-effective
         amendment that (I) includes any prospectus required by Section 10(a)(3)
         of the Securities Act or (II) reflects facts or events representing a
         material or fundamental change in the information set forth in the
         registration statement, the incorporation by reference of information
         required to be included in (1) and (II) above to be contained in
         periodic reports filed pursuant to Section 13 or 15(d) of the Exchange
         Act in the registration statement;

                  (iii) furnish to each seller of Registrable Securities covered
         by such registration statement and each underwriter, if any, of the
         securities being sold by such seller such number of conformed copies of
         such registration statement and of each such amendment and supplement
         thereto (in each case including all exhibits), such number of copies of
         the prospectus contained in such registration statement (including each
         preliminary prospectus and any summary prospectus) and any other
         prospectus filed under Rule 424 under the Securities Act, in

                                       8
<PAGE>

         conformity with the requirements of the Securities Act, and such other
         documents, as such seller may reasonably request in order to facilitate
         the public sale or other disposition of the Registrable Securities
         owned by such Seller;

                  (iv) use its best efforts (A) to register or qualify all
         Registrable Securities and other securities covered by such
         registration statement under such other securities laws or blue sky
         laws of such jurisdictions as shall reasonably be requested by such
         seller, (B) to keep such registrations or qualifications in effect for
         so long as such registration statement remains in effect, and (C) take
         any other action .which may be reasonably necessary or advisable to
         enable each seller to consummate the disposition in such jurisdictions
         of the securities owned by such seller, except that the Company shall
         not for any such purpose be required to qualify generally to do
         business as a foreign corporation in any jurisdiction wherein it would
         not, but for the requirements of this subdivision (iv), be obligated to
         be so qualified, to subject itself to taxation in any such jurisdiction
         or to consent to general service of process in any such jurisdiction;

                  (v) use its best efforts to cause all Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary to enable the seller or sellers thereof to consummate the
         disposition of such Registrable Securities;

                  (vi) cause the Registrable Shares included in any registration
         statement to be (i) listed on (.)each securities exchange, if any, on
         which similar securities issued by the Company are then listed, 'or
         (ii) authorized to be quoted and/or listed (to the extent applicable)
         on the National Association of Securities Dealers, Inc. Automated
         Quotation ("NASDAQ") or the National Market System of NASDAQ if the
         Registrable Shares so qualify;

                  (vii) provide a CUSIP number for the Registrable Shares
         included in any registration statement not later than the effective
         date of such registration statement;

                  (viii) furnish to each Holder selling securities in such
         registration and underwriter a signed counterpart of (i) an opinion or
         opinions of counsel to the Company, and (ii) a comfort letter or
         comfort letters from the Company's independent public accountants, each
         in customary form and covering such matters of the type customarily
         covered by opinions or comfort letters, as the case may be, as the
         Holders selling securities in such registration or managing underwriter
         reasonably requests;

                  (ix) notify each seller of Registrable Securities covered by
         such registration statement, at any time when a prospectus relating
         thereto is required to be delivered under the Securities Act, upon the
         discovery that, or upon the happening of any event as a result of
         which, the prospectus included in such registration statement, as then
         in effect, includes an untrue statement of a material fact or omits to
         state any material fact required to be stated therein or necessary to

                                       9
<PAGE>

         make the statements therein not misleading in the light of the
         circumstances under which they were made, and at the request of any
         such seller promptly prepare and furnish to such seller (and each
         underwriter, if any) a reasonable number of copies of a supplement to
         or an amendment of such prospectus as may be necessary so that, as
         thereafter delivered to the purchasers of such securities, such
         prospectus shall not include an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading in the light of
         the circumstances under which they were made;

                  (x) otherwise use its best efforts to comply with all
         applicable rules and regulations of the Commission, and make available
         to its security holders, as soon as reasonably practicable, an earnings
         statement covering the period of at least twelve months, but not more
         than eighteen months, beginning with the first day of the full calendar
         month after the effective date of such registration statement, if such
         earnings statement is necessary to satisfy the provisions of Section
         11(a) of the Securities Act, and will furnish to each such seller at
         least five business days (or such shorter reasonable time period as
         given circumstances shall dictate) prior to the filing thereof a copy
         of any amendment or supplement to such registration statement or
         prospectus and shall not file any thereof to which any such seller
         shall have reasonably objected on the grounds that such amendment or
         supplement does not comply in all material respects with the
         requirements of the Securities Act or of the rules or regulations
         thereunder; and

                  (xi) enter into such agreements and take such other actions as
         sellers of such Registrable Securities holding more than 50% of the
         shares so to be sold shall reasonably request in order to expedite or
         facilitate the disposition of such Registrable Securities.

         The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by
applicable law or the Commission in connection therewith. Each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the occurrence of any event
of the kind described in subdivision (ix) of this Section 2.4, such holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (ix) of this Section 2.4 and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.

         2.5 Preparation; Reasonable Investigation. (a) In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the

                                       10
<PAGE>

opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.

         (b) Certain Information. The Company agrees to include in any
registration statement that includes Registrable Securities filed under Section
2.1, 2.2 or 2.3 hereof, all information which holders of Registrable Securities
being registered shall reasonably request (after giving due regard to the
confidentiality of such information).

         2.6 Holdback Agreements.

         (a) So long as the Holder and'its affiliates beneficially own more than
five percent of the outstanding Common Stock or the Holder has the right to
designate one or more members of the Company's board of directors, if requested
by the Company and an underwriter of common stock (or other securities) of the
Company, the Holder shall not effect any public sales or distributions of Common
Stock held by the Holder (other than those included in the registration) during
the seven days prior to and the ninety (90) day period following the effective
date of a registration statement of the Company filed under the Securities Act,
provided that all Holders and officers and directors of the Company and
beneficial owners of more than five percent of the Company's outstanding Common
Stock enter into and remain bound by similar agreements.

         The obligations described in this Section 2.6(a) shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future.

         (b) The Company agrees (x), if so required by the managing underwriter,
not to effect any public sale or distribution of its equity securities or
securities convertible into or exchangeable or exercisable for any of such
securities during the seven days prior to and the 90 days after any underwritten
registration pursuant to Section 2.1 or 2.3 hereof has become effective, except
as part of such underwritten registration and except pursuant to registrations
on Form S-4, S-8, S-14 or S-15 or any successor or similar forms thereto, and
(y) use its best reasonable efforts to cause each holder of its securities or
any securities convertible into or exchangeable or exercisable for any of such
securities, in each case purchased directly from the Company at any time after
the date of this Agreement (other than in a public offering) to agree not to
effect any such public sale or distribution of such securities during such
period.

         2.7      Indemnification.

         (a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless, in the case of any registration
statement covering Registrable Securities, the holder of any Registrable
Securities covered by such registration statement, its directors and officers,
each

                                       11
<PAGE>

other Person who participates as an underwriter in the offering or sale of such
securities and each other Person; if any, who controls such holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or any
such director or officer or underwriter or controlling Person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such holder, and each such director, officer, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such holder, as the case may be, specifically
stating that it is for use in the preparation thereof and, provided further that
the Company shall not be liable to any Person who participates as an
underwriter, in the offering or sale of Registrable Securities or to any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim;
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
securities by such holder.

         (b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.4 hereof, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such Registrable
Securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 2.7) the Company, each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus,

                                       12
<PAGE>

summary prospectus, amendment or supplement. Such indemnity shall be limited to
the extent allowable by applicable law and shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by such seller.

         (c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.

         (d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 2.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority, other than
the Securities Act.

         (e) Indemnification Payments. The indemnification required by this
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.

         (f) Contribution. If the indemnification provided for in the preceding
subdivisions of this Section 2.7 is unavailable to an indemnified party in
respect of any expense, loss, damage or liability referred to therein, 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 expense, loss, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the holder or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the

                                       13
<PAGE>

allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the holder or underwriter, as the case may be, on the other
in connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission to state a material fact relates to information
supplied by the Company, by the holder or by the underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, that the foregoing contribution
agreement shall not inure to the benefit of any indemnified Person if
indemnification would be unavailable to such indemnified Person by reason of the
proviso contained in the first sentence of subdivision (a) of this Section 2.7,
and in no event shall the obligation of any indemnifying party to contribute
under this subdivision (f) exceed the amount that such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this Section 2.7 had been
available under the circumstances.

         The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subdivision (f)
were determined by pro rata allocation (even if the holders and any underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations refereed
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in the preceding sentence and subdivisions
(c) of this Section 2.7, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.

         Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

         3. Rule 144. The Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any holder of Registrable Securities, make publicly available
other information) and will take such

                                       14
<PAGE>

further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.

         4. Limitations on Registration of Issues of Securities. From and after
the date of this Agreement, the Company shall not enter into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or.prospective holder any registration rights the terms of which are more
favorable than the registration rights granted to the Holders hereunder unless
prior to entering into such agreement the Company has (i) given notice to the
Holders of such agreement and (ii) given the Holders the option (which option
must be exercised within 30 days of receipt of such notice) either to continue
under this Agreement or to tertnlinate this Agreement and enter into an
agreement with the Company with terms identical to the terms of such agreement.

         5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of more than 50% of the shares of Registrable Securities. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent; provided, however,
that no amendment shall be made to Section 2.7 hereof without the written
consent of the Company and the holder or holders of 100% of the shares of
Registrable Securities.

         6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.

         7. Notices. Except as otherwise provided in this Agreement, all
communications provided for hereunder shall be in writing and either hand
delivered or sent by prepaid commercial courier, telecopy or first-class
registered or certified mail, postage prepaid, and addressed

         if to the Investor:   First Allied Securities, Inc.
                               525 B Street
                               17th Floor
                               San Diego, California 92101
                               Attention: Robert Moses, General Counsel

                                       15
<PAGE>

                               Facsimile: (619) 239-0142

         with a copy to:       Akerman Senterfitt & Eidson, P.A. 50
                               North Laura Street, Suite 2500
                               Jacksonville, Florida 32202
                               Attention: Ivan A. Colao
                               Facsimile: (904) 798-3730

         if to the Company:    SportsTrac Systems, Inc.
                               6654 Gunpark Drive, Suite 100
                               Boulder, Colorado 80301 Attention:
                               Marc R. Silverman
                               Facsimile: (303) 527-1661

         with a copy to:       Doerner, Saunders, Daniel & Anderson LLP
                               320 South Boston Avenue, Suite 500
                               Tulsa, Oklahoma 74103
                               Attention: William F. Riggs
                               Facsimile: (918) 591-5360

or at such other address the Investor or the Company shall have given notice to
other. Notices sent by commercial courier services for next day delivery shall
be deemed given and received the day after they are sent, notices sent by
telecopy shall be deemed given and received the day they are sent, and notices
sent by mail shall be deemed given and received five (5) days after being mailed
as aforesaid.

         8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities, provided, that the transferee or assignee of such rights assumes the
obligations of such Holder under this Agreement by a written agreement
reasonably acceptable to the Company.

         9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.

         10. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York without reference to the principles of conflicts of laws.

                          [next page is signature page]

                                       16
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.

                                       THE COMPANY:

                                       SPORTSTRAC SYSTEMS, INC.

                                       By: /s/ Marc R. Silverman
                                           -------------------------------------
                                           Marc R. Silverman
                                           President & CEO

                                       THE INVESTOR:

                                       FIRST ALLIED SECURITIES, INC.

                                       By: /s/ Robert Moses
                                           -------------------------------------
                                           Robert Moses
                                           General Counsel

                                       17

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