Document:

INVESTMENT AGREEMENT
INVESTMENT  AGREEMENT  (this  "AGREEMENT"),  dated as of August 10, 2004, by and
between  Nighthawk  Systems,  Inc.,  a  Nevada  corporation (the "Company"), and
Dutchess  Private  Equities  Fund, II, L.P., a Delaware limited partnership (the
"Investor").

Whereas,  the  parties desire that, upon the terms and subject to the conditions
contained  herein,  the  Investor shall invest up to $10,000,000 to purchase the
Company's  Common  Stock,  $0.001  par  value  per  share  (the "Common Stock");

Whereas,  such  investments  will  be  made  in  reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"), Rule
506  of  Regulation  D,  and  the  rules and regulations promulgated thereunder,
and/or  upon such other exemption from the registration requirements of the 1933
Act  as may be available with respect to any or all of the investments in Common
Stock  to  be  made  hereunder;  and

Whereas,  contemporaneously  with  the execution and delivery of this Agreement,
the  parties hereto are executing and delivering a Registration Rights Agreement
substantially  in the form attached hereto as Exhibit A (as amended from time to
time,  the  "Registration  Rights  Agreement") pursuant to which the Company has
agreed  to provide certain registration rights under the 1933 Act, and the rules
and  regulations  promulgated  thereunder, and applicable state securities laws.

NOW  THEREFORE,  in  consideration  of  the  foregoing  recitals, which shall be
considered  an integral part of this Agreement, the covenants and agreements set
forth  hereafter,  and  other  good  and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree  as  follows:

SECTION  1.  DEFINITIONS.
     As  used  in  this  Agreement, the following terms shall have the following
meanings  specified  or  indicated  below,  and  such  meanings shall be equally
applicable  to  the  singular  and  plural  forms  of  such  defined  terms.

     "1933  Act"  shall  have  the  meaning  set  forth  in the preamble, above.

     "1934  Act"  shall  mean  the Securities Exchange Act of 1934, as it may be
amended.

     "Affiliate"  shall  have  the  meaning  specified  in  Section 5(h), below.

     "Agreement"  shall  mean  this  Investment  Agreement.

"Best  Bid"  shall  mean  the  highest  posted  bid  price  of the Common Stock.

     "Buy  In"  shall  have  the  meaning  specified  in  Section  6,  below.

     "Buy  In  Adjustment Amount" shall have the meaning specified in Section 6.

     "Closing"  shall  have  the  meaning  specified  in  Section  2(h).

     "Closing  Date"  shall mean seven (7) Trading Days following the Put Notice
Date.

"Common  Stock"  shall  have  the  meaning  set  forth  in  the preamble to this
Agreement.

     "Control"  or  "Controls" shall have the meaning specified in Section 5(h).

     "Covering  Shares"  shall  have  the  meaning  specified  in  Section  6.

     "Effective  Date"  shall mean the date the SEC declares effective under the
1933  Act  the  Registration  Statement  covering  the  Securities.

     "Environmental  Laws"  shall  have  the  meaning specified in Section 4(m).

     "Execution  Date"  shall  mean  the  date indicated in the preamble to this
Agreement.

     "Indemnities"  shall  have  the  meaning  specified  in  Section  11.

     "Indemnified  Liabilities"  shall have the meaning specified in Section 11.

     "Ineffective  Period"  shall  mean any period of time that the Registration
Statement  or  any  Supplemental  Registration  Statement  (as  defined  in  the
Registration  Rights  Agreement)  becomes ineffective or unavailable for use for
the  sale  or resale, as applicable, of any or all of the Registrable Securities
(as  defined  in  the  Registration  Rights Agreement) for any reason (or in the
event  the  prospectus under either of the above is not current and deliverable)
during  any  time  period  required  under  the  Registration  Rights Agreement.

     "Investor"  shall  have  the  meaning  indicated  in  the  preamble of this
Agreement.

     "Major  Transaction"  shall  have  the  meaning  specified in Section 2(g),
above.

     "Material Adverse Effect" shall have the meaning specified in Section 4(a).

     "Maximum Common Stock Issuance" shall have the meaning specified in Section
2(i).

     "Minimum  Acceptable  Price" with respect to any Put Notice Date shall mean
75%  of the lowest closing bid prices for the ten Trading Day period immediately
preceding  such  Put  Notice  Date.

     "Open  Period" shall mean the period beginning on and including the Trading
Day  immediately following the Effective Date and ending on the earlier to occur
of (i) the date which is thirty-six (36) months from the Effective Date; or (ii)
termination  of  the  Agreement  in  accordance  with  Section  9,  below.

     "Payment  Amount"  shall have the meaning specified in Section 2(m), below.

     "Pricing Period" shall mean the period beginning on the Put Notice Date and
ending  on  and  including the date that is five (5) Trading Days after such Put
Notice  Date.

     "Principal  Market"  shall  mean  the  American  Stock  Exchange, Inc., the
National  Association  of  Securities  Dealers,  Inc.  Over-the-Counter Bulletin
Board,  the  Nasdaq  National  Market  System  or  the  Nasdaq  SmallCap Market,
whichever  is  the  principal  market  on  which  the  Common  Stock  is listed.

"Prospectus"  shall mean the prospectus, preliminary prospectus and supplemental
prospectus  used  in  connection  with  the  Registration  Statement.

     "Purchase Amount" shall mean the total amount being paid by the Investor on
a  particular  Closing  Date  to  purchase  the  Securities.

     "Purchase Price" shall mean ninety-five percent (95%) of the lowest closing
Best  Bid  price  of  the  Common  Stock  during  the  Pricing  Period.

     "Put  Amount"  shall  have  the  meaning  set forth in Section 2(b) hereof.

     "Put  Notice"  shall  mean  a  written  notice  sent to the Investor by the
Company  stating  the  Put  Amount  of Shares the Company intends to sell to the
Investor  pursuant  to the terms of the Agreement and stating the current number
of  Shares  issued  and  outstanding  on  such  date.

     "Put  Notice Date" shall mean the Trading Day immediately following the day
on  which  the  Investor  receives  a  Put Notice, however a Put Notice shall be
deemed delivered on (x) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received prior to 9:00 am Eastern Time, or (y)
the  immediately  succeeding  Trading  Day  if  it  is  received by facsimile or
otherwise  after  9:00  am  Eastern Time on a Trading Day.  No Put Notice may be
deemed  delivered  on  a  day  that  is  not  a  Trading  Day.

     "Put Restriction" shall mean the days between the end of the Pricing Period
and  the date on which the investor deems the Put closed.  During this time, the
Company  shall  not  be  entitled  to  deliver  another  Put  Notice.

     "Registration  Period"  shall  have  the meaning specified in Section 5(c),
below.

     "Registration  Rights  Agreement"  shall  have the meaning set forth in the
recitals,  above.

     "Registration  Statement"  means  the registration statement of the Company
filed  under  the  1933  Act  covering  the  Common  Stock  issuable  hereunder.

     "Related  Party"  shall  have  the  meaning  specified  in  Section  5(h).

     "Repurchase  Event"  shall  have  the  meaning  specified  in Section 2(m).

     "Resolution"  shall  have  the  meaning  specified  in  Section  8(e).

     "SEC"  shall  mean  the  U.S.  Securities  &  Exchange  Commission.

     "SEC  Documents"  shall  have  the  meaning  specified  in  Section  4(f).

     "Securities"  shall  mean the shares of Common Stock issued pursuant to the
terms  of  the  Agreement.

     "Shares"  shall  mean  the  shares  of  the  Company's  Common  Stock.

     "Sold  Shares"  shall  have  the  meaning  specified  in  Section  6.

     "Subsidiaries"  shall  have  the  meaning  specified  in  Section  4(a).

     "Trading  Day"  shall  mean  any  day on which the Principal Market for the
Common  Stock  is  open  for  trading,  from the hours of 9:30 am until 4:00 pm.

"Transaction  Documents"  shall  mean  this  Agreement,  the Registration Rights
Agreement,  and  each of the other agreements entered into by the parties hereto
in  connection  with  this  Agreement.

SECTION  2.  PURCHASE  AND  SALE  OF  COMMON  STOCK.

(A)  PURCHASE  AND SALE OF COMMON STOCK. Subject to the terms and conditions set
forth herein, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, up to that number of Shares having an aggregate
Purchase  Price  of  $10,000,000.

(B)  DELIVERY  OF  PUT  NOTICES.
(I)  Subject  to the terms and conditions of the Transaction Documents, and from
time  to  time  during the Open Period, the Company may, in its sole discretion,
deliver  a Put Notice to the Investor which states the Put Amount (designated in
shares  of  Common Stock) which the Company intends to sell to the Investor on a
Closing  Date.  The Put Notice shall be in the form attached hereto as Exhibit B
and  incorporated  herein  by  reference.  The  amount that the Company shall be
entitled  to  Put  to  the Investor (the "Put Amount") shall be equal to, at the
Company's  election,  either:  (A) 200% of the average daily volume (U.S. market
only)  of  the  Common Stock for the 20 Trading Days prior to the applicable Put
Notice  Date,  multiplied  by  the average of the three daily closing bid prices
immediately  preceding  the  Put Date, or (B) $25,000; provided that in no event
will  the  Put  Amount  be  more than $1,000,000 with respect to any single Put.
During the Open Period, the Company shall not be entitled to submit a Put Notice
until  after the previous Closing has been completed. The Purchase Price for the
Common  Stock  identified  in the Put Notice shall be equal to 95% of the lowest
closing  bid  price  of  the  Common  Stock  during  the  Pricing  Period.
(II)  If any closing bid price during the applicable Pricing Period with respect
to  that Put Notice is less than 75% of the any closing bid prices of the Common
Stock  for  the  ten  Trading  Days  prior  to the Put Notice Date (the "Minimum
Acceptable  Price"),  the Put Notice will terminate at the Company's request. In
the  event  that the closing bid price for the applicable Pricing Period is less
than  the  Minimum  Acceptable  Price, the Company may elect, by sending written
notice  to  the  Investor  to  cancel  the  Put  Notice.

 (C)  RESERVED

 (D)  INVESTOR'S  OBLIGATION  TO  PURCHASE SHARES. Subject to the conditions set
forth in this Agreement, following the Investor's receipt of a validly delivered
Put  Notice,  the Investor shall be required to purchase from the Company during
the  related  Pricing  Period that number of Shares having an aggregate Purchase
Price equal to the lesser of (i) the Put Amount set forth in the Put Notice, and
(ii)  20%  of  the  aggregate  trading  volume  of  the  Common Stock during the
applicable  Pricing Period times (x) the average of the three (3) lowest closing
bid  prices  of  the Company's Common Stock during the specified Pricing Period,
but  only  if  said  Shares  bear no restrictive legend, are not subject to stop
transfer  instructions  and  are being held in escrow, pursuant to Section 2(h),
prior  to  the  applicable  Closing  Date.

(E)  LIMITATION  ON  INVESTOR'S OBLIGATION TO PURCHASE SHARES. In no event shall
the  Investor  purchase Shares (whether from the Company or in public or private
secondary transactions) other than pursuant to this Agreement until such date as
this  Agreement  is  terminated.

(F)  CONDITIONS  TO  INVESTOR'S  OBLIGATION  TO PURCHASE SHARES. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be entitled to
deliver  a  Put  Notice  and the Investor shall not be obligated to purchase any
Shares  at  a  Closing (as defined in Section 2(h)) unless each of the following
conditions  are  satisfied:
(I) a Registration Statement shall have been declared effective and shall remain
effective  and  available  for  the resale of all the Registrable Securities (as
defined  in  the  Registration  Rights Agreement) at all times until the Closing
with  respect  to  the  subject  Put  Notice;
(II) at all times during the period beginning on the related Put Notice Date and
ending  on  and  including the related Closing Date, the Common Stock shall have
been  listed  on  the  Principal  Market  and shall not have been suspended from
trading  thereon  for  a period of five consecutive Trading Days during the Open
Period and the Company shall not have been notified of any pending or threatened
proceeding  or  other  action  to  suspend  the  trading  of  the  Common Stock;
(III)  the  Company  has  complied  with its obligations and is otherwise not in
breach  of  a  material  provision  of, or in default under, this Agreement, the
Registration  Rights  Agreement  or  any  other agreement executed in connection
herewith  which has not been corrected prior to delivery of the Put Notice Date;
(IV)  no  injunction  shall  have  been  issued  and  remain in force, or action
commenced  by  a  governmental authority which has not been stayed or abandoned,
prohibiting  the  purchase  or  the  issuance  of  the  Securities;  and
(V)  the  issuance  of  the Securities will not violate any shareholder approval
requirements  of  the  Principal  Market.
If  any of the events described in clauses (i) through (v) above occurs during a
Pricing  Period,  then the Investor shall have no obligation to purchase the Put
Amount  of  Common  Stock  set  forth  in  the  applicable  Put  Notice.

(G)  RESERVED

(H)  MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of
the  conditions set forth in Sections 2(f), 7 and 8, the closing of the purchase
by  the  Investor  of  Shares or the Investor deeming a Put closed (a "Closing")
shall  occur on the date which is no later than seven (7) Trading Days following
the  applicable  Put Notice Date or when the Investor deems a Put closed (each a
"Closing  Date").  Prior  to each Closing Date, (I) the Company shall deliver to
the Investor pursuant to this Agreement, certificates representing the Shares to
be  issued  to  the  Investor  on  such  date  and registered in the name of the
Investor;  and (II) the Investor shall deliver to the Company the Purchase Price
to  be  paid for such Shares, determined as set forth in Sections 2(b) and 2(d).
In  lieu  of  delivering  physical  certificates representing the Securities and
provided  that  the  Company's  transfer  agent  then  is  participating  in The
Depository  Trust  Company  ("DTC")  Fast Automated Securities Transfer ("FAST")
program,  upon  request  of the Investor, the Company shall use its commercially
reasonable  efforts  to  cause its transfer agent to electronically transmit the
Securities  by crediting the account of the Investor's prime broker (which shall
be  specified  by the Investor a reasonably sufficient time in advance) with DTC
through  its  Deposit  Withdrawal  Agent  Commission  ("DWAC")  system.
The  Company  understands  that a delay in the issuance of Securities beyond the
Closing  Date could result in economic loss to the Investor. After the Effective
Date,  as  compensation to the Investor for such loss, the Company agrees to pay
late  payments  to  the  Investor  for  late issuance of Securities (delivery of
Securities  after  the applicable Closing Date) in accordance with the following
schedule  (where  "No.  of  Days  Late" is defined as the number of trading days
beyond  the  Closing  Date.  The  Amounts  are  not  cumulative.):

LATE  PAYMENT  FOR  EACH
NO.  OF  DAYS  LATE               $10,000  OF  COMMON  STOCK

          1                                           $100
          2                                           $200
          3                                           $300
          4                                           $400
          5                                           $500
          6                                           $600
          7                                           $700
          8                                           $800
          9                                           $900
          10                                       $1,000
          Over  10                             $1,000  +  $200  for  each
                                                      Business  Day  late
beyond  10  days

The  Company  shall  pay any payments incurred under this Section in immediately
available  funds upon demand. Nothing herein shall limit the Investor's right to
pursue  actual  damages  for  the  Company's  failure  to  issue and deliver the
Securities  to  the Investor, except to the extent that such late payments shall
constitute  payment  for  and  offset  any  such  actual  damages alleged by the
Investor,  and  any  Buy  In  Adjustment  Amount.

 (I)  OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained
herein  to the contrary, if during the Open Period the Company becomes listed on
an  exchange that limits the number of shares of Common Stock that may be issued
without  shareholder approval, then the number of Shares issuable by the Company
and  purchasable  by the Investor, including the shares of Common Stock issuable
to  the Investors pursuant to Section 11(b), shall not exceed that number of the
shares  of  Common  Stock  that  may  be  issuable without shareholder approval,
subject  to  appropriate  adjustment  for  stock  splits,  stock  dividends,
combinations  or  other similar recapitalization affecting the Common Stock (the
"Maximum  Common  Stock Issuance"), unless the issuance of Shares, including any
Common  Stock to be issued to the Investors pursuant to Section 11(b), in excess
of  the  Maximum  Common Stock Issuance shall first be approved by the Company's
shareholders  in  accordance with applicable law and the By-laws and Amended and
Restated Certificate of Incorporation of the Company, if such issuance of shares
of  Common  Stock  could  cause a delisting on the Principal Market. The parties
understand  and  agree  that  the  Company's  failure  to  seek  or  obtain such
shareholder  approval  shall  in  no  way  adversely affect the validity and due
authorization  of  the  issuance  and  sale  of  Securities  or  the  Investor's
obligation  in  accordance  with  the  terms and conditions hereof to purchase a
number  of  Shares  in  the  aggregate  up  to the Maximum Common Stock Issuance
limitation,  and  that  such  approval pertains only to the applicability of the
Maximum  Common  Stock  Issuance  limitation  provided  in  this  Section  2(j).
SECTION  3.  INVESTOR'S  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS.
The  Investor  represents  and  warrants  to  the  Company, and covenants, that:

(A)  SOPHISTICATED  INVESTOR.  The  Investor  has, by reason of its business and
financial experience, such knowledge, sophistication and experience in financial
and  business matters and in making investment decisions of this type that it is
capable  of  (I)  evaluating  the  merits  and  risks  of  an  investment in the
Securities  and  making an informed investment decision; (II) protecting its own
interest;  and  (III)  bearing  the  economic  risk  of  such  investment for an
indefinite  period  of  time.

(B)  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has  been  duly  and validly
authorized,  executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to  applicable  bankruptcy,  insolvency, reorganization, moratorium, liquidation
and  other  similar laws relating to, or affecting generally, the enforcement of
applicable  creditors'  rights  and  remedies.

(C)  SECTION  9 OF THE 1934 ACT. During the term of this Agreement, the Investor
will  comply  with  the  provisions  of Section 9 of the 1934 Act, and the rules
promulgated thereunder, with respect to transactions involving the Common Stock.
The  Investor  agrees  not  to  short, either directly or indirectly through its
affiliates,  principals  or advisors, the Company's common stock during the term
of  this  Agreement.

(D)  ACCREDITED  INVESTOR.  Investor is an "Accredited Investor" as that term is
defined  in  Rule  501(a)(3)  of  Regulation  D  of  the  1933  Act.

(E)  NO  CONFLICTS.  The  execution, delivery and performance of the Transaction
Documents  by  the  Investor  and  the  consummation  by  the  Investor  of  the
transactions  contemplated  hereby and thereby will not result in a violation of
Partnership  Agreement  or  other  organizational  documents  of  the  Investor.

(F)  OPPORTUNITY TO DISCUSS. The Investor has received all materials relating to
the  Company's  business,  finance  and  operations  which it has requested. The
Investor  has  had  an  opportunity  to  discuss  the  business,  management and
financial  affairs  of  the  Company  with  the  Company's  management.

(G)  INVESTMENT  PURPOSES. The Investor is purchasing the Securities for its own
account  for  investment  purposes  and not with a view towards distribution and
agrees  to  resell  or  otherwise dispose of the Securities solely in accordance
with  the  registration  provisions of the 1933 Act (or pursuant to an exemption
from  such  registration  provisions).

(H) NO REGISTRATION AS A DEALER. The Investor is not and will not be required to
be  registered  as  a  "dealer"  under  the  1934 Act, either as a result of its
execution  and performance of its obligations under this Agreement or otherwise.
(I)  GOOD  STANDING  The  Investor  is  a  Limited  Partnership, duly organized,
validly  existing  and  in  good  standing  in  the  State  of  Delaware.

(J)  TAX  ILABILITIES.  The  Investor  understands that it is liable for its own
tax  liabilities.
(K)  REGULATION  M.  The  Investor  will comply with Regulation M under the 1934
Act,  if  applicable.

SECTION  4.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.

Except  as  set  forth  in the Schedules attached hereto, or as disclosed on the
Company's  SEC  Documents,  the  Company represents and warrants to the Investor
that:
(A)  ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized
and  validly  existing  in good standing under the laws of the State of  Nevada,
and  has  the  requisite corporate power and authorization to own its properties
and to carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good  standing  in  every jurisdiction in which its ownership of property or the
nature  of  the  business  conducted  by  it makes such qualification necessary,
except  to the extent that the failure to be so qualified or be in good standing
would  not  have a Material Adverse Effect. As used in this Agreement, "Material
Adverse  Effect"  means any material adverse effect on the business, properties,
assets,  operations,  results of operations, financial condition or prospects of
the  Company  and  its  Subsidiaries,  if  any,  taken  as  a  whole,  or on the
transactions  contemplated  hereby  or  by  the agreements and instruments to be
entered  into  in  connection  herewith,  or  on the authority or ability of the
Company  to  perform its obligations under the Transaction Documents (as defined
in  Section  1  and  4(b),  below).

(B)  AUTHORIZATION;  ENFORCEMENT;  COMPLIANCE  WITH  OTHER  INSTRUMENTS.
(I)  The  Company  has the requisite corporate power and authority to enter into
and  perform  this Agreement, the Registration Rights Agreement, and each of the
other  agreements  entered  into  by  the  parties hereto in connection with the
transactions  contemplated  by  this  Agreement  (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof.
(II)  The execution and delivery of the Transaction Documents by the Company and
the  consummation  by  it  of  the transactions contemplated hereby and thereby,
including  without  limitation  the reservation for issuance and the issuance of
the Securities pursuant to this Agreement, have been duly and validly authorized
by  the  Company's Board of Directors and no further consent or authorization is
required  by  the  Company,  its  Board  of  Directors,  or  its  shareholders.
(III)  The  Transaction  Documents  have  been  duly  and  validly  executed and
delivered  by  the  Company.
(IV)  The  Transaction Documents constitute the valid and binding obligations of
the  Company  enforceable  against  the  Company in accordance with their terms,
except  as such enforceability may be limited by general principles of equity or
applicable  bankruptcy,  insolvency,  reorganization, moratorium, liquidation or
similar  laws relating to, or affecting generally, the enforcement of creditors'
rights  and  remedies.

(C)  CAPITALIZATION.  As of the date hereof, the authorized capital stock of the
Company  consists of (i) 50,000,000 shares of Common Stock, $0.001 par value per
share,  of  which  as  of  the  date  hereof,  25,659,235  shares are issued and
outstanding;  5,000,000  shares  of Preferred Stock authorized, $0.001 par value
per  share  of  which  3,000 shares are issued and outstanding; (as of March 31,
2004)  shares  reserved  for  issuance  pursuant  to options, warrants and other
convertible  securities.  All  of  such  outstanding  shares  have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed  in  the  Company's  publicly available filings with Periodic Filings,
 (I)  no  shares of the Company's capital stock are subject to preemptive rights
or  any  other similar rights or any liens or encumbrances suffered or permitted
by  the  Company; (II) there are no outstanding debt securities; (III) there are
no  outstanding  shares  of  capital  stock, options, warrants, scrip, rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements  by  which  the Company or any of its Subsidiaries is or may become
bound  to  issue additional shares of capital stock of the Company or any of its
Subsidiaries  or  options,  warrants,  scrip,  rights  to subscribe to, calls or
commitments  of  any  character  whatsoever relating to, or securities or rights
convertible  into,  any  shares  of  capital  stock of the Company or any of its
Subsidiaries;  (IV)  there  are  no  agreements  or arrangements under which the
Company  or  any of its Subsidiaries is obligated to register the sale of any of
their  securities under the 1933 Act (except the Registration Rights Agreement),
other  than  the  Special Warrants attached hereto; (V) there are no outstanding
securities  of  the  Company  or  any  of  its  Subsidiaries  which  contain any
redemption  or  similar  provisions,  and  there  are no contracts, commitments,
understandings  or  arrangements by which the Company or any of its Subsidiaries
is  or  may  become  bound  to  redeem  a  security of the Company or any of its
Subsidiaries;  (VI)  there  are  no  securities  or  instruments  containing
anti-dilution  or  similar  provisions that will be triggered by the issuance of
the  Securities  as described in this Agreement; (VII) the Company does not have
any  stock  appreciation  rights  or  "phantom stock" plans or agreements or any
similar  plan  or  agreement;  and  (VIII)  there  is  no  dispute  as  to  the
classification  of  any  shares  of the Company's capital stock. The Company has
furnished to the Investor, or the Investor has had access through EDGAR to, true
and  correct  copies  of  the  Company's  Amended  and  Restated  Certificate of
Incorporation,  as  in  effect  on  the  date  hereof  (the  "Certificate  of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"),  and the terms of all securities convertible into or exercisable for
Common  Stock and the material rights of the holders thereof in respect thereto.

(D)  ISSUANCE  OF  SHARES.  The Company has reserved _______ Shares for issuance
pursuant  to  this  Agreement has been duly authorized and reserved for issuance
(subject  to  adjustment pursuant to the Company's covenant set forth in Section
5(f)  below)  pursuant  to this Agreement. Upon issuance in accordance with this
Agreement,  the Securities will be validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issue thereof. In
the event the Company cannot register a sufficient number of Shares for issuance
pursuant  to  this Agreement, the Company will use its best efforts to authorize
and  reserve  for  issuance  the  number  of  Shares required for the Company to
perform  its  obligations  hereunder  as  soon  as  reasonably  practicable.

(E)  NO  CONFLICTS.  The  execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated  hereby  and  thereby  will  not  (I)  result in a violation of the
Certificate  of  Incorporation, any Certificate of Designations, Preferences and
Rights  of  any  outstanding  series  of  preferred  stock of the Company or the
By-laws;  or  (II)  conflict with, or constitute a material default (or an event
which  with  notice  or  lapse  of time or both would become a material default)
under,  or  give to others any rights of termination, amendment, acceleration or
cancellation  of,  any  material  agreement,  contract,  indenture  mortgage,
indebtedness  or instrument to which the Company or any of its Subsidiaries is a
party,  or  to  the  Company's knowledge result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities  laws  and regulations and the rules and regulations of the Principal
Market  or  principal  securities exchange or trading market on which the Common
Stock  is traded or listed) applicable to the Company or any of its Subsidiaries
or  by  which any property or asset of the Company or any of its Subsidiaries is
bound or affected. Except as disclosed in Schedule 4(e), neither the Company nor
its  Subsidiaries  is  in  violation  of  any  term of, or in default under, the
Certificate  of  Incorporation, any Certificate of Designations, Preferences and
Rights  of  any  outstanding  series  of  preferred  stock of the Company or the
By-laws  or  their  organizational  charter  or  by-laws,  respectively,  or any
contract,  agreement,  mortgage,  indebtedness, indenture, instrument, judgment,
decree  or order or any statute, rule or regulation applicable to the Company or
its  Subsidiaries,  except  for  possible  conflicts,  defaults,  terminations,
amendments,  accelerations,  cancellations  and  violations  that  would  not
individually or in the aggregate have a Material Adverse Effect. The business of
the  Company  and  its  Subsidiaries  is  not  being conducted, and shall not be
conducted,  in  violation  of  any  law,  statute,  ordinance,  rule,  order  or
regulation  of  any  governmental  authority  or  agency,  regulatory  or
self-regulatory  agency,  or court, except for possible violations the sanctions
for  which  either  individually  or  in the aggregate would not have a Material
Adverse  Effect.  Except  as  specifically contemplated by this Agreement and as
required  under  the  1933  Act  to  the Company's knowledge, the Company is not
required  to  obtain any consent, authorization, permit or order of, or make any
filing or registration (except the filing of a registration statement) with, any
court, governmental authority or agency, regulatory or self-regulatory agency or
other  third  party  in  order  for it to execute, deliver or perform any of its
obligations  under,  or contemplated by, the Transaction Documents in accordance
with the terms hereof or thereof. All consents, authorizations, permits, orders,
filings  and  registrations  which the Company is required to obtain pursuant to
the  preceding  sentence  have been obtained or effected on or prior to the date
hereof  and  are  in  full  force  and  effect  as of the date hereof. Except as
disclosed  in Schedule 4(e), the Company and its Subsidiaries are unaware of any
facts  or  circumstances  which  might  give  rise  to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal  Market  as  in  effect  on the date hereof and on each of the Closing
Dates  and is not aware of any facts which would reasonably lead to delisting of
the  Common  Stock  by  the  Principal  Market  in  the  foreseeable  future.

(F)  SEC  DOCUMENTS; FINANCIAL STATEMENTS. As of August 2, 2004, the Company has
filed  all reports, schedules, forms, statements and other documents required to
be  filed  by it with the SEC pursuant to the reporting requirements of the 1934
Act  (all  of  the  foregoing  filed  prior  to the date hereof and all exhibits
included  therein  and  financial statements and schedules thereto and documents
incorporated  by  reference  therein  being  hereinafter referred to as the "SEC
Documents").  The  Company has delivered to the Investor or its representatives,
or  they  have  had access through EDGAR to, true and complete copies of the SEC
Documents.  As  of  their  respective  dates,  the SEC Documents complied in all
material  respects  with  the  requirements  of  the  1934 Act and the rules and
regulations  of  the SEC promulgated thereunder applicable to the SEC Documents,
and  none  of  the  SEC  Documents,  at  the  time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact  required to be stated therein or necessary to make the statements therein,
in  light of the circumstances under which they were made, not misleading. As of
their  respective dates, the financial statements of the Company included in the
SEC  Documents  complied  as  to  form  in all material respects with applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles,  consistently  applied,  during the
periods  involved  (except  (I)  as may be otherwise indicated in such financial
statements  or  the  notes  thereto,  or  (II)  in the case of unaudited interim
statements,  to  the  extent  they  may exclude footnotes or may be condensed or
summary  statements)  and  fairly present in all material respects the financial
position  of  the  Company  as  of  the  dates  thereof  and  the results of its
operations  and  cash  flows for the periods then ended (subject, in the case of
unaudited  statements,  to  normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Investor which is not
included  in  the  SEC  Documents,  including,  without  limitation, information
referred  to in Section 4(d) of this Agreement, contains any untrue statement of
a  material  fact  or  omits  to  state  any material fact necessary to make the
statements  therein,  in  the  light of the circumstance under which they are or
were  made,  not  misleading. Neither the Company nor any of its Subsidiaries or
any of their officers, directors, employees or agents have provided the Investor
with  any material, nonpublic information which was not publicly disclosed prior
to  the  date  hereof  and  any  material, nonpublic information provided to the
Investor by the Company or its Subsidiaries or any of their officers, directors,
employees or agents prior to any Closing Date shall be publicly disclosed by the
Company  prior  to  such  Closing  Date.

(G)  ABSENCE  OF  CERTAIN CHANGES. Except as set forth in the SEC Documents, the
Company  does not intend to change the business operations of the Company in any
material way. The Company has not taken any steps, and does not currently expect
to  take  any  steps, to seek protection pursuant to any bankruptcy law nor does
the Company or its Subsidiaries have any knowledge or reason to believe that its
creditors  intend  to  initiate  involuntary  bankruptcy  proceedings.

(H) ABSENCE OF LITIGATION. Except as set forth in the SEC Documents, there is no
action,  suit,  proceeding,  inquiry  or  investigation  before or by any court,
public  board,  government  agency, self-regulatory organization or body pending
or,  to  the  knowledge  of  the  executive  officers  of  Company or any of its
Subsidiaries,  threatened  against or affecting the Company, the Common Stock or
any  of  the  Company's  Subsidiaries  or  any of the Company's or the Company's
Subsidiaries'  officers  or  directors  in their capacities as such, in which an
adverse  decision  could  have  a  Material  Adverse  Effect.

(I)  ACKNOWLEDGMENT  REGARDING  INVESTOR'S  PURCHASE  OF  SHARES.  The  Company
acknowledges  and  agrees  that the Investor is acting solely in the capacity of
arm's  length  purchaser  with  respect  to  the  Transaction  Documents and the
transactions  contemplated  hereby and thereby. The Company further acknowledges
that  the  Investor  is  not  acting  as a financial advisor or fiduciary of the
Company  (or  in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor  or  any of its respective representatives or agents in connection with
the  Transaction  Documents and the transactions contemplated hereby and thereby
is  merely  incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company  and  its  representatives.

(J) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as
set  forth  in  the  SEC  Documents,  since August 2, 2004, no event, liability,
development  or  circumstance  has  occurred  or  exists,  or  to  the Company's
knowledge  is  contemplated  to  occur,  with  respect  to  the  Company  or its
Subsidiaries  or  their  respective  business,  properties,  assets,  prospects,
operations or financial condition, that would be required to be disclosed by the
Company  under applicable securities laws on a registration statement filed with
the  SEC relating to an issuance and sale by the Company of its Common Stock and
which  has  not  been  publicly  announced.

(K)  EMPLOYEE  RELATIONS.  Neither  the  Company  nor any of its Subsidiaries is
involved  in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of  its  Subsidiaries  is  a party to a collective bargaining agreement, and the
Company  and  its  Subsidiaries  believe that relations with their employees are
good.  No  executive  officer  (as  defined  in Rule 501(f) of the 1933 Act) has
notified  the Company that such officer intends to leave the Company's employ or
otherwise  terminate  such  officer's  employment  with  the  Company.

(L)  INTELLECTUAL  PROPERTY  RIGHTS.  The  Company  and  its Subsidiaries own or
possess  adequate rights or licenses to use all trademarks, trade names, service
marks,  service  mark  registrations,  service  names,  patents,  patent rights,
copyrights,  inventions, licenses, approvals, governmental authorizations, trade
secrets  and  rights  necessary  to  conduct  their respective businesses as now
conducted.  Except  as  set  forth  in  the SEC Documents, none of the Company's
trademarks,  trade  names,  service  marks,  service mark registrations, service
names,  patents,  patent  rights,  copyrights,  inventions, licenses, approvals,
government  authorizations,  trade secrets or other intellectual property rights
necessary  to  conduct  its  business as now or as proposed to be conducted have
expired  or  terminated, or are expected to expire or terminate within two years
from  the  date  of this Agreement. The Company and its Subsidiaries do not have
any  knowledge  of  any  infringement  by  the  Company  or  its Subsidiaries of
trademark,  trade  name  rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or  other  similar  rights  of  others, or of any such development of similar or
identical  trade  secrets  or technical information by others and, except as set
forth  in  the SEC Documents, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company  or  its  Subsidiaries  regarding trademark, trade name, patents, patent
rights,  invention,  copyright,  license,  service names, service marks, service
mark  registrations, trade secret or other infringement; and the Company and its
Subsidiaries  are unaware of any facts or circumstances which might give rise to
any  of  the foregoing. The Company and its Subsidiaries have taken commercially
reasonable  security  measures to protect the secrecy, confidentiality and value
of  all  of  their  intellectual  properties.

(M)  ENVIRONMENTAL  LAWS.  The  Company  and  its  Subsidiaries  (I) are, to the
knowledge  of  management  of  the  Company,  in  compliance  with  any  and all
applicable  foreign,  federal,  state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances  or  wastes,  pollutants or contaminants ("Environmental Laws"); (II)
have,  to  the  knowledge  of  management  of the Company, received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to  conduct  their  respective  businesses;  and (III) are in compliance, to the
knowledge  of  the  Company,  with  all terms and conditions of any such permit,
license  or approval where, in each of the three foregoing cases, the failure to
so  comply  would  have,  individually  or  in the aggregate, a Material Adverse
Effect.

(N)  TITLE.  The  Company and its Subsidiaries have good and marketable title to
all  personal  property  owned  by them which is material to the business of the
Company  and  its  Subsidiaries,  in  each  case  free  and  clear of all liens,
encumbrances  and  defects  except such as are described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of  its  Subsidiaries.  Any real property and facilities held under lease by the
Company  or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  Subsidiaries.

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

(P)  REGULATORY PERMITS. The Company and its Subsidiaries have in full force and
effect  all  certificates,  approvals,  authorizations  and  permits  from  the
appropriate  federal,  state,  local  or  foreign  regulatory  authorities  and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties  and  assets and conduct their respective businesses, and
neither  the  Company  nor  any  such  Subsidiary  has  received  any  notice of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or  permit,  except  for such certificates, approvals,
authorizations  or  permits  which  if  not  obtained,  or  such  revocations or
modifications  which,  would  not  have  a  Material  Adverse  Effect.

(Q)  INTERNAL  ACCOUNTING  CONTROLS.  The  Company  and each of its 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.

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

(S)  TAX  STATUS. The Company and each of its Subsidiaries has made or filed all
United  States  federal  and state income and all other tax returns, reports and
declarations  required  by  any  jurisdiction to which it is subject (unless and
only  to  the extent that the Company and each of its Subsidiaries has set aside
on  its  books  provisions reasonably adequate for the payment of all unpaid and
unreported  taxes) and has paid all taxes and other governmental assessments and
charges  that  are  material  in  amount,  shown or determined to be due on such
returns,  reports  and  declarations, except those being contested in good faith
and  has set aside on its books provision reasonably adequate for the payment of
all  taxes  for periods subsequent to the periods to which such returns, reports
or  declarations apply. There are no unpaid taxes in any material amount claimed
to  be  due by the taxing authority of any jurisdiction, and the officers of the
Company  know  of  no  basis  for  any  such  claim.

(T)  CERTAIN  TRANSACTIONS.  Except  as  set forth in the SEC Documents filed at
least ten days prior to the date hereof and except for arm's length transactions
pursuant  to which the Company makes payments in the ordinary course of business
upon  terms  no  less favorable than the Company could obtain from third parties
and  other  than the grant of stock options disclosed in the SEC Documents, none
of  the officers, directors, or employees of the Company is presently a party to
any  transaction  with  the  Company  or any of its Subsidiaries (other than for
services  as  employees,  officers  and  directors),  including  any  contract,
agreement  or  other  arrangement providing for the furnishing of services to or
by,  providing  for rental of real or personal property to or from, or otherwise
requiring  payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which  any officer, director, or any such employee has a substantial interest or
is  an  officer,  director,  trustee  or  partner.

(U) DILUTIVE EFFECT. The Company understands and acknowledges that the number of
shares  of  Common Stock issuable upon purchases pursuant to this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance  wherein  the trading price of the Common Stock declines during the
period  between the Effective Date and the end of the Open Period. The Company's
executive officers and directors have studied and fully understand the nature of
the  transactions  contemplated by this Agreement and recognize that they have a
potential  dilutive effect. The Board of Directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of  the  Company.  The  Company  specifically acknowledges that, subject to such
limitations  as  are  expressly  set  forth  in  the  Transaction Documents, its
obligation  to  issue  shares  of  Common  Stock upon purchases pursuant to this
Agreement  is  absolute and unconditional regardless of the dilutive effect that
such  issuance  may have on the ownership interests of other shareholders of the
Company.

(V)  RIGHT  OF  FIRST  REFUSAL.  The  Company shall not, directly or indirectly,
without  the  prior  written  consent of Investor which will not be unreasonably
withheld, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce  any offer, sale, grant or any option to purchase or other disposition)
any  of  its Common Stock or securities convertible into Common Stock at a price
that  is  less than the market price of the Common Stock at the time of issuance
of  such  security  or investment (a "Subsequent Financing") for a period of one
year after the Effective Date, except (I) the granting of options or warrants to
employees,  officers, directors and consultants, and the issuance of shares upon
exercise of options granted, under any stock option plan heretofore or hereafter
duly  adopted  by  the  Company or for services rendered or to be rendered; (II)
shares issued upon exercise of any currently outstanding warrants or options and
upon  conversion  of  any  currently  outstanding  convertible  debenture  or
convertible  preferred  stock,  in each case disclosed pursuant to Section 4(c);
(III)  securities  issued in connection with the capitalization or creation of a
joint venture with a strategic partner; (IV) shares issued to pay part or all of
the  purchase price for the acquisition by the Company of another entity (which,
for  purposes  of  this clause (iv), shall not include an individual or group of
individuals);  and  (V)  shares  issued  in  a  bona fide public offering by the
Company of its securities, unless (A) the Company delivers to Investor a written
notice  (the  "Subsequent  Financing  Notice")  of  its intention to effect such
Subsequent  Financing,  which  Subsequent  Financing  Notice  shall  describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds  intended to be raised thereunder, the person with whom such Subsequent
Financing  shall  be  effected,  and  attached to which shall be a term sheet or
similar  document relating thereto; and (B) Investor shall not have notified the
Company  by 5:00 p.m. (New York time) on the fifth Trading Day after its receipt
of  the  Subsequent  Financing  Notice of its willingness to provide, subject to
completion  of  mutually  acceptable  documentation, financing to the Company on
substantially  the  terms  set forth in the Subsequent Financing Notice; (VI) to
enter  into  a  loan,  credit  or  lease  facility  with  a  bank  or  financing
institution.  If  Investor  shall fail to notify the Company of its intention to
enter  into  such  negotiations  within  such  time period, then the Company may
effect  the  Subsequent  Financing substantially upon the terms set forth in the
Subsequent  Financing  Notice;  provided that the Company shall provide Investor
with  a  second  Subsequent  Financing Notice, and Investor shall again have the
right  of  first  refusal  set  forth  above  in this Section, if the Subsequent
Financing subject to the initial Subsequent Financing Notice shall not have been
consummated  for  any reason on the terms set forth in such Subsequent Financing
Notice  within  thirty  Trading  Days  after  the date of the initial Subsequent
Financing Notice. The rights granted to Investor in this Section are not subject
to  any  prior  right  of  first  refusal given to any other person disclosed on
Schedule  4(c).

(W)  LOCK-UP.  The  Company  shall  cause its officers, insiders, directors, and
affiliates  or  other  related  parties under control of the Company, to refrain
from  selling  Common  Stock  during  each  Pricing  Period.

(X) NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor
any person acting on its behalf, has engaged in any form of general solicitation
or  general  advertising (within the meaning of Regulation D) in connection with
the  offer  or  sale  of  the  Common  Stock  offered  hereby.

(Y)  NO  BROKERS,  FINDERS  OR  FINANCIAL  ADVISORY  FEES OR COMMISSIONS will be
payable  by  the  Company  with respect to the transactions contemplated by this
Agreement.

SECTION  5.  COVENANTS  OF  THE  COMPANY

(A)  BEST  EFFORTS. The Company shall use commercially reasonable efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Section 7
of  this  Agreement.

(B) BLUE SKY. The Company shall, at its sole cost and expense, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is  necessary  to  qualify  the  Securities  for,  or  obtain  exemption for the
Securities  for,  sale  to the Investor at each of the Closings pursuant to this
Agreement  under  applicable securities or "Blue Sky" laws of such states of the
United  States,  as reasonably specified by Investor, and shall provide evidence
of  any  such  action  so taken to the Investor on or prior to the Closing Date.

(C)  REPORTING STATUS. Until the earlier to occur of (I) the first date which is
after  the  date this Agreement is terminated pursuant to Section 9 and on which
the  Holders  (as that term is defined in the Registration Rights Agreement) may
sell  all  of  the  Securities  without  restriction  pursuant  to  Rule  144(k)
promulgated  under  the  1933  Act  (or successor thereto); and (II) the date on
which (A) the Holders shall have sold all the Securities; and (B) this Agreement
has  been  terminated  pursuant  to  Section  9 (the "Registration Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934  Act, and the Company shall not terminate its status as a reporting company
under  the  1934  Act.

(D)  USE  OF  PROCEEDS.  The  Company will use the proceeds from the sale of the
Shares  (excluding  amounts  paid  by  the  Company for fees as set forth in the
Transaction  Documents)  for  general corporate and working capital purposes and
acquisitions  or assets, businesses or operations or for other purposes that the
Board  of  Directors  deem  to  be  in  the  best  interest  of  the  Company.

(E)  FINANCIAL INFORMATION. The Company agrees to make available to the Investor
via  EDGAR  or  other  electronic means the following to the Investor during the
Registration  Period: (I) within five Trading Days after the filing thereof with
the  SEC,  a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports on
Form  10-QSB, any Current Reports on Form 8-K and any Registration Statements or
amendments  filed  pursuant to the 1933 Act; (II) on the same day as the release
thereof,  facsimile copies of all press releases issued by the Company or any of
its  Subsidiaries;  (III)  copies  of  any  notices  and  other information made
available  or  given  to  the  shareholders  of  the  Company  generally,
contemporaneously  with  the  making  available  or  giving  thereof  to  the
shareholders;  and  (IV) within two calendar days of filing or delivery thereof,
copies  of  all  documents  filed  with,  and  all  correspondence  sent to, the
Principal Market, any securities exchange or market, or the National Association
of  Securities  Dealers,  Inc.,  unless  such  information is material nonpublic
information.

(F)  RESERVATION OF SHARES. Subject to the following sentence, the Company shall
take  all action necessary to at all times have authorized, and reserved for the
purpose  of  issuance,  a sufficient number of shares of Common Stock to provide
for  the  issuance  of  the  Securities hereunder. In the event that the Company
determines  that  it  does  not have a sufficient number of authorized shares of
Common  Stock  to  reserve  and keep available for issuance as described in this
Section  5(f),  the Company shall use its best efforts to increase the number of
authorized  shares  of  Common  Stock  by  seeking  shareholder approval for the
authorization  of  such  additional  shares.

(G)  LISTING.  The Company shall promptly secure and maintain the listing of all
of  the Registrable Securities (as defined in the Registration Rights Agreement)
upon  the  Principal  Market  and  each  other  national securities exchange and
automated  quotation  system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, such listing
of  all Registrable Securities from time to time issuable under the terms of the
Transaction  Documents.  Neither  the  Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market (excluding suspensions of
not  more  than  one  trading  day  resulting from business announcements by the
Company).  The  Company  shall  promptly  provide  to the Investor copies of any
notices  it  receives  from  the  Principal  Market  regarding  the  continued
eligibility  of  the Common Stock for listing on such automated quotation system
or  securities  exchange.  The  Company  shall  pay  all  fees  and  expenses in
connection  with  satisfying  its  obligations  under  this  Section  5(g).

(H) TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each of
its  Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary  to  enter  into,  amend,  modify  or  supplement,  any  agreement,
transaction,  commitment  or  arrangement  with  any  of its or any Subsidiary's
officers,  directors,  persons who were officers or directors at any time during
the  previous  two  years,  shareholders  who beneficially own 5% or more of the
Common Stock, or affiliates or with any individual related by blood, marriage or
adoption  to  any such individual or with any entity in which any such entity or
individual  owns  a  5%  or  more  beneficial interest (each a "Related Party"),
except  for  (I)  customary  employment  arrangements  and  benefit  programs on
reasonable  terms, (II) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable  from a person other than such Related Party, or (III) any agreement,
transaction,  commitment  or  arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also  an  officer of the Company or any Subsidiary of the Company shall not be a
disinterested  director  with  respect  to  any  such  agreement,  transaction,
commitment  or  arrangement. "Affiliate" for purposes hereof means, with respect
to  any person or entity, another person or entity that, directly or indirectly,

(I)  has  a  5% or more equity interest in that person or entity, (II) has 5% or
more  common ownership with that person or entity, (III) controls that person or
entity, or (IV) is under common control with that person or entity. "Control" or
"Controls"  for  purposes  hereof  means  that a person or entity has the power,
direct  or  indirect,  to  conduct  or  govern the policies of another person or
entity.

(J)  FILING OF FORM 8-K. On or before the date which is three Trading Days after
the Execution Date, the Company shall file a Current Report on Form 8-K with the
SEC  describing  the  terms  of  the transaction contemplated by the Transaction
Documents  in  the  form  required  by the 1934 Act, if such filing is required.

(J)  CORPORATE EXISTENCE. The Company shall use its best efforts to preserve and
continue  the  corporate  existence  of  the  Company.

(K) NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE
A  PUT. The Company shall promptly notify Investor upon the occurrence of any of
the  following  events  in  respect  of  a  Registration  Statement  or  related
prospectus  in  respect  of  an  offering  of the Securities: (I) receipt of any
request  for  additional  information  by  the SEC or any other federal or state
governmental  authority  during  the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus;  (II)  the  issuance  by  the  SEC  or  any  other  federal or state
governmental  authority  of  any  stop order suspending the effectiveness of any
Registration  Statement  or  the initiation of any proceedings for that purpose;
(III)  receipt  of  any  notification  with  respect  to  the  suspension of the
qualification  or exemption from qualification of any of the Securities for sale
in  any  jurisdiction  or  the  initiation  or notice of any proceeding for such
purpose;  (IV)  the happening of any event that makes any statement made in such
Registration  Statement  or  related  prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that  requires  the making of any changes in the Registration Statement, related
prospectus  or  documents  so  that, in the case of a Registration Statement, 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  not misleading, and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of  a  material  fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein,  in  the  light  of  the  circumstances under which they were made, not
misleading; and (V) the Company's reasonable determination that a post-effective
amendment  to  the  Registration Statement would be appropriate, and the Company
shall  promptly  make  available to Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to Investor any Put Notice
during  the  continuation  of  any  of  the  foregoing  events.

(L)  REIMBURSEMENT.  If  (I)  Investor  becomes  involved in any capacity in any
action,  proceeding  or investigation brought by any shareholder of the Company,
in  connection  with  or  as  a  result  of the consummation of the transactions
contemplated  by  the  Transaction Documents, or if Investor is impleaded in any
such  action,  proceeding or investigation by any person (other than as a result
of  a  breach of the Investor's representations and warranties set forth in this
Agreement);  or  (II)Investor  becomes  involved  in any capacity in any action,
proceeding  or investigation brought by the SEC against or involving the Company
or  in  connection  with  or as a result of the consummation of the transactions
contemplated by the Transaction Documents (other than as a result of a breach of
the  Investor's  representations and warranties set forth in this Agreement), or
if  Investor is impleaded in any such action, proceeding or investigation by any
person,  then  in  any  such  case,  the Company will reimburse Investor for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred. In
addition,  other  than  with  respect to any matter in which Investor is a named
party, the Company will pay to Investor the charges, as reasonably determined by
Investor,  for  the  time  of  any  officers or employees of Investor devoted to
appearing  and  preparing  to  appear as witnesses, assisting in preparation for
hearings,  trials  or  pretrial matters, or otherwise with respect to inquiries,
hearing,  trials,  and  other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this section 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 Investor that are
actually  named  in  such  action,  proceeding  or  investigation, and partners,
directors,  agents,  employees, attorneys, accountants, auditors and controlling
persons  (if  any),  as the case may be, of Investor and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of the Company,
Investor  and  any  such  affiliate  and  any  such  person.

SECTION  6.  COVER.

If  the number of Shares represented by any Put Notices become restricted or are
no  longer freely trading for any reason, and after the applicable Closing Date,
the  Investor  purchases,  in  an  open  market  transaction  or  otherwise, the
Company's  Common  Stock  (the  "Covering  Shares") in order to make delivery in
satisfaction  of  a  sale  of  Common Stock by the Investor (the "Sold Shares"),
which delivery such Investor anticipated to make using the Shares represented by
the  Put  Notice  (a "Buy-In"), the Company shall pay to the Investor the Buy-In
Adjustment  Amount  (as  defined  below).  The "Buy-In Adjustment Amount" is the
amount  equal  to the excess, if any, of (A) the Investor's total purchase price
(including  brokerage  commissions, if any) for the Covering Shares over (B) the
net proceeds (after brokerage commissions, if any) received by the Investor from
the  sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount
to  the  Investor  in immediately available funds immediately upon demand by the
Investor.  By way of illustration and not in limitation of the foregoing, if the
Investor  purchases  Common  Stock  having  a  total  purchase  price (including
brokerage  commissions)  of $11,000 to cover a Buy-In with respect to the Common
Stock  it  sold  for net proceeds of $10,000, the Buy-In Adjustment Amount which
the  Company  will  be  required  to  pay  to  the  Investor  will  be  $1,000.
SECTION  7.  CONDITIONS  OF  THE  COMPANY'S  OBLIGATION  TO  SELL.
The  obligation hereunder of the Company to issue and sell the Securities to the
Investor is further subject to the satisfaction, at or before each Closing Date,
of  each  of  the following conditions set forth below. These conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole  discretion.

(A) The Investor shall have executed each of this Agreement and the Registration
Rights  Agreement  and  delivered  the  same  to  the  Company.

(B)  The Investor shall have delivered to the Company the Purchase Price for the
Securities  being  purchased  by  the  Investor at the Closing (after receipt of
confirmation  of  delivery  of  such Securities) by wire transfer of immediately
available  funds  pursuant  to  the  wire  instructions provided by the Company.

(C)  No statute, rule, regulation, executive order, decree, ruling or injunction
shall  have  been  enacted,  entered,  promulgated  or  endorsed by any court or
governmental  authority  of  competent  jurisdiction  which  prohibits  the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.

SECTION  8.  FURTHER  CONDITIONS  OF  THE  INVESTOR'S  OBLIGATION  TO  PURCHASE.
The  obligation  of  the Investor hereunder to purchase Shares is subject to the
satisfaction,  on  or  before  each  Closing  Date,  of  each  of  the following
conditions  set  forth  below.

(A)  The  Company  shall  have  executed  each  of the Transaction Documents and
delivered  the  same  to  the  Investor.

(B)  The  Common Stock shall be authorized for quotation on the Principal Market
and  trading  in the Common Stock shall not have been suspended by the Principal
Market  or  the  SEC,  at  any time beginning on the date hereof and through and
including  the  respective  Closing Date (excluding suspensions of not more than
one  Trading  Day resulting from business announcements by the Company, provided
that  such  suspensions  occur prior to the Company's delivery of the Put Notice
related  to  such  Closing).

(C)  The representations and warranties of the Company shall be true and correct
as of the date when made and as of the applicable Closing Date as though made at
that  time  (except  for  (I)  representations and warranties that speak as of a
specific  date  and  (II)  with  respect to the representations made in Sections
4(g),  (h)  and  (j) and the third sentence of Section 4(k) hereof, events which
occur  on  or  after the date of this Agreement and are disclosed in SEC filings
made by the Company at least ten Trading Days prior to the applicable Put Notice
Date)  and  the  Company  shall  have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed,  satisfied  or complied with by the Company on or before such Closing
Date.  The  Investor may request an update as of such Closing Date regarding the
representation  contained  in  Section  4(c)  above.

(D)  The  Company  shall  have  executed  and  delivered  to  the  Investor  the
certificates  representing,  or have executed electronic book-entry transfer of,
the  Securities  (in  such  denominations  as such Investor shall request) being
purchased  by  the  Investor  at  such  Closing.

(E)  The  Board  of  Directors  of  the  Company  shall have adopted resolutions
consistent  with Section 4(b)(ii) above (the "Resolutions") and such Resolutions
shall  not  have  been  amended  or  rescinded  prior  to  such  Closing  Date.

(F)  reserved

(G)  No statute, rule, regulation, executive order, decree, ruling or injunction
shall  have  been  enacted,  entered,  promulgated  or  endorsed by any court or
governmental  authority  of  competent  jurisdiction  which  prohibits  the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.

(H)  The  Registration  Statement shall be effective on each Closing Date and no
stop  order  suspending the effectiveness of the Registration statement shall be
in  effect  or  to  the  Company's  knowledge  shall  be  pending or threatened.
Furthermore,  on  each  Closing  Date (I) neither the Company nor Investor shall
have  received  notice  that the SEC has issued or intends to issue a stop order
with  respect  to  such  Registration  Statement  or  that the SEC otherwise has
suspended  or withdrawn the effectiveness of such Registration Statement, either
temporarily  or  permanently,  or intends or has threatened to do so (unless the
SEC's concerns have been addressed and Investor is reasonably satisfied that the
SEC  no longer is considering or intends to take such action), and (II) no other
suspension  of  the  use or withdrawal of the effectiveness of such Registration
Statement  or  related  prospectus  shall  exist.

(I)  At  the  time  of  each  Closing,  the  Registration  Statement  (including
information  or  documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make  the  statements  therein  not  misleading  or  which  would require public
disclosure  or  an  update  supplement  to  the  prospectus.

(J)  If  applicable,  the  shareholders  of  the Company shall have approved the
issuance  of  any  Shares  in  excess  of  the  Maximum Common Stock Issuance in
accordance  with  Section  2(i)  or  the Company shall have obtained appropriate
approval  pursuant  to the requirements of Nevada law and the Company's Articles
of  Incorporation  and  By-laws.

(K)  The  conditions  to  such Closing set forth in Section 2(f) shall have been
satisfied  on  or  before  such  Closing  Date.

(L)  The  Company  shall  have certified to the Investor the number of Shares of
Common  Stock  outstanding  when  a  Put  Notice  is  given  to  the  Investor.
SECTION 9. TERMINATION. This Agreement shall terminate upon any of the following
events:
(I)  when  the  Investor has purchased an aggregate of $10,000,000 in the Common
Stock  of  the  Company  pursuant  to  this  Agreement;
(II)  on  the  date  which  is  thirty-six (36) months after the Effective Date;
SECTION  10.  SUSPENSION

This  Agreement  shall  be suspended upon any of the following events, and shall
remain  suspended  until  such  event  is  rectified:

     (I)  the trading of the Common Stock is suspended by the SEC, the Principal
Market or the NASD for a period of five consecutive Trading Days during the Open
Period;

     (II)  The Common Stock ceases to be registered under the 1934 Act or listed
or  traded  on  the  Principal  Market.  Upon  the  occurrence  of  one  of  the
above-described  events,  the Company shall send written notice of such event to
the  Investor.

SECTION  11.  INDEMNIFICATION.

In  consideration of the parties mutual obligations set forth In the Transaction
Documents, each of the parties (in such capacity, an "Indemnitor") shall defend,
protect,  indemnify  and  hold  harmless  the other and all of the other party's
shareholders,  officers,  directors,  employees, counsel, and direct or indirect
investors  and  any  of  the  foregoing person's agents or other representatives
(including,  without  limitation,  those  retained  in  connection  with  the
transactions  contemplated  by this Agreement) (collectively, the "Indemnitees")
from  and  against any and all actions, causes of action, suits, claims, losses,
costs,  penalties,  fees,  liabilities  and  damages, and reasonable expenses in
connection  therewith (irrespective of whether any such Indemnitee is a party to
the  action  for  which  indemnification  hereunder  is  sought),  and including
reasonable  attorneys'  fees  and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (I)
any  misrepresentation  or  breach of any representation or warranty made by the
Indemnitor  or any other certificate, instrument or document contemplated hereby
or  thereby;  (II)  any  breach  of any covenant, agreement or obligation of the
Indemnitor  contained  in  the  Transaction  Documents or any other certificate,
instrument  or  document  contemplated  hereby or thereby; or (III) any cause of
action,  suit  or claim brought or made against such Indemnitee by a third party
and  arising  out  of  or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  except  insofar  as  any  such
misrepresentation,  breach  or  any  untrue statement, alleged untrue statement,
omission  or  alleged  omission  is made in reliance upon and in conformity with
information  furnished  to  Indemnitor which is specifically intended for use in
the  preparation  of  any  such  Registration Statement, preliminary prospectus,
prospectus  or  amendments  to  the prospectus. To the extent that the foregoing
undertaking by the Indenitor may be unenforceable for any reason, the Indemnitor
shall  make  the maximum contribution to the payment and satisfaction of each of
the  Indemnified  Liabilities  which  is  permissible  under applicable law. The
indemnity  provisions  contained  herein  shall  be  in addition to any cause of
action or similar rights Indemnitor may have, and any liabilities the Indemnitor
or  the  Indemnitees  may  be  subject  to.

SECTION  12.  GOVERNING  LAW;  MISCELLANEOUS.

(A)  GOVERNING  LAW.  This  Agreement  shall  be  governed by and interpreted in
accordance  with the laws of the Commonwealth of Massachusetts without regard to
the principles of conflict of laws. Each party hereby irrevocably submits to the
exclusive  jurisdiction  of  the state and federal courts sitting in the City of
Boston,  County  of Suffolk, 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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each  party hereby irrevocably waives personal service of process and
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such 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.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.

(B)  LEGAL  FEES;  AND  MISCELLANEOUS FEES. Except as otherwise set forth in the
Transaction  Documents,  each  party  shall  pay  the  fees  and expenses of its
advisers,  counsel,  the  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. Any attorneys' fees and
expenses  incurred  by  either the Company or by the Investor in connection with
the  preparation,  negotiation, execution and delivery of any amendments to this
Agreement  or  relating to the enforcement of the rights of any party, after the
occurrence  of any breach of the terms of this Agreement by another party or any
default  by another party in respect of the transactions contemplated hereunder,
shall  be  paid  on  demand  by  the  party  which breached the Agreement and/or
defaulted,  as  the case may be. The Company shall pay all stamp and other taxes
and  duties  levied  in  connection  with  the  issuance  of  any  Securities.

(C)  COUNTERPARTS.  This  Agreement  may  be  executed  in two or more identical
counterparts,  all  of  which shall be considered one and the same agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered  to  the  other  party;  provided  that a facsimile signature shall be
considered  due  execution  and shall be binding upon the signatory thereto with
the  same force and effect as if the signature were an original, not a facsimile
signature.

(D)  HEADINGS;  SINGULAR/PLURAL.  The  headings  of  this  Agreement  are  for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Agreement.  Whenever  required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.

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

(F) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oral
or  written  agreements  between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this  Agreement  and  the  instruments  referenced  herein  (including the other
Transaction  Documents)  contain  the  entire  understanding of the parties with
respect  to  the  matters covered herein and therein and, except as specifically
set  forth  herein  or  therein,  neither the Company nor the Investor makes any
representation,  warranty, covenant or undertaking with respect to such matters.
No  provision  of  this  Agreement may be amended other than by an instrument in
writing  signed  by the Company and the Investor, and no provision hereof may be
waived  other  than by an instrument in writing signed by the party against whom
enforcement  is  sought.

(G)  NOTICES.  Any  notices  or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have  been  delivered  (I)  upon  receipt,  when delivered personally; (II) upon
receipt,  when  sent  by  facsimile  (provided  confirmation  of transmission is
mechanically or electronically generated and kept on file by the sending party);
or  (III)  one day after deposit with a nationally recognized overnight delivery
service,  in  each case properly addressed to the party to receive the same. The
addresses  and  facsimile  numbers  for  such  communications  shall  be:

                               If to the Company:
Nighthawk  Systems,  Inc.
10715  Gulfdale,  Suite  200
San  Antonio,  Texas  78216
Telephone:  (210)  341-4811
Facsimile:   (210)  341-2011
                               If to the Investor:
Dutchess  Private  Equities  fund,  LP,  II
312  Stuart  Street
Boston,  MA  02116
Telephone:  617-960-3582
Facsimile:  617-960-3772

Each  party  shall provide five days' prior written notice to the other party of
any  change  in  address  or  facsimile  number.

(H)  NO  ASSIGNMENT.  This  Agreement  may  not  be  assigned.

(I)  NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of
the  parties  hereto and is not for the benefit of, nor may any provision hereof
be  enforced  by,  any  other  person.

(J) SURVIVAL. The representations and warranties of the Company and the Investor
contained  in  Sections  2  and  3,  the  agreements  and covenants set forth in
Sections  4  and  5, and the indemnification provisions set forth in Section 10,
shall  survive  each  of  the  Closings  and  the termination of this Agreement.

 (K)  PUBLICITY.  The  Company  and  Investor  shall  consult with each other in
issuing any press releases or otherwise making public statements with respect to
the  transactions  contemplated  hereby  and no party shall issue any such press
release or otherwise make any such public statement without the prior consent of
the  other parties, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law,  in  which  such  case the disclosing party shall provide the other parties
with  prior  notice of such public statement. Notwithstanding the foregoing, the
Company  shall  not  publicly  disclose  the  name of Investor without the prior
consent  of  such  Investor,  except  to  the  extent  required by law. Investor
acknowledges  that  this  Agreement and all or part of the Transaction Documents
may  be  deemed  to  be  "material  contracts"  as  that term is defined by Item
601(b)(10)  of Regulation S-B, and that the Company may therefore be required to
file  such  documents  as  exhibits  to reports or registration statements filed
under  the  1933 Act or the 1934 Act. Investor further agrees that the status of
such documents and materials as material contracts shall be determined solely by
the  Company,  in  consultation  with  its  counsel.

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

(M)  PLACEMENT  AGENT.  The  Company  agrees  to  pay  U.S.  Euro  Securities, a
registered broker dealer 5% (five percent) of the Put Amount on each draw toward
the  fee.  U.S.  Euro Securities will also act as an unaffiliated broker dealer.
The  Investor  shall have no obligation with respect to any fees or with respect
to  any  claims  made by or on behalf of other persons or entities for fees of a
type  contemplated  in  this  Section  that  may  be  due in connection with the
transactions  contemplated  by  the  Transaction  Documents.  The  Company shall
indemnify  and hold harmless the Investor, their employees, officers, directors,
agents,  and  partners,  and  their  respective affiliates, from and against all
claims,  losses,  damages,  costs  (including  the  costs  of  preparation  and
attorney's  fees)  and  expenses  incurred  in  respect  of  any such claimed or
existing  fees,  as  such  fees  and  expenses  are  incurred.

(N)  NO  STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to  be the language chosen by the parties to express their mutual intent, and no
rules  of  strict  construction  will  be  applied  against  any  party.

(O)  REMEDIES.  The Investor and each holder of the Shares shall have all rights
and  remedies  set forth in this Agreement and the Registration Rights Agreement
and  all  rights  and  remedies which such holders have been granted at any time
under  any  other agreement or contract and all of the rights which such holders
have  under  any  law.  Any person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any default or breach
of  any  provision  of  this  Agreement,  including  the  recovery of reasonable
attorneys  fees  and  costs,  and  to  exercise all other rights granted by law.

(P)  PAYMENT  SET  ASIDE.  To  the  extent  that  the Company makes a payment or
payments  to  the Investor hereunder or the Registration Rights Agreement or the
Investor  enforces  or  exercises  its  rights hereunder or thereunder, and such
payment  or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set  aside,  recovered from, disgorged by or are required to be refunded, repaid
or  otherwise  restored  to the Company, 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.

(Q)  PRICING  OF  COMMON STOCK. For purposes of this Agreement, the bid price of
the  Common  Stock  in  this  Agreement  shall  be as reported on Bloomberg.com.
                                      * * *

                     SIGNATURE PAGE OF INVESTMENT AGREEMENT

Your  signature  on  this Signature Page evidences your agreement to be bound by
the terms and conditions of the Investment Agreement and the Registration Rights
Agreement  as  of  the  date  first  written  above.

The  undersigned signatory hereby certifies that he has read and understands the
Investment  Agreement,  and  the representations made by the undersigned in this
Investment Agreement are true and accurate, and agrees to be bound by its terms.

                    DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
                             BY ITS GENERAL PARTNER,
                        DUTCHESS CAPITAL MANAGEMENT, LLC

By: /s/ Douglas H. Leighton
Douglas  H.  Leighton,  Managing  Member

                             NIGHTHAWK SYSTEMS, INC.

By /s/ Douglas Saathoff
Douglas  Saathoff,  Chief  Executive  Officer

                                LIST OF EXHIBITS

EXHIBIT  A               Registration  Rights  Agreement
EXHIBIT  B               Opinion  of  Company's  Counsel
EXHIBIT  C               [reserved]
EXHIBIT  D               Broker  Representation  Letter
EXHIBIT  E               Board  Resolution
EXHIBIT  F               Put  Notice
EXHIBIT  G               Put  Settlement  Sheet

                                LIST OF SCHEDULES

Schedule  4(a)  Subsidiaries

                                    EXHIBIT A

                                    EXHIBIT B

                                    EXHIBIT C

                                    EXHIBIT D
                              [BROKER'S LETTERHEAD]
Date
Via  Facsimile
Attention:

Re:  Nighthawk  Systems,  Inc.
Dear  __________________:
It  is  our understanding that the Form______ Registration Statement bearing SEC
File  Number  (  ___-______) filed by Nighthawk Systems, Inc.,  on Form _____ on
__________,  200X  was  declared  effective  on  _________,  200X.
This  letter  shall  confirm  that  ______________ shares of the common stock of
Nighthawk Systems, Inc., are being sold on behalf of __________________ and that
we  shall  comply  with  the  prospectus delivery requirements set forth in that
Registration  Statement  by  filing  the  same  with  the  purchaser.
If  you  have  any  questions  please  do  not  hesitate  to  call.
Sincerely,

cc:  .

                                    EXHIBIT E

                                    EXHIBIT F
Date:
RE:  Put  Notice  Number  __
Dear  Mr.  Leighton,
This  is  to  inform  you  that  as  of today, Nighthawk Systems, Inc., a Nevada
corporation (the "Company"), hereby elects to exercise its right pursuant to the
Investment  Agreement  to  require  Dutchess  Private Equities Fund, II,  LP. to
purchase  shares  of  its  common  stock.  The  Company  hereby  certifies that:
The  amount  of  this  put  is  $__________.
The  Pricing  Period  runs  from  ________  until  _______.
The  current  number  of  shares  issued  and outstanding as of the Company are:

Regards,

Douglas  Saathoff
Chief  Executive  Officer
Nighthawk  Systems,  Inc.

                                    EXHIBIT G
                              PUT SETTLEMENT SHEET
Date:
Douglas,
Pursuant  to  the  Put  given  by  Nighthawk  Systems,  Inc. to Dutchess Private
Equities  Fund,  II,  L.P.  on _________________ 200x, we are now submitting the
amount  of  common  shares  for  you  to  issue  to  Dutchess.
Please  have  a  certificate  bearing  no restrictive legend totaling __________
shares  issued  to  Dutchess Private Equities Fund, II,  LP immediately and send
via  DWAC  to  the  following  account:
XXXXXX
If  not  DWAC  eligible,  please  send  FedEx  Priority  Overnight  to:
XXXXXX
Once  these  shares  are  received  by  us,  we will have the funds wired to the
Company.
Regards,
Douglas  H.  Leighton

DATE PRICE

Date  of  Day  1  Closing  Bid  of  Day  1
Date  of  Day  2  Closing  Bid  of  Day  2
Date  of  Day  3  Closing  Bid  of  Day  3
Date  of  Day  4  Closing  Bid  of  Day  4
Date  of  Day  5  Closing  Bid  of  Day  5

LOWEST  1  (ONE)  CLOSING  BID  IN  PRICING  PERIOD
                                             ------------

PUT  AMOUNT
                                             ------------

AMOUNT  WIRED  TO  COMPANY
                                             ------------

PURCHASE  PRICE  (95%  (NINETY-FIVE  PERCENT))
                                             ------------

AMOUNT  OF  SHARES  DUE
                                             ------------

The  undersigned has completed this Put as of this ___th day of _________, 20xx.
Nighthawk  Systems,  Inc.

Douglas  Saathoff,  CEO

                          SCHEDULE 4(c) CAPITALIZATION

                             SCHEDULE 4(e) CONFLICTS

                         SCHEDULE 4(g) MATERIAL CHANGES

                            SCHEDULE 4(h) LITIGATION

                       SCHEDULE 4(l) INTELLECTUAL PROPERTY

                               SCHEDULE 4(n) LIENS

                       SCHEDULE 4(t) CERTAIN TRANSACTIONSREGISTRATION RIGHTS AGREEMENT

     Registration  Rights  Agreement (the  "Agreement"),  dated as of August 10,
2004,  by and between Nighthawk Systems, Inc., a corporation organized under the
laws  of  State  of  Nevada,  with  its  principal executive office at Nighthawk
Systems,  Inc.,  10715  Gulfdale,  Suite  200,  San  Antonio,  Texas 78216, (the
"Company"),  and  Dutchess  Private  Equities Fund, II, L.P., a Delaware limited
partnership  with  its  principal  office at 312 Stuart Street, Boston, MA 02116
(the  "Investor").

     Whereas,  in  connection  with  the Investment Agreement by and between the
Company and the Investor of even date herewith (the "Investment Agreement"), the
Company  has agreed to issue and sell to the Investor an indeterminate number of
shares  of  the  Company's  Common  Stock,  no  par value per share (the "Common
Stock"), to be purchased pursuant to the terms and subject to the conditions set
forth  in  the  Investment  Agreement;  and

     Whereas,  to  induce  the  Investor  to  execute and deliver the Investment
Agreement,  the  Company has agreed to provide certain registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable  state  securities  laws,  with respect to the shares of Common Stock
issuable  pursuant  to  the  Investment  Agreement.

     Now  therefore,  in  consideration of the foregoing premises and the mutual
covenants  contained  hereinafter and other good and valuable consideration, the
receipt  and  sufficiency  of which are hereby acknowledged, the Company and the
Investor  hereby  agree  as  follows:

Section  1.  DEFINITIONS.

     As  used  in  this  Agreement, the following terms shall have the following
meanings:

     "Execution  Date"  means  the  date  first  written  above.

     "Investor"  means  Dutchess  Private  Equities  Fund,  II, L.P., a Delaware
limited  partnership.

     "Person"  means a corporation, a limited liability company, an association,
a  partnership,  an  organization,  a business, an individual, a governmental or
political  subdivision  thereof  or  a  governmental  agency.

"Potential Material Event" means any of the following: (i) the possession by the
Company  of  material  information  not  ripe  for  disclosure in a Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of  Directors  of  the  Company  that  disclosure  of  such  information  in the
Registration  Statement  would be detrimental to the business and affairs of the
Company, or (ii) any material engagement or activity by the Company which would,
in  the  good  faith  determination of the Board of Directors of the Company, be
adversely affected by disclosure in a Registration Statement at such time, which
determination shall be accompanied by a good faith determination by the Board of
Directors  of  the  Company  that the Registration Statement would be materially
misleading  absent  the  inclusion  of  such  information.

     "Principal  Market"  shall  mean  The  American  Stock  Exchange,  National
Association  of  Securities  Dealer's, Inc. Over-the-Counter electronic bulletin
board, the Nasdaq National Market or The Nasdaq SmallCap Market whichever is the
principal  market  on  which  the  Common  Stock  is  listed.

     "Register,"  "Registered,"  and  "Registration"  refer  to  a  registration
effected  by  preparing  and  filing  one  or  more  Registration  Statements in
compliance  with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor  rule  providing  for offering securities on a continuous basis ("Rule
415"),  and  the  declaration  or ordering of effectiveness of such Registration
Statement(s)  by  the  United  States  Securities  and  Exchange Commission (the
"SEC").

     "Registrable  Securities"  means  (i)  the shares of Common Stock issued or
issuable  pursuant  to  the Investment Agreement, and (ii) any shares of capital
stock issued or issuable with respect to such shares of Common Stock, if any, as
a  result  of  any  stock  split,  stock dividend, recapitalization, exchange or
similar  event  or otherwise, which have not been (x) included in a Registration
Statement  that  has  been  declared  effective  by  the  SEC  or (y) sold under
circumstances  meeting  all  of  the  applicable  conditions of Rule 144 (or any
similar  provision  then  in  force)  under  the  1933  Act.

     "Registration  Statement"  means  a  registration  statement of the Company
filed  under  the  1933  Act  covering  the  Registrable  Securities.

     All  capitalized  terms  used  in  this Agreement and not otherwise defined
herein  shall  have  the  same  meaning  ascribed  to  them as in the Investment
Agreement.

     Section  2.  REGISTRATION.

     (a)  On  or  before the execution of this Agreement, the Company shall have
provided  a  draft  of  the  Registration  Statement  covering  the  Registrable
Securities  to  the Investor. The Company shall, as soon as practicable, but not
later than fifteen calendar days following the Execution Date, file with the SEC
a  Registration  Statement  or Registration Statements (as is necessary) on Form
SB-2  (or,  if  such  form is unavailable for such a registration, on such other
form as is available for such a registration), covering the resale of all of the
Registrable  Securities,  which  Registration  Statement(s) shall state that, in
accordance  with  Rule  416  promulgated  under  the 1933 Act, such Registration
Statement  also  covers such indeterminate number of additional shares of Common
Stock  as  may  become  issuable  upon  stock splits, stock dividends or similar
transactions.  The  Company shall initially register for resale _________ shares
of  Common Stock which would be issuable on the date preceding the filing of the
Registration  Statement  based  on the closing bid price of the Company's Common
Stock  on  such date and the amount reasonably calculated that represents Common
Stock  issuable to other parties as set forth in the Investment Agreement except
to  the  extent  that  the  SEC  requires  the  share  amount to be reduced as a
condition  of  effectiveness.

     (b)  The  Company  shall  use  commercially  reasonable efforts to have the
Registration  Statement(s) declared effective by the SEC within 90 calendar days
after  the  Execution  Date.

     (c)  The  Company  agrees  not  to  include  any  other  securities  in the
Registration  Statement  covering  the Registrable Securities without Investor's
prior  written  consent  which  Investor  may  withhold  in its sole discretion.
Furthermore,  the  Company  agrees  that it will not file any other Registration
Statement  for  other  securities,  until  thirty  calendar  days  after  the
Registration  Statement  for the Registrable Securities is declared effective by
the  SEC.

     Section  3.  RELATED  OBLIGATIONS.

     At such time as the Company is obligated to prepare and file a Registration
Statement  with  the  SEC  pursuant to Section 2(a), the Company will effect the
registration  of  the  Registrable  Securities  in  accordance with the intended
method  of disposition thereof and, with respect thereto, the Company shall have
the  following  obligations:

     (a)  The  Company  shall  use commercially reasonable efforts to cause such
Registration  Statement  relating  to  the  Registrable  Securities  to  become
effective  within  90  days  after  the  Execution  Date  and  shall  keep  such
Registration  Statement  effective until the earlier to occur of (i) the date as
of  which  the  Investor  may  sell  all  of  the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto);  or  (ii)  the  date on which (A) the Investor shall have sold all the
Registrable  Securities;  and  (B)  the  Investor  has  no  right to acquire any
additional  shares  of  Common  Stock  under  the  Investment  Agreement  (the
"Registration Period").  The Registration Statement (including any amendments or
supplements  thereto  and  prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be  stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. The Company shall use its
best  efforts  to  respond  to  all SEC comments within seven business days from
receipt  of such comments by the Company. The Company shall use its best efforts
to  cause  the  Registration Statement relating to the Registrable Securities to
become  effective  no  later  than three business days after notice from the SEC
that  the Registration Statement may be declared effective.  The Investor agrees
to  provide  all  information  which  it  is  required  by law to provide to the
Company,  including  the  intended  method  of  disposition  of  the Registrable
Securities,  and  the Company's obligations set forth above shall be conditioned
on  the  receipt  of  such  information.

     (b)  The  Company  shall  prepare  and  file  with  the SEC such amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used  in  connection  with  such  Registration
Statement,  which  prospectus  is  to  be filed pursuant to Rule 424 promulgated
under  the  1933  Act,  as  may be necessary to keep such Registration Statement
effective  during  the Registration Period, and, during such period, comply with
the  provisions  of  the  1933  Act  with  respect  to  the  disposition  of all
Registrable  Securities  of  the  Company covered by such Registration Statement
until  such  time as all of such Registrable Securities shall have been disposed
of  in  accordance  with  the  intended  methods  of disposition by the Investor
thereof as set forth in such Registration Statement.  In the event the number of
shares  of  Common  Stock  covered by a Registration Statement filed pursuant to
this  Agreement  is  at  any  time  insufficient to cover all of the Registrable
Securities,  the  Company shall amend such Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case, as soon as
practicable,  but  in  any  event  within  30  calendar days after the necessity
therefor  arises (based on the then Purchase Price of the Common Stock and other
relevant  factors  on which the Company reasonably elects to rely), assuming the
Company  has  sufficient  authorized  shares  at  that time, and if it does not,
within 30 calendar days after such shares are authorized.  The Company shall use
commercially  reasonable efforts to cause such amendment and/or new Registration
Statement  to  become  effective  as  soon  as  practicable following the filing
thereof.

     (c)  The  Company  shall  make  available to the Investor whose Registrable
Securities  are  included  in  any  Registration Statement and its legal counsel
without charge (i) promptly after the same is prepared and filed with the SEC at
least  one  copy  of  such  Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by  reference  and  all  exhibits,  the prospectus included in such Registration
Statement  (including  each  preliminary  prospectus)  and, with regards to such
Registration  Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives; (ii) upon the effectiveness of
any  Registration  Statement,  the  Company  shall  make available copies of the
prospectus  included  in  such  Registration  Statement  and  all amendments and
supplements  thereto;  and  (iii)  such other documents, including copies of any
preliminary  or  final  prospectus,  as the Investor may reasonably request from
time  to  time  in  order  to  facilitate  the  disposition  of  the Registrable
Securities.

     (d)  The  Company shall use commercially reasonable efforts to (i) register
and qualify the Registrable Securities covered by a Registration Statement under
such  other securities or "blue sky" laws of such states in the United States as
any  Investor reasonably requests; (ii) prepare and file in those jurisdictions,
such  amendments  (including  post-effective amendments) and supplements to such
registrations  and  qualifications  as  may  be  necessary  to  maintain  the
effectiveness  thereof  during  the  Registration  Period; (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect  at  all  times  during  the Registration Period, and (iv) take all other
actions  reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required  in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), or (y) subject itself to general taxation in any such
jurisdiction.  The  Company  shall  promptly  notify  each  Investor  who  holds
Registrable  Securities  of  the receipt by the Company of any notification with
respect  to  the  suspension  of the registration or qualification of any of the
Registrable  Securities  for sale under the securities or "blue sky" laws of any
jurisdiction  in  the  United  States  or  its  receipt  of actual notice of the
initiation  or  threatening  of  any  proceeding  for  such  purpose.

     (e)  As  promptly  as  practicable  after becoming aware of such event, the
Company shall notify each Investor in writing of the happening of any event as a
result  of which the prospectus included in a Registration Statement, as then in
effect,  includes  an untrue statement of a material fact or omission to state a
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  ("Registration  Default")  and  use all diligent efforts to promptly
prepare  a  supplement  or amendment to such Registration Statement and take any
other  necessary  steps  to  cure  the  Registration  Default,  (which,  if such
Registration  Statement is on Form S-3, may consist of a document to be filed by
the  Company  with  the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934  Act  (as  defined  below)  and  to  be  incorporated  by  reference in the
prospectus)  to  correct  such  untrue statement or omission, and make available
copies  of such supplement or amendment to each Investor. The Company shall also
promptly notify each Investor (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration Statement or
any  post-effective  amendment  has  become  effective (the Company will prepare
notification  of  such effectiveness which shall be delivered to the Investor on
the  same  day  of  such effectiveness and by overnight mail), additionally, the
Company  will promptly provide to the Investor a copy of the effectiveness order
prepared  by  the SEC once it is received by the Company; (ii) of any request by
the  SEC  for  amendments  or supplements to a Registration Statement or related
prospectus  or  related  information,  (iii)  of  the  Company's  reasonable
determination  that a post-effective amendment to a Registration Statement would
be  appropriate,  (iv)  in  the  event  the  Registration Statement is no longer
effective,  or  (v)  if  Registration  Statement  is  stale  as  a result of the
Company's  failure  to  timely  file  its  financials  or otherwise. The Company
acknowledges  that  its  failure  to  cure  the  Registration Default within ten
business  days  will cause the Investor to suffer damages in an amount that will
be  difficult  to  ascertain.  Accordingly,  the  parties  agree  that  it  is
appropriate  to  include  a  provision  for  liquidated  damages.  The  parties
acknowledge  and  agree  that the liquidated damages provision set forth in this
section  represents the parties' good faith effort to quantify such damages and,
as  such,  agree  that  the  form  and  amount  of  such  liquidated damages are
reasonable  and  will  not  constitute  a  penalty.  It  is the intention of the
parties that interest payable under any of the terms of this Agreement shall not
exceed  the  maximum  amount permitted under any applicable law. If a law, which
applies  to  this  Agreement  which sets the maximum interest amount, is finally
interpreted  so  that the interest in connection with this Agreement exceeds the
permitted  limits,  then:  (1)  any such interest shall be reduced by the amount
necessary  to  reduce  the  interest  to  the  permitted limit; and (2) any sums
already  collected  (if  any) from the Company which exceed the permitted limits
will be refunded to the Company.  The Investor may choose to make this refund by
reducing  the  amount  that the Company owes under this Agreement or by making a
direct  payment to the Company.  If a refund reduces the amount that the Company
owes  the Investor, the reduction will be treated as a partial payment.  In case
any  provision of this Agreement is held by a court of competent jurisdiction to
be  excessive  in  scope  or  otherwise invalid or unenforceable, such provision
shall  be adjusted rather than voided, if possible, so that it is enforceable to
the  maximum  extent  possible,  and  the  validity  and  enforceability  of the
remaining  provisions  of  this  Agreement  will  not  in any way be affected or
impaired  thereby.

     (f)  The  Company  shall use commercially reasonable efforts to prevent the
issuance  of  any  stop  order  or  other  suspension  of  effectiveness  of  a
Registration  Statement,  or  the  suspension of the qualification of any of the
Registrable  Securities  for  sale  in any jurisdiction and, if such an order or
suspension  is  issued,  to obtain the withdrawal of such order or suspension at
the  earliest  possible  moment and to notify the Investor who holds Registrable
Securities  being sold of the issuance of such order and the  resolution thereof
or  its  receipt  of actual notice of the initiation or threat of any proceeding
for  such  purpose.

     (g)  The  Company  shall  permit  the  Investor  and  one  legal  counsel,
designated  by the Investor, to review and comment upon a Registration Statement
and  all  amendments and supplements thereto at least seven  business days prior
to  their filing with the SEC, and not file any document in a form to which such
counsel  reasonably  objects.  The Company may request to shorten the Investor's
review  period  and  the  Investor will, if possible, attempt to comply with the
accelerated  review  period.  The  Company shall not submit to the SEC a request
for  acceleration  of the effectiveness of a Registration Statement or file with
the  SEC a Registration Statement or any amendment or supplement thereto without
the  prior  approval  of  such counsel, which approval shall not be unreasonably
withheld.

     (h)  At  the  request  of  the  Investor,  the  Company  shall  cause to be
furnished  to  such Investor, on the date of the effectiveness of a Registration
Statement,  a  legal  opinion,  in  form  and substance reasonably acceptable to
Investor's  counsel,  dated as of such date, of counsel representing the Company
for  purposes  of  such  Registration  Statement.

     (i)  The  Company  shall  make available for inspection by (i) the Investor
and  (ii) one legal counsel and one firm of accountants or other agents retained
by  the  Investor  (collectively, the "Inspectors"), all pertinent financial and
other  records,  and pertinent corporate documents and properties of the Company
(collectively,  the  "Records"), as shall be reasonably deemed necessary by each
Inspector,  and  cause the Company's officers, directors and employees to supply
all  information  which any Inspector may reasonably request; provided, however,
that  each  Inspector  shall  hold  in  strict confidence and shall not make any
disclosure  (except  to  an  Investor) or use of any Record or other information
which  the  Company  determines  in  good faith to be confidential, and of which
determination  the Inspectors are so notified, unless (a) the disclosure of such
Records  is  necessary  to  avoid  or  correct a misstatement or omission in any
Registration  Statement  or  is  otherwise  required under the 1933 Act, (b) the
release  of such Records is ordered pursuant to a final, non-appealable subpoena
or  order  from a court or government body of competent jurisdiction, or (c) the
information  in  such  Records  has  been made generally available to the public
other  than  by  disclosure in violation of this or any other agreement of which
the  Inspector has knowledge.  Each Investor agrees that it shall, upon learning
that  disclosure of such Records is sought in or by a court or governmental body
of  competent  jurisdiction  or  through  other means, give prompt notice to the
Company  and  allow the Company, at its expense, to undertake appropriate action
to  prevent  disclosure  of,  or  to  obtain a protective order for, the Records
deemed  confidential.

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

     (k)  The  Company  shall  use  commercially  reasonable efforts to maintain
designation  and  quotation  of  all  the  Registrable Securities covered by any
Registration  Statement on the Principal Market.  If, despite the Company's best
efforts,  the  Company  is unsuccessful in satisfying the preceding sentence, it
shall  use  commercially  reasonable  efforts  to  cause  all  the  Registrable
Securities  covered  by  any  Registration  Statement to be listed on each other
national  securities  exchange  and automated quotation system, if any, on which
securities of the same class or series issued by the Company are then listed, if
any,  if  the listing of such Registrable Securities is then permitted under the
rules  of  such exchange or system.  The Company shall pay all fees and expenses
in  connection  with  satisfying  its  obligation  under  this  Section  3(k).

     (l)  The Company shall cooperate with the Investor to facilitate the prompt
preparation  and  delivery  of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement  and  enable such certificates to be in such denominations or amounts,
as  the  case  may  be,  as  the  Investor  may  reasonably  request.

     (m)  The  Company  shall  provide  a transfer agent for all the Registrable
Securities not later than the effective date of the first Registration Statement
filed  pursuant  hereto.

     (n)  If  requested  by  the  Investor,  the  Company  shall  (i) as soon as
reasonably  practical  incorporate  in a prospectus supplement or post-effective
amendment  such  information  as  such  Investor  reasonably determine should be
included  therein  relating  to  the  sale  and  distribution  of  Registrable
Securities,  including,  without  limitation,  information  with  respect to the
offering  of  the  Registrable Securities to be sold in such offering; (ii) make
all  required  filings of such prospectus supplement or post-effective amendment
as  soon  as  reasonably  possible  after  being  notified  of the matters to be
incorporated  in  such  prospectus  supplement  or post-effective amendment; and
(iii)  supplement or make amendments to any Registration Statement if reasonably
requested  by  such  Investor.

     (o)  The  Company  shall  use  commercially reasonable efforts to cause the
Registrable  Securities  covered  by the applicable Registration Statement to be
registered  with  or approved by such other governmental agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such  Registrable
Securities.

     (p)  The  Company  shall  otherwise  use commercially reasonable efforts to
comply  with  all applicable rules and regulations of the SEC in connection with
any  registration  hereunder.

     (q)  Within  one  business  day  after  the  Registration  Statement  which
includes  Registrable  Securities  is declared effective by the SEC, the Company
shall deliver to the transfer agent for such Registrable Securities, with copies
to the Investor, confirmation that such Registration Statement has been declared
effective  by  the  SEC.

     (r)  At  or  prior  to  the  date  of the first Put Notice (as that term is
defined in the Investment Agreement) and at such other times as the Investor may
reasonably  request,  the  Company shall cause to be delivered, letters from the
Company's independent certified public accountants (i) addressed to the Investor
that  such  accountants are independent public accountants within the meaning of
the  1933 Act and the applicable published rules and regulations thereunder, and
(ii) in customary form and covering such financial and accounting matters as are
customarily  covered  by  letters  of  independent  certified public accountants
delivered  to  underwriters  in  connection  with  public  offerings.

     (s)  The  Company  shall  take  all  other  reasonable actions necessary to
expedite  and  facilitate  disposition by the Investor of Registrable Securities
pursuant  to  a  Registration  Statement.

     Section  4.  OBLIGATIONS  OF  THE  INVESTOR.

     (a)  At least five calendar days prior to the first anticipated filing date
of a Registration Statement  the Company shall notify the Investor in writing of
the  information  the  Company requires from each such Investor if such Investor
elects  to  have  any of such Investor's Registrable Securities included in such
Registration Statement.  It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to  the Registrable Securities of a particular Investor that such Investor shall
furnish  in  writing  to  the  Company  such  information  regarding itself, the
Registrable  Securities held by it and the intended method of disposition of the
Registrable  Securities held by it as shall reasonably be required to effect the
registration  of such Registrable Securities and shall execute such documents in
connection  with  such registration as the Company may reasonably request.  Each
Investor  covenants  and agrees that, in connection with any sale of Registrable
Securities  by it pursuant to a Registration Statement, it shall comply with the
"Plan  of  Distribution"  section  of  the  current  prospectus relating to such
Registration  Statement.

     (b)  The  Investor,  by  such  Investor's  acceptance  of  the  Registrable
Securities,  agrees to cooperate with the Company as reasonably requested by the
Company  in  connection  with  the  preparation  and  filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's  Registrable
Securities  from  such  Registration  Statement.

     (c)  The  Investor  agrees  that,  upon  receipt of written notice from the
Company  of  the happening of any event of the kind described in Section 3(f) or
the  first  sentence  of  3(e),  such  Investor  will  immediately  discontinue
disposition  of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of  the  supplemented  or amended prospectus contemplated by Section 3(f) or the
first  sentence  of  3(e).

     Section  5.  EXPENSES  OF  REGISTRATION.

     All  expenses,  other than underwriting discounts and commissions and other
than  as  set  forth  in  the  Investment Agreement, incurred in connection with
registrations including comments, filings or qualifications pursuant to Sections
2  and  3,  including,  without  limitation,  all  registration,  listing  and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel  for  the  Company  or  for  the  Investor shall be paid by the Company.

     Section  6.  INDEMNIFICATION.

     In  the  event  any  Registrable  Securities are included in a Registration
Statement  under  this  Agreement:

     (a)  To  the  fullest extent permitted by law, the Company will, and hereby
does,  indemnify,  hold  harmless  and  defend  each  Investor  who  holds  such
Registrable  Securities,  the directors, officers, partners, employees, counsel,
agents,  representatives of, and each Person, if any, who controls, any Investor
within  the  meaning  of the 1933 Act or the Securities Exchange Act of 1934, as
amended  (the  "1934  Act") (each, an "Indemnified Person"), against any losses,
claims,  damages,  liabilities,  judgments,  fines,  penalties,  charges, costs,
attorneys'  fees,  amounts  paid  in  settlement  or  expenses, joint or several
(collectively,  "Claims"), incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by  or  before  any  court  or  governmental, administrative or other
regulatory  agency,  body  or the SEC, whether pending or threatened, whether or
not  an  indemnified party is or may be a party thereto ("Indemnified Damages"),
to  which  any  of them may become subject insofar as such Claims (or actions or
proceedings,  whether  commenced or threatened, in respect thereof) arise out of
or  are  based  upon:  (i) any untrue statement or alleged untrue statement of a
material  fact  in  a  Registration  Statement  or  any post-effective amendment
thereto  or  in  any  filing  made  in  connection with the qualification of the
offering  under  the  securities or other "blue sky" laws of any jurisdiction in
which the Investor has requested in writing that the Company register or qualify
the  Shares  ("Blue Sky Filing"), or the omission or alleged omission to state a
material  fact required to be stated therein or necessary to make the statements
therein,  in  light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material  fact contained in the final prospectus (as amended or supplemented, if
the  Company  files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make  the statements made therein, in light of the circumstances under which the
statements  therein were made, not misleading, or (iii) any violation or alleged
violation  by  the  Company  of  the  1933  Act,  the  1934  Act, any other law,
including,  without  limitation,  any  state  securities  law,  or  any  rule or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant  to  a Registration Statement (the matters in the foregoing
clauses  (i)  through  (iii) being, collectively, "Violations").  Subject to the
restrictions  set  forth  in  Section  6(c)  with respect to the number of legal
counsel,  the  Company  shall  reimburse  the Investor and each such controlling
person,  promptly as such expenses are incurred and are due and payable, for any
reasonable  legal  fees  or  other  reasonable  expenses  incurred  by  them  in
connection  with  investigating  or  defending  any  such Claim. Notwithstanding
anything  to  the  contrary  contained  herein,  the  indemnification  agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based  upon  a  Violation  which  is  due  to  the inclusion in the Registration
Statement  of the information furnished to the Company by any Indemnified Person
expressly  for  use  in  connection  with  the  preparation  of the Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not be
available  to the extent such Claim is based on (a) a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the Company
or  (b)  the  Indemnified  Person's use of an incorrect prospectus despite being
promptly  advised in advance by the Company in writing not to use such incorrect
prospectus;  (iii)  any  claims  based  on the manner of sale of the Registrable
Securities  by the Investor or of the Investor's failure to register as a dealer
under  applicable  securities  laws; (iv) any omission of the Investor to notify
the  Company  of  any  material  fact  that should be stated in the Registration
Statement  or prospectus relating to the Investor or the manner of sale; and (v)
any  amounts  paid  in  settlement  of  any Claim if such settlement is effected
without  the  prior  written  consent of the Company, which consent shall not be
unreasonably  withheld.  Such  indemnity  shall  remain in full force and effect
regardless  of  any investigation made by or on behalf of the Indemnified Person
and  shall  survive  the  resale  of  the Registrable Securities by the Investor
pursuant  to  the  Registration  Statement.

          (b)  In connection with any Registration Statement in which a Investor
is  participating, each such Investor agrees to severally and jointly indemnify,
hold  harmless  and defend, to the  same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its  directors, each of its officers
who  signs  the  Registration  Statement,  each Person, if any, who controls the
Company  within  the  meaning  of the 1933 Act or the 1934 Act and the Company's
agents  (collectively  and  together with an Indemnified Person, an "Indemnified
Party"),  against  any  Claim  or  Indemnified  Damages to which any of them may
become  subject,  under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim  or  Indemnified  Damages arise out of or are based upon any Violation, in
each  case  to the extent, and only to the extent, that such Violation is due to
the inclusion in the Registration Statement of the written information furnished
to  the  Company  by  such  Investor  expressly  for use in connection with such
Registration  Statement;  and,  subject  to  Section  6(c),  such  Investor will
reimburse  any legal or other expenses reasonably incurred by them in connection
with  investigating  or  defending  any  such Claim; provided, however, that the
indemnity  agreement  contained  in  this  Section  6(b)  and the agreement with
respect  to  contribution contained in Section 7 shall not apply to amounts paid
in  settlement  of  any  Claim  if such settlement is effected without the prior
written  consent  of  such  Investor,  which  consent  shall not be unreasonably
withheld;  provided,  further,  however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not  exceed  the  net  proceeds  to  such  Investor  as  a result of the sale of
Registrable  Securities pursuant to such Registration Statement.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on  behalf  of  such  Indemnified  Party  and  shall  survive  the resale of the
Registrable  Securities  by the Investor pursuant to the Registration Statement.
Notwithstanding  anything  to the contrary contained herein, the indemnification
agreement  contained  in  this  Section  6(b)  with  respect  to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement  or  omission of material fact contained in the preliminary prospectus
were  corrected  on  a  timely  basis  in  the  prospectus,  as  then amended or
supplemented.  This  indemnification  provision  shall  apply separately to each
Investor  and  liability  hereunder  shall  not  be  joint  and  several.

     (c)  Promptly  after  receipt by an Indemnified Person or Indemnified Party
under  this  Section 6 of notice of the commencement of any action or proceeding
(including  any  governmental  action  or  proceeding)  involving  a Claim, such
Indemnified  Person or Indemnified Party shall, if a Claim in respect thereof is
to  be  made against any indemnifying party under this Section 6, deliver to the
indemnifying  party  a  written  notice  of  the  commencement  thereof, and the
indemnifying  party  shall  have the right to participate in, and, to the extent
the  indemnifying  party  so  desires, jointly with any other indemnifying party
similarly  noticed,  to  assume  control  of  the  defense  thereof with counsel
mutually  satisfactory  to  the indemnifying party and the Indemnified Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person  or Indemnified Party shall have the right to retain its own
counsel  with the fees and expenses to be paid by the indemnifying party, if, in
the  reasonable  opinion  of  counsel  retained  by  the  Indemnified  Person or
Indemnified  Party,  the  representation by counsel of the Indemnified Person or
Indemnified  Party  and  the  indemnifying  party  would be inappropriate due to
actual  or  potential  differing  interests  between  such Indemnified Person or
Indemnified  Party  and  any  other  party  represented  by such counsel in such
proceeding.  The  indemnifying  party  shall  pay  for  only  one separate legal
counsel  for  the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor are entitled
to  indemnification  hereunder,  or  the  Company, if the Company is entitled to
indemnification  hereunder, as applicable.  The Indemnified Party or Indemnified
Person  shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall  furnish to the indemnifying party all information reasonably available to
the  Indemnified  Party  or  Indemnified  Person which relates to such action or
Claim.  The  indemnifying  party shall keep the Indemnified Party or Indemnified
Person  fully  appraised  at  all  times  as to the status of the defense or any
settlement  negotiations  with  respect thereto.  No indemnifying party shall be
liable  for  any  settlement of any action, claim or proceeding effected without
its  written  consent,  provided, however, that the indemnifying party shall not
unreasonably  withhold,  delay  or  condition its consent. No indemnifying party
shall,  without  the  consent  of  the  Indemnified Party or Indemnified Person,
consent  to  entry  of  any  judgment  or  enter  into  any  settlement or other
compromise which does not include as an unconditional term thereof the giving by
the  claimant  or plaintiff to such Indemnified Party or Indemnified Person of a
release  from all liability in respect to such Claim.  Following indemnification
as  provided  for  hereunder,  the indemnifying party shall be surrogated to all
rights  of the Indemnified Party or Indemnified Person with respect to all third
parties,  firms or corporations relating to the matter for which indemnification
has  been made.  The failure to deliver written notice to the indemnifying party
within  a  reasonable  time  of  the  commencement  of any such action shall not
relieve  such  indemnifying  party of any liability to the Indemnified Person or
Indemnified  Party  under  this  Section  6,  except  to  the  extent  that  the
indemnifying  party  is  prejudiced  in  its  ability  to  defend  such  action.

     (d)  The  indemnity agreements contained herein shall be in addition to (i)
any  cause  of  action  or similar right of the Indemnified Party or Indemnified
Person  against  the  indemnifying party or others, and (ii) any liabilities the
indemnifying  party  may  be  subject  to  pursuant  to  the  law.

     Section  7.  CONTRIBUTION.

     To the extent any indemnification by an indemnifying party is prohibited or
limited  by  law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6  to  the  fullest  extent  permitted  by  law; provided, however, that: (i) no
contribution  shall  be  made under circumstances where the maker would not have
been  liable  for indemnification under the fault standards set forth in Section
6;  (ii)  no  seller  of  Registrable  Securities  guilty  of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled  to  contribution from any seller of Registrable Securities who was not
guilty  of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received  by  such  seller  from  the  sale  of  such  Registrable  Securities.

     Section  8.     REPORTS  UNDER  THE  1934  ACT.

     With  a  view  to making available to the Investor the benefits of Rule 144
promulgated  under  the  1933 Act or any other similar rule or regulation of the
SEC  that  may at any time permit the Investor to sell securities of the Company
to  the  public  without  registration  ("Rule  144"),  the  Company  agrees to:

     (a)     make  and  keep  public  information  available, as those terms are
understood  and  defined  in  Rule  144;

     (b)     file  with  the  SEC  in  a  timely  manner  all  reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the  Company  remains  subject  to  such  requirements (it being understood that
nothing  herein  shall limit the Company's obligations under Section 5(c) of the
Investment  Agreement)  and  the  filing  of such reports and other documents is
required  for  the  applicable  provisions  of  Rule  144;  and

     (c)     furnish  to  the  Investor,  promptly  upon  request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule  144,  the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by  the Company, and (iii) such other information as may be reasonably requested
to  permit  the  Investor  to  sell such securities pursuant to Rule 144 without
registration.

Section  9.  NO  ASSIGNMENT  OF  REGISTRATION  RIGHTS.

     The  rights  under  this  Agreement  shall  not  be  assignable.

Section  10.  AMENDMENT  OF  REGISTRATION  RIGHTS.

     Provisions  of  this Agreement may be amended only with the written consent
of  the Company and Investor. No such amendment shall be effective to the extent
that  it applies to less than all of the Investor of the Registrable Securities.

Section  11.  MISCELLANEOUS.

     (a)  Any  notices or other communications required or permitted to be given
under the terms of this Agreement that must be in writing will be deemed to have
been  delivered  (i) upon receipt, when delivered personally; (ii) upon receipt,
when  sent by facsimile (provided a confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (iii) one
day  after  deposit  with a nationally recognized overnight delivery service, in
each  case  properly  addressed to the party to receive the same.  The addresses
and  facsimile  numbers  for  such  communications  shall  be:

If  to  the  Company:

Nighthawk  Systems,  Inc.
10715  Gulfdale,  Suite  200
San  Antonio,  Texas  78216
Telephone:        210-341-4811
Facsimile:     210-341-2011

If  to  the  Investor:

Dutchess  Private  Equities  Fund,  II,  LP
312  Stuart  St,  Third  Floor
Boston,  MA  02116
Telephone:     617-960-3570
Facsimile:     617-960-3772

     Each party shall provide five business days prior notice to the other party
of  any  change  in  address,  phone  number  or  facsimile  number.

     (b)  Failure  of  any  party  to  exercise  any  right or remedy under this
Agreement  or otherwise, or delay by a party in exercising such right or remedy,
shall  not  operate  as  a  waiver  thereof.

     (c)    The  laws  of  the  Commonwealth  of  Massachusetts shall govern all
issues  arising  from  or  related  to  this  Agreement  without  regard  to the
principles  of  conflict  of  laws. Each party hereby irrevocably submits to the
exclusive  jurisdiction  of  the state and federal courts sitting in the City of
Boston,  County  of Suffolk, 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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each  party hereby irrevocably waives personal service of process and
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such 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.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.

     (d)  This  Agreement  and  the  Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof.  There are no restrictions, promises, warranties or undertakings, other
than  those  set  forth  or  referred  to  herein  and  therein.

     (e)  This  Agreement  and  the  Transaction  Documents  supersede all prior
agreements  and  understandings  among  the  parties  hereto with respect to the
subject  matter  hereof  and  thereof.

     (f)  The  headings  in this Agreement are for convenience of reference only
and  shall  not limit or otherwise affect the meaning hereof.  Whenever required
by  the  context  of  this  Agreement, the singular shall include the plural and
masculine  shall include the feminine.  This Agreement shall not be construed as
if  it had been prepared by one of the parties, but rather as if all the parties
had  prepared  the  same.

     (g)  This  Agreement may be executed in two or more identical counterparts,
each  of which shall be deemed an original but all of which shall constitute one
and  the  same  agreement.  This  Agreement,  once  executed  by a party, may be
delivered  to the other party hereto by facsimile transmission of a copy of this
Agreement  bearing  the  signature  of  the  party so delivering this Agreement.

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

                                      * * *

<PAGE>

                                 SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT

     Agreed  as  of  the  date  first  written  above.

DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.,
BY  ITS  GENERAL  PARTNER,
DUTCHESS  CAPITAL  MANAGEMENT,  LLC

     By:/s/ Douglas H. Leighton
     Douglas  H.  Leighton,  Managing  Member

NIGHTHAWK  SYSTEMS,  INC.,

By  /s/ H. Douglas Saathoff
    H.  Douglas  Saathoff,  Chief  Executive  Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]