Document:

SECURITIES PURCHASE AGREEMENT

      Securities Purchase Agreement (together with the schedules and exhibits
hereto, this "Agreement"), dated as of March 15, 2005, by and between Electronic
Game Card, Inc., a Nevada corporation (the "Company"), and each of the Persons
(as defined below) who has executed a signature page to this Agreement (each a
"Purchaser," and together, the "Purchasers").

                              W I T N E S S E T H:

      WHEREAS, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, certain securities as set forth
below.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:

      1. Offer and Sale of Securities.
1.1 The Offering. The Company is offering for sale in this offering the
Company's convertible promissory notes (the "Convertible Promissory Notes").
Each Convertible Promissory Note will automatically convert, with respect to
each $48,000 of the principal amount of the same, into 32,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.001 per share (the
"Shares" or "Series A Preferred" or the "Series A Preferred Stock") upon the
effectiveness of actions by the Company's shareholders to authorize the Series A
Preferred. The Company covenants to complete those actions as soon as
practicable. Each share of the Series A Preferred is initially convertible into
1 share of the Company's common stock, par value $0.001 per share (the "Common
Stock"), which equates to an initial conversion price of $1.50 per share of
Common Stock. (Each Promissory Note, therefore, is ultimately convertible into
an aggregate of 32,000 shares of Common Stock.) At the option of the holder,
each Convertible Promissory Note is also convertible directly into shares of
Common Stock on an as-converted-into-Series-A-Preferred basis, whether or not
the Series A Preferred is ever authorized or issued. The Purchaser will also
receive one (1) warrant (a "Warrant") substantially in the form of Exhibit C to
acquire one (1) share of the Series A Preferred for every 2 shares of the Series
A Preferred into which the Convertible Promissory Note(s) acquired by such
Purchaser are initially convertible, or 16,000 additional shares of Series A
Preferred in the aggregate with respect to each $48,000 initial principal amount
of Convertible Promissory Note(s) purchased (but there will be no fractional
Warrants). The Warrants, which shall not be transferable, shall be exercisable
as soon as the Series A Preferred Stock is authorized by the Company's
shareholders. The Warrants shall be initially exercisable at $1.85 per share of
Series A Preferred Stock, subject to adjustment, and shall be exercisable for a
period of 5 years. At the option of the holder, each Warrant is also immediately
exercisable directly to acquire shares of Common Stock on an
as-converted-from-Series-A-Preferred basis, whether or not the Series A
Preferred is ever authorized or issued. Unexercised Warrants shall expire
earlier upon notice by the Company to the holders of the Warrants following any
consecutive 30-day trading period during which the Common Stock trades on its
principal market at a price at or above three (3) times the then applicable
exercise price with average daily volume of at least 100,000 shares (subject to
adjustment of such trading volume threshold in the event of stock splits,
reverse stock splits, stock dividends, recapitalizations or similar events). The
"Minimum Offering" shall be Three Million Dollars ($3,000,000) of Convertible
Promissory Notes. The "Maximum Offering" shall be Eight Million One Hundred
Thousand Dollars ($8,100,000) of Convertible Promissory Notes; provided, that
the Company, in its sole discretion, may increase the Maximum Offering, at any
time during the Offering and without prior notice, by up to ten per cent (10%).
Once the Company is prepared to accept subscriptions for at least the Minimum
Offering, the Company may accept and close upon subscriptions from time to time
in its sole discretion during the offering period referred to in this Agreement.
The shares of Common Stock into which the Series A Preferred Stock is
convertible are sometimes hereafter referred to as the "Conversion Shares"). The
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Series A Preferred which may be acquired upon exercise of a Warrant are
sometimes hereinafter referred to as the "Warrant Shares". The shares of Common
Stock which may be acquired upon conversion of the Warrant Shares are sometimes
hereafter referred to as the "Common Stock Warrant Shares". Notwithstanding the
foregoing, the Warrant Shares shall not be authorized, the Warrants shall not be
exercisable as to the Warrant Shares, and the Company shall not be required to
reserve Warrant Shares (or the underlying Common Stock Warrant Shares) for
issuance upon exercise of Warrants until the Company has amended its Certificate
of Incorporation in order to authorize sufficient Series A Preferred Stock to
reserve for issuance upon exercise of the Warrants and such amendment is
effective under applicable law, including securities laws. The Company covenants
to promptly obtain the necessary shareholder consents for the amendment and to
promptly thereafter file an Information Statement with the U.S. Securities and
Exchange Commission and, as soon as permissible thereafter, mail the Information
Statement to shareholders in order that the amendment may become effective.. The
Series A Preferred shall have the powers, designations, preferences, rights,
qualifications, limitations and restrictions contained in the Certificate of
Designations of the Series A Preferred Stock, in the form of Exhibit A hereto
(the "Certificate of Designations"). The Convertible Promissory Notes offered
hereby, and the accompanying Warrants are sometimes referred to herein as the
"Securities". The Purchasers of the Convertible Promissory Notes shall have the
benefit of certain registration rights in respect of the Conversion Shares and
the Common Stock Warrant Shares and the shares of Common Stock which may be
acquired directly upon conversion of the Convertible Promissory Notes and
directly upon exercise of the Warrants on the terms and conditions of a
Registration Rights Agreement, substantially in the form of Exhibit B hereto
(the "Registration Rights Agreement").

The Company is offering the Securities (the "Offering") for sale only to
individuals, entities or groups, including, without limitation, corporations,
limited liability companies, limited or general partnerships, joint ventures,
associations, joint stock companies, trusts, unincorporated organizations, or
governments or any agencies or political subdivisions thereof (each, a "Person")
who are "accredited investors" (as defined herein). The Company is making the
Offering of the Securities directly through certain of its officers and its
directors, but may engage a placement agent (the "Placement Agent") and other
registered broker-dealers ("Other Participating Agents") may also place
Securities. If the Company should engage a Placement Agent or any Other
Participating Agent, the Company presently intends to pay to the Placement Agent
and to Other Participating Agents, if any, commissions equal to up to 10% of the
gross sales price of the Convertible Promissory Notes sold in the offering by
the applicable Placement Agent or Other Participating Agent. In addition, the
Company presently intends to issue to any such Placement Agent or Other
Participating Agent, if any, at each Closing warrants (the "Placement Agent
Warrants") granting to such person warrant coverage equal to up to Ten Per Cent
(10%) of the Common Stock initially issuable upon exercise of the Series A
Preferred Stock initially issuable upon conversion of the Convertible Promissory
Notes sold by such placement agent to investors introduced by such placement
agent. The Company has agreed to indemnify the Placement Agent and the Other
Participating Agents, if any, against certain liabilities. The Company will also
pay its own costs of the Offering. The Company will also reimburse the Placement
Agent for its documented fees and expenses (including without limitation legal
fees and expenses) in connection with the Offering, subject to pre-approval of
significant expenses. The Placement Agent, in the Placement Agent's sole
discretion, may share the consideration described in this paragraph with the
Other Participating Agents. There will be no Placement Agent Warrants with
respect to Warrants, Warrant Shares, Common Stock Warrant Shares, or the shares
of Common Stock which may be acquired directly upon conversion of Convertible
Promissory Notes or the exercise of Warrants. The Placement Agent Warrants shall
initially be exercisable at $1.85 per share of Common Stock, subject to
adjustment, commencing upon the date of issuance and continuing for Five (5)
years after issuance or until the date which is ten (10) days after the Company
furnishes written notice to the Warrant holder that the market price of the

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Common Stock has been at least 300% of the then applicable exercise price of the
Warrant for a period of at least thirty (30) days, and the average trading
volume of the Common Stock has been at least 100,000 shares per day (subject to
adjustment of such trading volume threshold in the event of stock splits,
reverse stock splits, stock dividends, recapitalizations or similar events). The
shares of Common Stock which may be acquired upon exercise of a Warrant are
sometimes hereinafter referred to as the "Placement Agent Warrant Shares"). The
Placement Agent Warrants shall contain a cashless exercise provision. The
Placement Agent Warrants shall be transferable by the Placement Agent or Other
Participating Agent receiving the same only to its officers, directors,
shareholders and employees, as well as by such persons to their immediate family
affiliates in connection with estate planning, provided that no such transfer or
disposition may be made other than in compliance with applicable securities laws
and furnishing satisfactory evidence of such compliance to the Company. All
subscription proceeds in the Offering will be paid at Closing to the account or
accounts specified in or pursuant to Section 1.2 herein, provided that in the
event that a Placement Agent is utilized, the Company will utilize an escrow
agent (the "Escrow Agent") for receipt of funds if required under applicable
law. All references in this Agreement to the Escrow Agent shall be deemed to be
references to the Company in the event that there is no third party Escrow
Agent.

      1.2 Subscription. Subject to the terms and conditions hereinafter set
forth in this Agreement, each Purchaser hereby offers to purchase, the initial
principal amount of Convertible Promissory Notes, together with the accompanying
Warrants, at the applicable Closing Date, set forth beneath each such
Purchaser's name on the signature pages of this Agreement, for an aggregate
purchase price (the "Purchase Price") equal to the principal amount of the
Convertible Promissory Notes so purchased (in multiples of $48,000) in the
amount set forth on the signature page beneath such Purchaser's name, to be paid
as set forth in this Agreement to such account or accounts as the Company may
specify by written notice to the Purchaser.

      1.3 Subscription Procedures. To submit this Subscription, each Purchaser
must deliver (i) this Agreement, including, without limitation, the related
Purchaser Questionnaire, both duly completed and executed and (ii) an executed
Registration Rights Agreement to the following address, unless otherwise advised
by the Company:

      Electronic Game Card, Inc.
      712 Fifth Avenue, 19th floor
      New York, New York, 10019

      Attention:  Private Placement

(with any questions to be raised with Liza Mullins +1 (212) 332-4365).

      The Company may accept or reject subscriptions, in whole or in part, or
accept subscriptions for less than the $48,000 minimum subscription, in its sole
discretion. The Company shall notify each Purchaser of the portion, if any, of
such Purchaser's subscription which has been accepted, payment instructions for
the Purchase Price, including wire transfer instructions and instructions for
delivery of payment by checks, if applicable, and the date upon which the
applicable Closing shall be held and payment must be made. At each applicable
Closing, each Purchaser acquiring Securities at such Closing shall deliver and
pay the applicable Purchase Price in full for the Securities being purchased by
such Purchaser at such Closing, for which such Purchaser's subscription has been
accepted, in U.S. dollars, in immediately available funds, in accordance with
the payment instructions contained in the notification to such Purchaser by the
Company.

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<PAGE>

      2. Closing. Upon acceptance of subscriptions for the Securities offered
hereby, the Company shall hold one or more closings (each one a "Closing", with
the first one being the "Initial Closing" and the final one being the "Final
Closing"). Each Closing shall be held at such location as the Company may
determine. The Final Closing Date will be that date which is the earlier to
occur of (i) March 18, 2005 or (ii) the sale of all of the Securities being
offered hereby, unless the Offering is extended without notice to investors, by
the Company in its sole discretion, for up to thirty (30) additional days (the
Final Closing Date is sometimes hereafter also referred to as the "Termination
Date"). At the Closing with respect to the subscription by each Purchaser, to
the extent the same is accepted by the Company, the Company will record on its
stock ledger in the name of each such Purchaser the Securities being purchased
by such Purchaser in accordance with the information on the applicable signature
page of this Agreement.

      2.1 Escrow. In the event that the Company engages a Placement Agent for
this Offering, which the Company may not choose to do, then, and only in such
case, pending each Closing all funds paid in respect of this Agreement with
regard to such Closing shall be deposited in an escrow account (the "Escrow
Account") maintained by the Escrow Agent in accordance with Rule 15c2-4 under
the Exchange Act (as defined herein). The Escrow Account shall not be interest
bearing. In such a case, if the Company accepts subscriptions at or prior to the
Initial Closing Date or the Final Closing Date, as the case may be, then all
subscription proceeds received for subscriptions accepted by the Company prior
to such Closing Date shall be paid over to the Company at each Closing, net of
the Placement Agent fees, if any, and other offering expenses, which shall be
paid to the appropriate parties at each such Closing. In any event, if the
Company shall not have received and accepted each Purchaser's subscription, then
that subscription shall be void and all funds paid hereunder by such Purchaser
with respect to such unaccepted subscription, without deduction therefrom or
interest thereon, shall be promptly returned to such Purchaser within three (3)
business days after the Termination Date.

      2.2. Return of Funds. Each Purchaser hereby authorizes and directs both
the Company and the Escrow Agent, if any, jointly and severally, to return or
direct the return of any funds from the Escrow Account, if any, without
deduction therefrom or interest thereon, to the same account from which the
funds were originally drawn, to the extent that such Purchaser's subscription is
not accepted prior to the termination of the Offering.

      3. Conditions to the Obligations of each Purchaser at Closing.

      The obligation of each Purchaser to purchase and pay for the Securities
subscribed for by such Purchaser at the applicable Closing is subject to the
satisfaction on or prior to the applicable Closing Date or the Final Closing
Date, as the case may be, of the following conditions, each of which may be
waived by the applicable Purchaser:

      3.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement which are qualified as to materiality
must be true and correct in all respects, and the representations and warranties
of the Company contained in this Agreement which are not qualified as to
materiality must be true and correct in all material respects, in each case as
of the applicable Closing Date except to the extent that the representations and
warranties relate to a different date in which case the representations and
warranties must be true and correct as written or true and correct in all
material respects, as the case may be, as of the different date.

      3.2 Performance of Covenants. The Company shall have performed or complied
with in all material respects all covenants and agreements required to be
performed by it on or prior to the applicable Closing pursuant to this
Agreement, including, without limitation, the delivery of certificates
evidencing the Securities issued to the Purchasers at the Closing.

      3.3 No Injunctions; etc. No court or governmental injunction, order or
decree prohibiting the purchase and sale of the Securities, the Conversion
Shares, the Warrant Shares, the Common Stock Warrant Shares or the shares of

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<PAGE>

Common Stock which may be acquired directly upon conversion of the Convertible
Promissory Notes or exercise of the Warrants will be in effect. There will not
be in effect any law, rule or regulation prohibiting or restricting the sale or
requiring any consent or approval of any Person that has not been obtained to
issue and sell the Securities, the Conversion Shares, the Warrant Shares, the
Common Stock Warrant Shares or the shares of Common Stock which may be acquired
directly upon conversion of the Convertible Promissory Notes or exercise of the
Warrants to the Purchasers except as contemplated by this Agreement.

      3.4 Closing Documents. At each Closing, the Company shall have delivered
to each applicable Purchaser the following:

      (a) a certificate of the President of the Company certifying that the
conditions in Sections 3.1 and 3.2 have been satisfied;

      (b) A certificate of the Secretary of the Company, dated as of that
Closing Date, certifying (i) the attached copies of the Certificate of
Incorporation and By-laws of the Company, (ii) the resolutions of the Board of
Directors of the Company (the "Board") authorizing the execution, delivery and
performance of this Agreement and the issuance of the Securities (including, but
not limited to, for purposes of Nevada corporations law) and recommending to
shareholders the creation of the Series A Preferred, and (iii) the incumbency of
the officers duly authorized to execute this Agreement and the other documents
contemplated by this Agreement;

      (c) a certificate of the Secretary of State of the State of Nevada, dated
as of a recent date (but no more than five business days) prior to the date of
the applicable Closing, to the effect that the Company is in good standing in
the State of Nevada and that all annual reports, if any, have been filed as
required and that all taxes and fees have been paid in connection therewith;

      (d) a copy of the Certificate of Designations to be filed with the
Secretary of State of the State of Nevada;

      (e) a certificate evidencing the Convertible Promissory Notes purchased by
such Purchaser;

      (f) a certificate evidencing the Warrants purchased by each Purchaser;

      (g) an opinion of counsel, reasonably satisfactory in form and in
substance to the Placement Agent; and

      (h) a Registration Rights Agreement duly executed by the Company.

      3.5 Waivers and Consents. The Company will have obtained all consents and
waivers necessary to execute and deliver this Agreement and all related
documents and agreements and to issue and deliver the Securities, and all
consents and waivers will be in full force and effect; provided, that the
Warrant Shares shall not be authorized, the Company will not be required to
reserve Warrant Shares for exercise of the Warrants, and the Warrants shall not
be exercisable as to Warrant Shares, until the Company has amended its
Certificate of Incorporation in order to authorize sufficient Series A Preferred
Stock to reserve for issuance upon exercise of the Warrants and such amendment
has become effective under applicable laws, including securities laws.

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<PAGE>

      4. Conditions to the Obligations of the Company at Closing.

      The obligation of the Company to issue and sell the Securities to any
Purchaser is subject to the satisfaction on or prior to each Closing Date of the
following conditions, each of which may be waived by the Company:

      4.1 Receipt of Purchase Price. The Company shall have received payment in
full in immediately available funds in U.S. dollars of the Purchase Price for
the Securities with respect to which the Company has accepted the Subscription
made by such Purchaser by means of this Agreement.

      4.2 Representations and Warranties. The representations and warranties of
each applicable Purchaser contained in this Agreement which are qualified as to
materiality must be true and correct in all respects, and the representations
and warranties of each applicable Purchaser contained in this Agreement which
are not qualified as to materiality must be true and correct in all material
respects, in each case as of the applicable Closing Date except to the extent
that the representations and warranties relate to a different date in which case
the representations and warranties must be true and correct as of the different
date.

       4.3 Performance of Covenants. The Purchasers will have performed or
complied with in all material respects all covenants and agreements required to
be performed by the Purchasers on or prior to the Closing pursuant to this
Agreement.

      4.4 Purchaser Questionnaire. All of the information furnished by each
Purchaser in the confidential purchaser questionnaire accompanying this
Agreement (the "Purchaser Questionnaire") shall have been accurate and complete
in all material respects.

       4.5 No Injunctions. No court or governmental injunction, order or decree
prohibiting the purchase or sale of the Securities, the Conversion Shares, the
Warrant Shares, the Common Stock Warrant Shares or the shares of Common Stock
which may be acquired directly upon conversion of the Convertible Promissory
Notes or exercise of the Warrants will be in effect.

       4.6 Closing Document. The Purchasers will have delivered to the Company a
Registration Rights Agreement duly executed by the Purchasers.

      5. Representations and Warranties of each Purchaser.

      Each Purchaser, in order to induce the Company to perform this Agreement,
hereby represents and warrants, severally and not jointly, as follows:

      5.1 Due Authorization. Each Purchaser represents for such Purchaser to the
Company that such Purchaser has full power and authority and has taken all
action necessary to authorize such Purchaser to execute, deliver and perform
such Purchaser's obligations under this Agreement and the other agreements to be
executed and delivered by such Purchaser in connection herewith. This Agreement,
and each other such agreement, is the legal, valid and binding obligation of
such Purchaser in accordance with its terms.

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<PAGE>

      5.2 Accredited Investor. Each Purchaser represents that such Purchaser is
an Accredited Investor as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended (the "Securities Act").

      5.3 No Investment Advice. The Company has not made any other
representations or warranties to such Purchaser other than as set forth herein
or incorporated herein by reference with respect to the Company or rendered any
investment advice.

      5.4 Investment Experience. Each Purchaser represents that such Purchaser
has not authorized any Person to act as such Purchaser's Purchaser
Representative (as that term is defined in Regulation D of the General Rules and
Regulations under the Securities Act) in connection with this transaction. Such
Purchaser has such knowledge and experience in financial, investment and
business matters that such Purchaser is capable of evaluating the merits and
risks of the prospective investment in the securities of the Company. Such
Purchaser has consulted with such independent legal counsel or other advisers as
such Purchaser has deemed appropriate to assist such Purchaser in evaluating the
proposed investment in the Company.

      5.5 Adequate Means. Each Purchaser represents as to such Purchaser that
such Purchaser (i) has adequate means of providing for such Purchaser's current
financial needs and possible contingencies; and (ii) can afford (a) to hold
unregistered securities for an indefinite period of time as required; and (b)
sustain a complete loss of the entire amount of the subscription.

      5.6 Access to Information. Each Purchaser represents that such Purchaser
has been afforded the opportunity to ask questions of, and receive answers from
the officers and/or directors of the Company acting on its behalf concerning the
terms and conditions of this transaction and to obtain any additional
information, to the extent that the Company possesses such information or can
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the information furnished; and has had such opportunity to the
extent such Purchaser considers appropriate in order to permit such Purchaser to
evaluate the merits and risks of an investment in the Company. It is understood
that all documents, records and books pertaining to this investment have been
made available for inspection, and that the books and records of the Company
will be available upon reasonable notice for inspection by investors during
reasonable business hours at its principal place of business. The foregoing
shall in no way be deemed to limit the ability of each Purchaser to rely on the
representations and warranties set forth herein or incorporated herein by
reference.

      5.7 No Endorsement. Each Purchaser further acknowledges that the offer and
sale of the Securities, the Conversion Shares, the Warrant Shares, the Common
Stock Warrant Shares and the shares of Common Stock which may be acquired
directly upon conversion of the Convertible Promissory Notes or exercise of the
Warrants has not been passed upon or the merits thereof endorsed or approved by
any state or federal authorities.

      5.8 Non-Registered Securities. Each Purchaser acknowledges that neither
the offer and sale of the Securities at the Closing, or the sale of the
Conversion Shares, the Warrant Shares, the Common Stock Warrant Shares, or the
shares of Common Stock which may be acquired directly upon conversion of the
Convertible Promissory Notes or exercise of the Warrants, to the extent
permissible thereafter, has been registered under the Securities Act or any
state securities laws and the Securities, and the Conversion Shares, the Warrant
Shares, the Common Stock Warrant Shares and or the shares of Common Stock which
may be acquired directly upon conversion of the Convertible Promissory Notes or
exercise of the Warrants may be resold only if registered pursuant to the
provisions thereunder or if an exemption from registration is available and such
resale is otherwise permitted by law and contract. Each Purchaser understands
that the offer and sale of the Securities at the Closing, and the sale of the
Conversion Shares, the Warrant Shares, the Common Stock Warrant Shares or the
shares of Common Stock which may be acquired directly upon conversion of the
Convertible Promissory Notes or exercise of the Warrants, to the extent
permissible thereafter, is intended to be exempt from registration under the
Securities Act, based, in part, upon the representations, warranties and
agreements of such Purchaser contained in this Agreement.

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<PAGE>

      5.9 No Resale. Each Purchaser represents that the Securities being
subscribed for, and the securities underlying the subscription, are being
acquired solely for the account of such Purchaser for such Purchaser's
investment and not with a view to, or for resale in connection with, any
distribution in any jurisdiction where such sale or distribution would be
precluded. By such representation, such Purchaser means that, other than as
disclosed on both the signature page of this Agreement and in the Purchaser
Questionnaire, no other Person has a beneficial interest in the Securities or
the securities underlying the subscription, and that no other Person has
furnished or will furnish directly or indirectly, any part of or guarantee the
payment of any part of the consideration to be paid by such Purchaser to the
Company in connection therewith. Such Purchaser does not intend to dispose of
all or any part of the Securities or the securities underlying the subscription
except in compliance with the provisions of the Securities Act and applicable
state securities laws, and understands that the Securities and the securities
underlying the subscription are being offered pursuant to a specific exemption
under the provisions of the Securities Act, which exemption(s) depends, among
other things, upon the compliance with the provisions of the Securities Act.

      5.10 Legend. Each Purchaser hereby acknowledges and agrees that until
either (i) a registration statement covering the resale of the securities is
effective under the Securities Act and such securities have been disposed of
thereunder, (ii) such securities are disposed of under Rule 144 and are no
longer required to be legended under Rule 144, or (iii) such securities are
eligible for sale under Rule 144(k) promulgated under the Securities Act, and,
in either case, the holder properly requests that the legend be removed in
accordance therewith, the Company may insert the following or similar legend on
the face of the certificates evidencing the Securities, the Conversion Shares,
the Warrant Shares, the Common Stock Warrant Shares and/or the shares of Common
Stock which may be acquired directly upon conversion of the Convertible
Promissory Notes or exercise of the Warrants, as the case may be, if the Company
deems the same to be necessary or appropriate in order to ensure compliance with
the Securities Act or state securities laws:

      "These securities have not been registered under the Securities Act of
      1933, as amended (the "Securities Act"), or any state securities laws and
      may not be sold or otherwise transferred or disposed of except pursuant to
      an effective registration statement under the Securities Act and any
      applicable state securities laws, or an opinion of counsel satisfactory to
      counsel to the issuer that an exemption from registration under the
      Securities Act and any applicable state securities laws is available."

In addition, the Company may insert a legend to the effect that the Warrants are
non-transferable.

      5.11 Broker's or Finder's Commissions. Other than the Placement Agent (as
placement agent on behalf of the Company) or any Other Participating Agent, if
any, no finder, broker, agent, financial person or other intermediary has acted
on behalf of any Purchaser in connection with the sale of the Securities by the
Company or the consummation of this Agreement or any of the transactions
contemplated hereby.

      Each Purchaser certifies that each of the foregoing representations and
warranties by such Purchaser set forth in this Section 5 are true as of the date
hereof and shall survive such date.

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<PAGE>

      6. Representations and Warranties of the Company.

      The Company represents and warrants to the Purchasers as follows as of
each applicable Closing, each such representation and warranty being made
subject to such disclosures as are made pursuant to this Agreement or any
schedule or exhibit delivered in connection herewith at the applicable Closing,
and the consummation of additional Closings as contemplated by this Agreement:

      6.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Company has full corporate power and authority to
own and hold its properties and to conduct its business. The Company is duly
licensed or qualified to do business, and in good standing, in each jurisdiction
in which the nature of its business requires licensing, qualification or good
standing, except for any failure to be so licensed or qualified or in good
standing that would not have a material adverse effect on the Company or its
results of operations, assets, business or financial condition or on its ability
to perform its obligations under this Agreement or to issue the Securities (a
"Material Adverse Effect").

      6.2 Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of 100,000,000 shares of Common Stock and
no shares of preferred stock. However, the Company is in the process of
effecting an amendment to its Certificate of Incorporation to authorize
10,000,000 shares of preferred stock, $0.001 per share par value. Except for the
Securities, the Conversion Shares, the Warrant Shares, the Common Stock Warrant
Shares, the shares of Common Stock which may be acquired directly upon
conversion of the Convertible Promissory Notes or exercise of the Warrants, the
Placement Agent Warrants and the Placement Agent Warrant Shares contemplated by
this Agreement, the capitalization of the Company as of March 1, 2005 is as set
forth on Schedule 6.2 to this Agreement, and there were no other securities
outstanding or reserved for issuance. All the outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights created by or through the Company,
and have been issued in compliance with all federal and state securities laws,
and were not issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as set forth on Schedule 6.2, as of
March 1, 2005 there are no other options, warrants or other rights, convertible
debt, agreements, arrangements or commitments of any character obligating the
Company to issue or sell any shares of capital stock of or other equity
interests in the Company, and the Company is not obligated to retire, redeem,
repurchase or otherwise reacquire any of its capital stock or other securities.
Except as identified on Schedule 6.2 or as contemplated by this Agreement, if at
all, there are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company's securities to which the Company is a
party and has material continuing obligations. The Company has not adopted a
stockholders rights plan, poison pill or similar arrangement. The consummation
of the transactions contemplated by this Agreement will not accelerate the
vesting schedule of any Company option or warrant. As used in this Agreement,
the term "Commission Documents" shall mean all reports, schedules, forms,
statements and other documents filed by the Company with the United States
Securities and Exchange Commission (the "Commission" or the "SEC") pursuant to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including all exhibits included therein and financial
statements and schedules thereto and documents or instruments incorporated by
reference therein.

      6.3 Corporate Power, Authorization; Enforceability. The Company has full
corporate power and authority to execute, deliver and enter into this Agreement,
the Warrants, the Placement Agent Warrants (if any), the Certificate of
Designations, and the Registration Rights Agreement (collectively, the
"Transaction Documents") and to consummate the transactions contemplated hereby

                                       9
<PAGE>

and thereby; except that, the Warrant Shares shall not be authorized, the
Warrants shall not be exercisable as to the Warrant Shares, and the Company
shall not be required to reserve Warrant Shares (or underlying Common Stock
Warrant Shares) for issuance upon exercise of the Warrants, until the Company
has amended its Certificate of Incorporation in order to authorize sufficient
Series A Preferred Stock to reserve for issuance upon exercise of the Warrants,
and such amendment is effective in accordance with applicable law, including
securities laws. All action on the part of the Company, its directors or
stockholders necessary for (i) the authorization, execution, delivery and
performance of the Transaction Documents by the Company, (ii) the authorization,
sale, issuance and delivery of the Securities as contemplated hereby, (iii) the
reservation of the securities underlying the Securities, and (iv) the
performance of the Company's obligations hereunder and thereunder has been
taken; except that, notwithstanding the foregoing, the Warrant Shares shall not
be authorized, the Warrants shall not be exercisable as to the Warrant Shares,
and the Company shall not be required to reserve Warrant Shares or the Common
Stock Warrant Shares for issuance upon exercise of the Warrant, until the
Company has amended its Certificate of Incorporation in order to authorize
sufficient Series A Preferred Stock to reserve for issuance upon exercise of the
Warrants and such amendment is effective in accordance with applicable laws
including, without limitation, securities laws. The Securities to be purchased
on each the Closing Date and the related Placement Agent Warrants, and the
underlying Conversion Shares, Warrant Shares, Common Stock Warrant Shares,
shares of Common Stock which may be acquired directly upon conversion of the
Convertible Promissory Notes or exercise of the Warrants, and Placement Agent
Warrant Shares have been duly authorized and, when issued in accordance with
this Agreement or the Warrants or the Placement Agent Warrants, as the case may
be, will be validly issued, fully paid and nonassessable and will be free and
clear of any mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or preference, priority, right or other
security interest or preferential arrangement of any kind or nature whatsoever
(collectively, "Liens") imposed by or through the Company other than
restrictions imposed by this Agreement, the Warrants, the Placement Agent
Warrants, the Certificate of Designations, and the Registration Rights
Agreement, as the case may be, and applicable securities laws; except that,
notwithstanding the foregoing, the Warrant Shares shall not be authorized, the
Warrants shall not be exercisable as to the Warrant Shares, and the Company
shall not be required to reserve Warrant Shares or the Common Stock Warrant
Shares for issuance upon exercise of the Warrants, until the Company has amended
its Certificate of Incorporation in order to authorize sufficient Series A
Preferred Stock to reserve for issuance upon exercise of the Warrants and such
amendment is effective in accordance with applicable laws including, without
limitation, securities laws. No preemptive or other rights to subscribe for or
purchase equity securities of the Company exists with respect to the issuance
and sale of the Securities, the Warrant Shares, the Common Stock Warrant Shares,
the shares of Common Stock which may be acquired directly upon conversion of the
Convertible Promissory Notes or exercise of the Warrants, or the Placement Agent
Warrant Shares. The Transaction Documents have been duly executed and delivered
by the Company, and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).

      6.4 No Conflict; Governmental Consents. (a) The execution and delivery by
the Company of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not (i) result in the
violation of any provision of the Certificate of Incorporation or By-laws or
other organizational documents of the Company or any subsidiary of the Company,
(ii) result in any violation of Requirements of Law to or by which the Company
or any subsidiary of the Company is bound, or (iii) conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute (with
due notice or lapse of time or both) a default under, any bond, debenture, note

                                       10
<PAGE>

or other evidence of indebtedness, or any material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company or any subsidiary of the Company is a party or
by which it or its property is bound, nor result in the creation or imposition
of any Lien upon any of the properties or assets of the Company, except for, in
the case of clauses (ii) and (iii) of this subsection (a), any violation,
conflict, breach or default which would not have a Material Adverse Effect. For
purposes of this Agreement, "Requirements of Law" means, as to any Person, any
law, statute, treaty, rule, regulation, right, privilege, qualification, license
or franchise or determination of an arbitrator or a court or other government of
any nation, state, city, locality or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing (each, a "Governmental Authority") or stock exchange, in each case
applicable or binding upon such Person or any of its property or to which such
Person or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.

      (b) No material consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other Governmental Authority or Person, and no lapse of
any waiting period under any Requirements of Law, remains to be obtained (or
lapsed) or is otherwise required to be obtained by the Company or any subsidiary
of the Company in connection with the authorization, execution and delivery of
the Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, including, without limitation the issue and sale of the
Securities as disclosed in this Agreement, and except filings, if any, as may be
required to be made by the Company after each Closing with (i) the Commission,
(ii) the National Association of Securities Dealers, Inc. ("NASD"), (iii) the
Nasdaq Stock Market, Inc. and (iv) state blue sky or other securities regulatory
authorities; except that, notwithstanding the foregoing, the Warrant Shares
shall not be authorized, the Warrants shall not be exercisable as to the Warrant
Shares, and the Company shall not be required to reserve Warrant Shares or
Common Stock Warrant Shares for issuance upon exercise of the Warrants, until
the Company has amended its Certificate of Incorporation in order to authorize
sufficient Series A Preferred Stock to reserve for issuance upon exercise of the
Warrants and such amendment becomes effective in accordance with applicable laws
including, without limitation, securities laws.

      6.5 Litigation. There are no claims, actions, suits, investigations or
proceedings pending or, to the Company's knowledge, threatened against the
Company or any subsidiary of the Company or its respective assets, at law or in
equity, by or before any Governmental Authority, or by or on behalf of any third
party, except for any claim, action, suit, investigation or proceeding which
would not have a Material Adverse Effect. There are no claims, actions, suits,
investigations or proceedings pending or, to the Company's knowledge, threatened
proceedings against the Company or any subsidiary of the Company contesting the
right of the Company to use, sell, import, license, or make available to any
Person any of the Company's or any subsidiary's products or services currently
or previously sold, offered, licensed or made available to any Person or used by
the Company or opposing or attempting to cancel any of the Company's
Intellectual Property (as such term is hereafter defined) rights, except for any
claim, action, suit, investigation or proceeding which would not have a Material
Adverse Effect.

      6.6 Compliance with Laws; No Default or Violation; Contracts. The Company
and each subsidiary of the Company is in compliance in all material respects
with all Requirements of Law and all orders issued by any court or Governmental
Authority against the Company in all material respects. To the Company's
knowledge, there is no existing or currently proposed Requirement of Law which
could reasonably be expected to prohibit or restrict the Company or any
subsidiary from, or otherwise materially adversely affect the Company or any
subsidiary in, conducting its business in any jurisdiction in which it now
conducts or proposes to conduct such business. The Company and each subsidiary
of the Company have all licenses, permits and approvals of any Governmental
Authority (collectively, "Permits") that are necessary for the conduct of the
business of the Company and each subsidiary of the Company, respectively; (ii)
such Permits are in full force and effect; and (iii) no violations are or have

                                       11
<PAGE>

been recorded in respect of any Permit, in each case except such as would not be
reasonably expected to have a Material Adverse Effect. No material expenditure
is presently required by the Company to comply with any existing Requirements of
Law or order. Except as would not be reasonably expected to have a Material
Adverse Effect, neither the Company nor any subsidiary of the Company is (i) in
default under or in violation of any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party of by which it or any of
its properties is bound or (ii) in violation of any order, decree or judgment of
any court, arbitrator or other Governmental Authority. The contracts described
in the Commission Documents or incorporated by reference therein that are
material to the Company (collectively, the "Contractual Obligations") are in
full force and effect on the date hereof, and neither the Company or any
subsidiary's nor, to the Company's knowledge, any other party to such contracts
is in breach of or default under any of such contracts nor, to the Company's
knowledge, does any condition exist that with notice or lapse of time or both
would constitute a default by such other party thereunder, in each case except
such as would not be reasonably expected to have a Material Adverse Effect.
Neither the Company nor any subsidiary of the Company has not received notice of
a default and is not in default under, or with respect to, any Contractual
Obligation nor, to the Company's knowledge, does any condition exist that with
notice or lapse of time or both would constitute a default thereunder, in each
case except such as would not be reasonably expected to have a Material Adverse
Effect. All of such Contractual Obligations are valid, subsisting, in full force
and effect and binding upon the Company or each subsidiary that is a party
thereto and, to the Company's knowledge, the other parties thereto, and the
Company has paid in full or accrued all amounts due thereunder and has satisfied
in full or provided for all of its liabilities and obligations thereunder.

      6.7 Environmental Matters. The Company and each subsidiary of the Company
is in compliance, in all material respects, with all applicable Environmental
Laws. There is no civil, criminal or administrative judgment, action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter pending or, to the Company's knowledge, threatened against the
Company pursuant to Environmental Laws. To the Company's knowledge, there are no
past or present events, conditions, circumstances, activities, practices,
incidents, agreements, actions or plans which could reasonably be expected to
prevent compliance with, or which have given rise to or will give rise to
liability which would have a Material Adverse Effect, under Environmental Laws.
For purposes of the foregoing, "Environmental Laws" means federal, state, local
and foreign laws, principles of common laws, civil laws, regulations, and codes,
as well as orders, decrees, judgments or injunctions, issued, promulgated,
approved or entered thereunder relating to pollution, protection of the
environment or public health and safety.

      6.8 Taxes. The Company and each subsidiary of the Company has filed all
required Tax returns and has paid or caused to be paid, or has established
reserves in accordance with GAAP for all Tax liabilities applicable to such
entity except as would not have a Material Adverse Effect. No additional Tax
assessment against the Company or its subsidiaries has been heretofore proposed
or, to the Company's knowledge, threatened by any Governmental Authority for
which provision has not been made on its balance sheet.

      No tax audit is currently in progress and there is no unassessed
deficiency proposed or, to the Company's knowledge, threatened against the
Company or any subsidiary. The Company has no knowledge of any change in the
rates or basis of assessment of any Tax (other than federal income tax), of the
Company or any subsidiary which would reasonably be expected to have a Material
Adverse Effect. The Company has not agreed to or is required to make any
adjustments under section 481 of the Code by reason of a change of accounting
method or otherwise. None of the assets of the Company or any subsidiary is
required to be treated as being owned by any Person, other than the Company or
any of its subsidiaries, pursuant to the "safe harbor" leasing provisions of
Section 168(f)(8) of the Code. The company is not a "United States real property
holding corporation" (a "USRPHC") as that term is defined in Section 897(c)(2)
of the Code and the regulations promulgated thereunder.

                                       12
<PAGE>

      For purposes of this Agreement, "Code" means the Internal Revenue Code of
1986, as amended, and "Taxes" means any federal, state, provincial, county,
local, foreign and other taxes (including, without limitation, income, profits,
windfall profits, alternative, minimum, accumulated earnings, personal holding
company, capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.

      6.9   Intellectual Property.

      (a) "Intellectual Property" shall mean all of the following as they are
necessary in connection with the business of the Company or its subsidiaries as
presently conducted and as they exist in all jurisdictions throughout the world,
in each case, to the extent owned by or licensed to the Company or its
subsidiaries: (i) patents, patent applications and inventions, designs and
improvements described and claimed therein, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
reissues, reexaminations, or interferences thereof, whether or not patents are
issued on any such applications and whether or not any such applications are
modified, withdrawn, or resubmitted) ("Patents"); (ii) trademarks, service
marks, trade dress, trade names, brand names, designs, logos, or corporate
names, whether registered or unregistered, and all registrations and
applications for registration thereof ("Trademarks"); (iii) copyrights and mask
works, including all renewals and extensions thereof, copyright registrations
and applications for registration thereof, and non-registered copyrights
("Copyrights"); (iv) trade secrets, inventions, know-how, process technology,
databases, confidential business information, customer lists, technical data and
other proprietary information and rights ("Trade Secrets"); (v) computer
software programs, including, without limitation, all source code, object code,
and documentation related thereto ("Software"); (vi) Internet addresses, domain
names, web sites, web pages and similar rights and items ("Internet Assets");
and (vii) all licenses, sublicenses and other agreements or permissions
including the right to receive royalties, or any other consideration related to
the property described in (i)-(vi). The Intellectual Property contains all of
the intellectual property necessary to operate the business of the Company as
currently conducted.

      (b) The Company or its subsidiaries exclusively own (or otherwise have the
right to use the Intellectual Property pursuant to a valid license, sublicense
or other agreement), free and clear of all Liens, and has the unrestricted right
(subject to any such license terms, if applicable) to use, sell, license, or
sublicense all Intellectual Property.

      (c) As used in this Agreement, the term "IP Licenses" means all material
licenses, sublicenses, distributor agreements and other agreements or
permissions under which the Company or any of its subsidiaries is a (i)
licensor, or (ii) licensee, distributor, or reseller, except such licenses,
sublicenses and other agreements relating to off-the-shelf software which is
commercially available on a retail basis for less than $15,000 per license and
$100,000 in the aggregate and used solely on the computers of the Company
("Off-the-Shelf Software"). To the knowledge of the Company, all of the IP
Licenses are valid, enforceable, and in full force and effect, and, with respect
to the Company and its applicable subsidiaries, will continue to be on identical
terms immediately following the completion of the transactions contemplated by
this Agreement.

      (d) All products made, used or sold by the Company or any of its
subsidiaries under the Patents have been marked with the proper patent notice.

                                       13
<PAGE>

      (e) All products and materials made, used or sold by the Company or its
subsidiaries containing Trademarks bear the proper federal registration notice
where permitted by law.

      (f) All works encompassed by the Copyrights and used by the Company or its
subsidiaries have been marked with the proper copyright notice.

      (g) To the Company's knowledge, upon reasonable inquiry in accordance with
sound business practice and business judgment, all the Company's Intellectual
Property rights are valid and enforceable. The Company has taken all reasonably
necessary actions to maintain and protect each item of Intellectual Property
owned by the Company or its subsidiaries.

      (h) The Company and each subsidiary of the Company has taken all
reasonable precautions to protect the secrecy, confidentiality, and value of its
Trade Secrets and the proprietary nature and value of its Intellectual Property.
To the best of the Company's knowledge, none of the Trade Secrets, wherever
located, the value of which is contingent upon maintenance of confidentiality
thereof, have been disclosed to any employee, representative or agent of the
Company or any other person not obligated to maintain such Trade Secret in
confidence pursuant to a confidentiality agreement entered into with the
Company, except as required pursuant to the filing of a patent application by
the Company.

      (i) The Company or a subsidiary of the Company, as applicable, is
diligently prosecuting all Patent applications it has filed, as instructed by
patent counsel. The Company or a subsidiary of the Company, as applicable, is
diligently filing and preparing to file Patent applications for all inventions
in a manner and within a sufficient time period to avoid statutory
disqualification of any potential Patent application.

      (j) The Company or a subsidiary of the Company, as applicable, is
diligently filing and preparing to file Patent applications for all inventions
in a manner and within a sufficient time period to avoid statutory
disqualification of any potential Patent application.

      (k) Unless otherwise disclosed by the Company or pursuant to a current
license, it is not necessary for the Company's business to use any Intellectual
Property owned by any present or past director, officer, employee or consultant
of the Company (or persons the Company presently intends to hire). To the actual
knowledge of the Company's executive officers, at no time during the conception
or reduction to practice of any of the Company's Intellectual Property was any
developer, inventor or other contributor to such Intellectual Property operating
under any grants from any Governmental Authority or subject to any employment
agreement, invention and assignment, nondisclosure agreement or other
Contractual Obligation with any Person that could adversely affect the Company's
rights to its Intellectual Property.

      (l) To the actual knowledge of the Company, none of the Intellectual
Property, products or services owned, used, developed, provided, sold or
licensed by the Company, or made for, used or sold by or licensed to the Company
by any person infringes upon or otherwise violates any Intellectual Property
rights of others.

      (m) To the actual knowledge of the Company, no Person is infringing upon
or otherwise violating the Intellectual Property rights of the Company.

      6.10  Employee Benefit Plans.

      (a) Neither the Company nor any entity which is or was under common
control within the meaning of Section 414(b), (c), (m) or (o) of the Code
maintains or contributes to, or has within the preceding six years maintained or
contributed to, or may have any liability with respect to any employee benefit
plan subject to Title IV of Employee Retirement Income Security Act of 1974, as

                                       14
<PAGE>

amended ("ERISA"), or Section 412 of the Code or any "multiple employer plan"
within the meaning of the Code or ERISA. Each employee benefit plan,
arrangement, policy, program, agreement or commitment which the Company
maintains, contributes to or may have any liability in respect to (each, a
"Plan") has been established and administered in accordance with its terms, and
complies in form and in operation with the applicable requirements of ERISA, the
Code and other applicable Requirements of Law. No claim with respect to the
administration or the investment of the assets of any Plan (other than routine
claims for benefits) is pending. No event has occurred in connection with which
the Company or any Plan, directly or indirectly, could be subject to any
material liability under ERISA, the Code or any other law, regulation or
governmental order applicable to any Plan, or under any agreement, instrument,
statute, rule of law or regulation pursuant to or under which the Company has
agreed to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirement of, any such statute, regulation
or order. The Company has no liability, whether absolute or contingent,
including any obligations under any Plan, with respect to any misclassification
of any person as an independent contractor rather than as an employee.

      (b) Neither the Company nor any subsidiary of the Company has any
obligations to provide or any direct or indirect liability, whether contingent
or otherwise, with respect to the provision of health or death benefits to or in
respect of any former employee, except as may be required pursuant to Section
4980B of the Code and the corresponding provisions of ERISA and the cost of
which are fully paid by such former employees.

      (c) There are no unfunded obligations under any Plan which are not fully
reflected on the Financial Statements.

      (d) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any Company (or subsidiary) employee to severance pay or
(ii) accelerate the time of payment or vesting or trigger any payment or funding
(though a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligations pursuant
to, any Plan.

      6.11 Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

      6.12 Compliance. The Common Stock is registered pursuant to the Exchange
Act and the Common Stock is listed on the OTC Bulletin Board, and the Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the OTC Bulletin Board. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Securities.

      6.13 Private Offerings. Assuming the truth of each Purchaser's
representations and acknowledgments contained in Section 5 hereof and in the
Purchaser's Questionnaire delivered by such Purchaser in connection herewith,
neither the Company nor any Person acting on its behalf (other than the
Purchasers, as to whom the Company makes no representations) has offered or sold
the Securities by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act and this offering is
exempt from the registration requirements of the Securities Act. The Company has
not sold the Securities to anyone other than the subscribers to this Agreement.
Each Security shall bear substantially the same legend set forth in Section 8
hereof for at least so long as required by the Securities Act.

                                       15
<PAGE>

      6.14 Broker's or Finder's Commissions. Other than certain of the Company's
officers and directors, if at all, and the Placement Agent (as placement agent
on behalf of the Company) or any Other Participating Agent, if any are engaged
by the Company, no finder, broker, agent, financial person or other intermediary
has acted on behalf of the Company in connection with the sale of the Securities
by the Company or the consummation of this Agreement or any of the transactions
contemplated hereby. The Company has not had any direct or indirect contact with
any other investment banking firm (or similar firm) with respect to the offer of
the Securities by the Company to the Purchasers or the Purchasers' subscriptions
for the Securities.

      6.15 Disclosure. The Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading. The Company does not
have any knowledge of any fact that has specific application to the Company
(other than general economic or industry conditions) and that can reasonably be
foreseen to cause a Material Adverse Effect that has not been set forth in the
Transaction Documents or the Commission Documents. Since December 31, 2003, the
Company has filed all Commission Documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act, and all
such Commission Documents were filed within the time periods specified in the
Exchange Act. As of their respective filing dates, each Commission Document
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder applicable to the Commission Documents, and no Commission Document
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein.

      The Company certifies that each of the foregoing representations and
warranties by the Company sets forth in this Section 6 are true as of the date
hereof and shall survive such date as contemplated in Section 7.1.

      7. Indemnification.

      7.1 (a) The Company agrees to indemnify and hold harmless the Purchasers,
their affiliates and each of their respective directors, officers, general and
limited partners, principals, members, agents and attorneys (individually, an
"Indemnified Party" and collectively, the "Indemnified Parties") from and
against any and all losses, claims, damages, liabilities, costs (including
reasonable attorneys' fees) and expenses (collectively, "Losses") to which any
Indemnified Party may become subject, insofar as such Losses arise out of, in
any way relate to, or result from (i) any breach of any representation or
warranty made by the Company contained in or made pursuant to Article 6 of this
Agreement, or (ii) the failure of the Company to fulfill any agreement or
covenant contained in or made pursuant to this Agreement. In no event, however,
shall the Company be liable for indirect, incidental or consequential or special
damages of any kind. All of the representations and warranties of the Company
made herein shall survive the execution and delivery of this Agreement until the
date that is one hundred eighty (180) days after the date of this Agreement,

                                       16
<PAGE>

except for (a) Sections 6.1 (Organization, Good Standing and Qualification), 6.2
(Capitalization), 6.3 (Corporate Power, Authorization; Enforceability), 6.13
(Private Offerings) and 6.14 (Broker's or Finder's Commission), which
representations and warranties shall survive indefinitely (or if indefinite
survival is not permitted by law, then for the maximum period permitted by
applicable law), (b) Section 6.8 (Taxes), which representation and warranty
shall survive until the later to occur of (i) the lapse of the statute of
limitations with respect to the assessment of any tax to which such
representation and warranty relates (including any extensions or waivers
thereof) and (ii) sixty (60) days after the final administrative or judicial
determination of the Taxes to which such representation and warranty relates,
and no claim with respect to Section 6.8 may be asserted thereafter with the
exception of claims arising out of any fact, circumstance, action or proceeding
to which the party asserting such claim shall have given notice to the other
parties to this Agreement prior to the termination of such period of reasonable
belief that a tax liability will subsequently arise therefrom, and (c) Section
6.7 (Environmental Matters), which representation and warranty shall survive
until the lapse of the applicable statute of limitations. Except as set forth
herein, all of the covenants, agreements and obligations of the Company shall
survive the Final Closing indefinitely (or if indefinite survival is not
permitted by law, then for the maximum period permitted by applicable law).

      (b) Each Purchaser severally, and not jointly, agrees to indemnify and
hold harmless the Company, its affiliates and each of their respective
directors, officers, general and limited partners, principals, agents and
attorneys from and against any and all Losses to which any such Person may
become subject, insofar as such Losses arise out of, in any way relate to, or
result from (i) any breach of any representation or warranty made by such
Purchaser contained in or made pursuant to Article 5 of this Agreement, or (ii)
the failure of such Person to fulfill any agreement or covenant contained in or
made pursuant to this Agreement. In no event, however, shall any Purchaser be
liable for indirect, incidental or consequential or special damages of any kind.
All of the representations and warranties of each Purchaser made herein shall
survive the execution and delivery of this Agreement for the maximum period
permitted by applicable law with respect to the statute of limitations
applicable to survival of contractual claims for indemnification. Except as set
forth herein, all of the covenants, agreements and obligations of the Purchasers
shall survive the Final Closing for the maximum period permitted by applicable
law with respect to the statute of limitations applicable to survival of
contractual claims for indemnification. Furthermore, in no event shall any
Purchaser be required to make indemnification pursuant to this Section in excess
of the gross Purchase Price of the Securities acquired by such Purchaser in the
Offering.

      7.2 Promptly after receipt by any Person entitled to seek indemnification
under Section 7.1 of this Agreement (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties") of notice of any claim as to which
indemnity may be sought, including, without limitation, the commencement of any
action or proceeding, the Indemnified Party will, if a claim in respect thereof
may be made against a Person required to provide indemnification under Section
7.1 of this Agreement (individually, an "Indemnifying Party" and collectively,
the "Indemnifying Parties"), promptly notify the Indemnifying Party in writing
of the commencement thereof; provided that the failure of the Indemnified Party
to so notify the Indemnifying Party will not relieve the Indemnifying Party from
its obligations under this Section unless, and only to the extent that, such
omission results in the Indemnifying Party's forfeiture of substantive rights or
defenses or being materially prejudiced by the Indemnified Person's failure to
give such notice. In case any action or proceeding is brought against any
Indemnified Party, and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to assume the defense thereof
at its own expense, with counsel reasonably satisfactory to such Indemnified
Party, which approval will not be unreasonably withheld or delayed unreasonably;
provided, however, that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense at its own expense. After notice
from the Indemnifying Party to the Indemnified Party of its election to so
assume the defense thereof, the Indemnifying Party will not be liable to the
Indemnified Party under that Section 7 for any legal or any other expenses
subsequently incurred by the Indemnified Party in connection with the defense

                                       17
<PAGE>

thereof (other than reasonable costs of investigation) unless incurred at the
written request of the Indemnifying Party. Notwithstanding the above, the
Indemnified Party will have the right to employ counsel of its own choice in any
action or proceeding (and be reimbursed by the Indemnifying Party for the
reasonable fees and expenses of the counsel and other reasonable costs of the
defense) if, in the written opinion of such Indemnified Party's counsel,
representation of the Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests or conflicts between the Indemnified Party and any other party
represented by the counsel in the action; provided, however, that the
Indemnifying Party will not in connection with any one action or proceeding or
separate but substantially similar actions or proceedings arising out of the
same general allegations, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified Parties,
except to the extent that local counsel, in addition to regular counsel, is
required in order to effectively defend against the action or proceeding. An
Indemnifying Party will not be liable to any Indemnified Party for any
settlement or entry of judgment concerning any action or proceeding effected
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party agrees that it will not, without
the prior written consent of the Indemnified Party, settle, compromise or
consent to the entry of any judgment in any pending or threatened claim relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising or that may arise out of such
claim. The rights accorded to an Indemnified Party hereunder shall be in
addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise; provided, however, that notwithstanding the
foregoing or anything to the contrary contained in this Agreement, (a) nothing
in this Section 7 shall restrict or limit any rights that any Indemnified Party
may have to seek equitable relief and (b) this Section 7 shall be the sole
remedy for any breach of the Company's representations and warranties contained
in this Agreement and for any breach of any Purchaser's representations and
warranties contained in this Agreement except, in either case, with respect to
claims arising out of fraud or willful misconduct.

      8. Covenants.

      8.1 Use of Proceeds. The Company will use the proceeds from this Offering
for general working purposes.

      8.2 Conduct of the Company's Business. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing Date, the
Company will conduct its business and operations solely in the ordinary course
of business consistent with past practice and use reasonable commercial efforts
to keep available the services of its officers and employees and preserve its
current relationships with customers, suppliers, licensors, creditors and others
having business dealings with it, except as would not be reasonably expected to
have a Material Adverse Effect.

      8.3 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement at the earliest
practicable date.

      8.4   Tax Matters.

      (a) The Company covenants that it will use commercially reasonable efforts
not to become a USRPHC at any time while any Purchaser owns any of the Series A
Preferred Stock or the Common Stock into which such Series A Preferred Stock is
convertible.

      (b) In the event that a Purchaser desires to sell or dispose of any of the
Securities or the underlying securities as permitted under this Agreement and
applicable law, and upon demand by such Purchaser, the Company agrees to deliver
to such Purchaser a letter (the "Letter") which complies with Sections
1.1445-2(c)(3) and 1.897-2(h) of the Treasury Regulations, addressed to such
Purchaser, stating whether or not the Company is a USRPHC. The Letter shall be
delivered to the Purchaser one business day prior to the close of any such
permitted sale or disposition by the Purchaser (the "Delivery Date"). The Letter
shall be dated as of the Delivery Date and signed by a corporate officer who
must verify under penalties of perjury that the statement is correct to his
knowledge and belief pursuant to Section 1.897-2(h) of the Treasury Regulations.

                                       18
<PAGE>

      8.5 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants that it will use its commercially reasonable efforts to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will use its commercially reasonable efforts to prepare and furnish to
the Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities under Rule
144.

      8.6 Non-Public Information. The Company represents and warrants that
neither it nor, to the best of its knowledge, any other Person acting on its
behalf, has provided any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
acknowledges that each Purchaser is relying on the foregoing representations in
effecting transactions in securities of the Company.

      9. FOR RESIDENTS OF ALL STATES: NEITHER THE SECURITIES OFFERED HEREBY OR
THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT
AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD
BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE WARRANTS ARE NON-TRANSFERABLE.

      10. No Waiver.

      Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchasers, the Purchasers do not thereby or in
any manner waive any rights granted to the Purchasers under federal or state
securities laws.

      11. Miscellaneous.

      11.1 Notices. Any notice or other communication given hereunder by any
party hereto to any other party hereto shall be in writing and delivered
personally or by facsimile transmission or sent by registered or certified mail
or by any express mail or overnight courier service, postage or fees prepaid:

             If to the Company:

                  Electronic Game Card, Inc.
                  712 Fifth Avenue
                  19th Floor
                  New York, New York  10019
                  Attention:  Private Placement
                  Telephone:  (212) 332-4365
                  Facsimile:  (212) 581-1922

                                       19
<PAGE>

             If to the Purchasers:

                  To each Purchaser at such Purchaser's name and address set
                  forth on the signature page to this Agreement.

            Any notice that is delivered personally or by facsimile transmission
in the manner provided herein shall be deemed to have been duly given to the
party to whom it is directed upon actual receipt by such party or its agent. Any
notice that is addressed and mailed, postage prepaid for most rapid method of
delivery, or sent by courier in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the fourth business day after
the day it is so placed in the mail or, if earlier, the date and time of actual
receipt.

      11.2 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns, provided, that no party may assign this
Agreement without the prior written consent of the other party, such consent not
to be unreasonably withheld; provided that any transfer of Securities or
securities underlying such Securities must be in compliance with the Transaction
Documents and all applicable law.

      11.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them; provided that any confidentiality agreement between the
Company and any Purchaser shall remain in effect. This Agreement may be amended
only by mutual written agreement of the Company and a majority in interest of
the Purchasers, and the Company may take any action herein prohibited or omit to
take any action herein required to be performed by it, and any breach of any
covenant, agreement, warranty or representation may be waived, only if the
Company has obtained the written consent or waiver of the Purchasers purchasing
a majority of the Securities offered hereby.

      11.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York with respect to contracts made
and to be fully performed therein, without regard to the conflicts of laws
principles thereof. The parties hereto hereby agree that any suit or proceeding
arising under this Agreement, or in connection with the consummation of the
transactions contemplated hereby, shall be brought solely in a federal or state
court located in the County of New York and State of New York. By its execution
hereof, both the Company and the Purchasers hereby consent and irrevocably
submit to the in personam jurisdiction of the federal and state courts located
in the County of New York and State of New York and agree that any process in
any suit or proceeding commenced in such courts under this Agreement may be
served upon it personally or by certified or registered mail, return receipt
requested, or by Federal Express or other courier service, with the same force
and effect as if personally served upon the applicable party in New York and in
the city or county in which such other court is located. The parties hereto each
waive any claim that any such jurisdiction is not a convenient forum for any
such suit or proceeding and any defense of lack of in personam jurisdiction with
respect thereto.

      11.5 Severability. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction will not affect
any other provision of this Agreement, which will remain in full force and
effect. If any provision of this Agreement is declared by a court of competent

                                       20
<PAGE>

jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, the provision will be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof will nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions will be deemed dependent upon any other covenant
or provision unless so expressed herein.

      11.6 No Waiver. A waiver by either party of a breach of any provision of
this Agreement will not operate, or be construed, as a waiver of any subsequent
breach by that same party.

      11.7 Further Assurances. The parties agree to execute and deliver all
further documents, agreements and instruments and take further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

      11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which will
together constitute the same instrument.

      11.9 No Third Party Beneficiaries. Nothing in this Agreement creates in
any Person not a party to this Agreement any legal or equitable right, remedy or
claim under this Agreement, and this Agreement is for the exclusive benefit of
the parties hereto. The parties expressly recognize that this Agreement is not
intended to create a partnership, joint venture or other similar arrangement
between any of the parties or their respective affiliates.

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

      11.11 Securities Laws Disclosure; Publicity Restrictions. The Company
shall issue a press release by 8:30 a.m. Eastern time on the trading day
following each applicable Closing, or file a Current Report on Form 8-K
disclosing the consummation of the transactions consummated on such Closing by
8:30 a.m. Eastern time on the fourth day following each applicable Closing.
Except as may be required by applicable Requirements of Law, none of the parties
hereto shall issue a publicity release or public announcement or otherwise make
any disclosure concerning this Agreement, the transactions contemplated hereby
without prior approval by the other party hereto, and no investor may be named
in any such press release without such investor's specific consent; provided
that each Purchaser may disclose on its worldwide web pages and its offering
materials, if any, the name of the Company, the name of the Chief Executive
Officer of the Company, a brief description of the business of the Company
consistent with the Commission Documents or the Company's press releases or
other public statements, the Company's logo and the aggregate amount of such
Purchaser's investment in the Company. If any announcement is required by
applicable law or the rules of any securities exchange or market on which such
shares of Common Stock are traded to be made by any party hereto, prior to
making such announcement such party will deliver a draft of such announcement to
the other parties and shall give the other parties reasonable opportunity to
comment thereon. The parties agree to attribute and otherwise indicate ownership
of the other party's trademarks and logos.

      11.12 Certification. Each Purchaser certifies that such Purchaser has read
this entire Agreement and that every statement on such Purchaser's part made and
set forth herein is true and complete.

                [Remainder of page intentionally left blank.]

                                       21
<PAGE>

      IN WITNESS WHEREOF, the undersigned has executed this Securities Purchase
Agreement on the date his signature has been subscribed and sworn to below.

The Convertible Promissory Notes and the Warrants are to be issued in:

                                         ---------------------------------------
                                         Print Name of Investor

                                         ____________ principal amount of
____ individual name                     Convertible Promissory Notes
                                         subscribed for (multiple of $48,000

                                         Subscription price paid herewith:
                                         $____________(being the principal
____ tenants in the entirety             amount of the Convertible Promissory
                                         Notes listed above)

                                         ---------------------------------------
____ corporation (an officer must sign)  Print Name of Joint Investor
                                         (if applicable)

                                         ---------------------------------------
____  partnership  (all general partners Signature of Investor
must sign)

                                         ---------------------------------------
____ trust                               Signature of Joint Investor

____ limited liability company

                                         ---------------------------------------
                                         (with a copy to:)

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

                                         ---------------------------------------
                                         Address of Investor

Accepted as of the 24th day of March, 2005 as to _______________ principal
amount of the Company's Convertible Promissory Notes (a multiple of $48,000),
the Purchase Price for which is $______________, being the principal amount of
such Convertible Promissory Notes as to which this Subscription is accepted,
subject to receipt of the entire Purchase Price in United States Dollars by wire
transfer of immediately available funds to the Company at its requested account
or accounts and performance of other closing conditions set forth in this
Agreement :

ELECTRONIC GAME CARD, INC.

By:   ___________________________________________
Name:
Title:

                                       22
<PAGE>

                        [Insert Purchaser Questionnaire]

                                       23
<PAGE>

                                    Exhibit A

                       Form of Certificate of Designations

                                       24
<PAGE>

                                    Exhibit B

                      Form of Registration Rights Agreement

                                       25
<PAGE>

                                    Exhibit C

                                 Form of Warrant

                                       26
<PAGE>

                                  Schedule 6.2

      As of March 1, 2005, the capitalization of the Company was as follows:

25,468,439 shares of Common Stock issued and outstanding.

1,396,950 options and warrants issued and outstanding to investors

1,396,950 options issued and outstanding to employees

                                       27Exhibit 10.6

                          REGISTRATION RIGHTS AGREEMENT

      Registration Rights Agreement, dated as of March 24, 2005 (this
"Agreement"), by and among Electronic Game Card, Inc., a Nevada corporation (the
"Company"), and the Purchasers, Placement Agent(s) and Other Participating
Placement Agent(s), (as defined below).

                              W I T N E S S E T H :

      WHEREAS, the Company is offering (the "Offering") an aggregate of up to
Eight Million One Hundred Thousand Dollars ($8,100,000) in principal amount of
its convertible promissory notes (the "Convertible Promissory Notes"), subject
to a 10% overallotment at the sole discretion of the Company. Each $48,000
principal amount of Convertible Promissory Note will automatically convert into
32,000 shares (the "Shares") of the Company's Series A Convertible Preferred
Stock, par value $0.001 per share (the "Series A Preferred Stock") upon
authorization of the Series A Preferred Stock by the Company's shareholders.
Each share of the Series A Preferred Stock shall be initially convertible into 1
share (the "Common Shares") of the Company's common stock, par value $0.001 per
share (the "Common Stock"), which equates to an initial conversion price of
$1.50 per share of Common Stock. (Each Promissory Note, therefore, is ultimately
initially convertible into an aggregate of 32,000 shares of Common Stock). At
the option of the holder, each Convertible Promissory Note is also convertible
directly into the applicable shares of Common Stock on an
as-converted-into-Series-A-Preferred-Stock basis, whether or not the Series A
Preferred Stock is ever authorized or issued. The Convertible Promissory Notes
are being offered together with certain related warrants (the "Warrants") which
are exercisable to acquire shares of the Series A Preferred Stock or directly,
instead, to acquire the shares of Common Stock which may be acquired upon
conversion of the Series A Preferred Stock (each such share of Common Stock
which may be acquired upon conversion of a share of Series A Preferred Stock
underlying a Warrant or directly upon exercise of a Warrant is sometimes
hereafter referred to as a "Warrant Share"). The Company has a 10% overallotment
option, in its sole discretion. The Convertible Promissory Notes and the
Warrants offered in the Offering being sometimes hereinafter referred to as the
"Securities";

      WHEREAS, the Company desires to issue and sell to the persons listed on
Schedule A, attached hereto (each a "Purchaser," and collectively, the
"Purchasers"), the Securities as set forth in one or more Securities Purchase
Agreements entered into or to be entered into by and between the Company and
each Purchaser (the "Securities Purchase Agreement");

      WHEREAS, in connection with the Securities Purchase Agreement, the Company
may engage on or more "Placement Agents" or "Other Participating Agents," as
such terms are defined in the Securities Purchase Agreement, and may issue to
any such person or entity, in connection with the Offering, "Placement Agent
Warrants" (as defined in the Securities Purchase Agreement) exercisable to
acquire shares of Common Stock (the "Placement Agent Warrant Shares", as such
term is defined in the Securities Purchase Agreement);
<PAGE>

      WHEREAS, the Company and the Purchasers have entered or will have entered
into a Securities Purchase Agreement;

      WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Securities Purchase Agreement that the Company
provide for the rights set forth in this Agreement; and

      WHEREAS, certain terms used in this Agreement are defined in Section 3
hereof.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:

      1. Registration Rights.

            1.1 Required Registration. The Company shall use its reasonable best
efforts to accomplish the following:

                   (x) prepare and file with the "SEC" (as such term is
hereafter defined) a registration statement on Form SB-1 or a successor form or
another form selected by the Company that is available to the Company under the
"Securities Act" (as such term is hereafter defined) which conforms with
applicable rules and regulations (a "Required Registration Statement") covering
the "Registrable Securities" (as such term is hereafter defined), to permit the
offer and re-sale from time to time of such Registrable Securities in accordance
with the methods of distribution provided by the Purchasers, by the date (the
"Registration Statement Filing Date") which is not more than sixty (60) days
after the first to occur (the "Commencement Date") of the following dates: (i)
the "Final Closing Date" (as such term is defined in the Securities Purchase
Agreement) or the termination of the Offering, if there is no Final Closing
Date; and

                   (y) cause either of the following (the "Effectiveness
Actions") to occur by a date (the "Effectiveness Date") which is not more than
one hundred and twenty (120) days after the Commencement Date: (A) cause the SEC
to declare the Required Registration Statement to be effective or (B) cause the
SEC to communicate to the Company, orally or in writing, that the Required
Registration Statement will not be reviewed or that the SEC has no further
comments thereupon, whereupon the Company shall cause the Required Registration
Statement to be effective.

      The failure of the Company to file a Required Registration Statement prior
to the Required Filing Date, or to cause either of the Effectiveness Actions to
occur prior to the Required Effectiveness Date, shall be deemed to be a
"Non-Registration Event". The Company and the Purchasers agree that the
Purchasers will suffer damages if a Non-Registration Event occurs, and that it

                                       2
<PAGE>

would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if a Non-Registration Event should occur, then for each thirty (30)
day period during the pendency of such Non-Registration Event, the Company shall
deliver to each Purchaser, as liquidated damages, an amount equal to one percent
(1.0%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) paid by such Purchaser for Convertible Promissory
Notes in the Offering, with such payment being pro-rated for any
Non-Registration Event of less than thirty (30) days, subject to a maximum
penalty of 18.5% of the gross proceeds. Each such payment is hereinafter
referred to as a "Non-Registration Event Penalty Payment". Notwithstanding the
foregoing, in no event shall the Company be obligated to pay more than one
Non-Registration Event Penalty Payment to the same Purchaser in respect of a
substantively concurrent failure to perform; i.e., if a Non-Registration Event
Penalty Payment is accruing due to failure to file a Required Registration
Statement prior to the Required Filing Date, a separate Non-Registration Event
Penalty Payment shall not be due for a contemporaneous failure to cause an
Effectiveness Action to occur prior to the Required Effectiveness Date. The
Company, at its sole discretion, shall pay the Non-Registration Event Penalty
Payment in cash or in shares of its Common Stock, provided, that the Company may
not elect to pay some Purchasers in cash while it pays others in Common Stock.
In the event that the Company elects to pay the Non-Registration Event Penalty
Payment to a Purchaser in shares of the Company's Common Stock, it shall deliver
unregistered, legended shares of its Common Stock whose aggregate Market Price
is equal to the Non-Registration Event Penalty Payment due to such Purchaser.

            The Company shall use its reasonable best efforts to keep such
Required Registration Statement continuously effective (the "Effective Period")
for a period of two years after the Required Registration Statement first
becomes effective plus whatever period of time as shall equal any period, if
any, during such two year period in which the Company was not current with its
reporting requirements under the "Exchange Act" (as such term is hereinafter
defined).

            To the extent that the Registrable Securities are not sold under the
Required Registration Statement, the Purchasers shall have the registration
rights as enumerated in Sections 1.3 and 1.4 of this Agreement.

      1.2 Current Public Information. The Company covenants that it will use
reasonable best efforts to file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder, and will use reasonable best efforts to take such further action
as the Purchaser may reasonably request, all to the extent required to enable
the holders of Registrable Securities to sell Registrable Securities pursuant to
Rule 144 or Rule 144A adopted by the SEC under the Securities Act or any similar
rule or regulation hereafter adopted by the SEC. The Company shall, upon the
request of a holder of Registrable Securities (each a "Designated Holder" and
collectively, the "Designated Holders"), deliver to such Designated Holder a
written statement as to whether it has complied with such requirements.

      1.3 Form S-3 Registration. If the Company is eligible to use Form S-3
under the Securities Act (or any similar successor form) and shall receive from
a Purchaser and its permitted transferees (the "S-3 Initiating Holders") a
written request or requests that the Company effect a registration on such Form
S-3, including without limitation, pursuant to Rule 415 of the Securities Act
and any related qualification or compliance with respect to all or part of the
Registrable Securities owned by the S-3 Initiating Holders and its permitted
transferees (provided, that the S-3 Initiating Holders registering Registrable
Securities in such registration (together with all other holders of Registrable
Securities to be included in such registration) propose to sell their
Registrable Securities at an aggregate price (calculated based upon the Market
Price of the Registrable Securities on the date of filing of the Form S-3 with
respect to such Registrable Securities) to the public of no less than the lesser
of $500,000 or the remaining Registrable Securities), the Company shall (i)

                                       3
<PAGE>

promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other holders of Registrable Securities; and
(ii) as soon as practicable, use reasonable best efforts to file and effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of the Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other holder in
the group of holders joining in such request as is specified in a written
request given within fifteen (15) days after the holder's receipt of such
written notice from the Company. No registration requested by any S-3 Initiating
Holders pursuant to this Section 1.3 shall be deemed a registration pursuant to
Section 1.1.

      1.4 Piggyback Registrations.

            (a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a
registration pursuant to Section 1.3 or a registration on Form S-4 or S-8 or any
successor or similar forms) and the registration form to be used may be used for
the registration of Registrable Securities, whether or not for sale for its own
account, the Company will give prompt written notice (but in no event less than
fifteen (15) days before the anticipated filing date) to all holders of
Registrable Securities, and such notice shall describe the proposed registration
and distribution and offer to all holders of Registrable Securities the
opportunity to register the number of Registrable Securities as each such holder
may request. The Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten (10) days after the holders' receipt of the
Company's notice (a "Piggyback Registration").

            (b) Reasonable Efforts. The Company shall use all reasonable best
efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggyback Registration to be included on the same terms and
conditions as any similar securities of the Company or any other security holder
included therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof.

            (c) Withdrawal. Any Designated Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 1.4 by giving written notice to
the Company of its request to withdraw; provided, that in the event of such
withdrawal (other than pursuant to Section 1.4(e) hereof, the Company shall not
be required to reimburse such holder for the fees and expenses referred to in
Section 1.6(t) hereof incurred by or on behalf of such holder prior to such
withdrawal, unless such withdrawal was due to a material adverse change to the
Company. The Company may withdraw a Piggyback Registration at any time prior to
the time it becomes effective.

                                       4
<PAGE>

            (d) Priority in Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing (with a copy to each party hereto
requesting registration of Registrable Securities) that in their opinion the
number of Registrable Securities requested to be included on a secondary basis
in such registration exceeds the number which can be sold in such offering
without materially and adversely affecting the marketability of such primary or
secondary offering (the "Company Offering Quantity"), then the Company will
include in such registration securities in the following priority:

            (i) First, the Company will include the securities the Company
            proposes to sell.

            (ii) Second, the Company will include all Registrable Securities
            requested to be included by any Designated Holder and any securities
            which any Pari Passu Holder may request to be so included, and if
            the number of such Designated Holders' securities and Pari Passu
            Holder securities requested to be included exceeds the Company
            Offering Quantity, then the Company shall include only each such
            requesting Designated Holders' and Pari Passu Holders' pro rata
            share of the shares available for registration by the Purchaser,
            based on the amount of securities held by such holder, on an as
            converted basis. For purposes of this Agreement, the term "Pari
            Passu Holder" shall mean any holder of the Company's securities
            outstanding as of the completion of the Offering that has
            registration rights.

            (iii) Third, the Company will include other securities of the
            Company proposed to be included in the registration.

            (e) Cutback. If, as a result of the proration provisions of this
Section 1.4, any Designated Holders shall not be entitled to include all
Registrable Securities in a Piggyback Registration that such Designated Holders
has requested to be included, such holder may elect to withdraw his request to
include Registrable Securities in such registration but the Company shall be
required to reimburse such holder for the fees and expenses referred to in
Section 1.6(t) hereof incurred by such holder prior to such withdrawal.

            1.5 Holdback Agreements.

            (a) To the extent not inconsistent with applicable law, in
connection with a public offering of securities of the Company, upon the request
of the Company or the underwriter, in the case of an underwritten public
offering, the underwriters managing such underwritten offering of the Company's
securities, each holder of Registrable Securities who owns at least 5% of the
outstanding capital stock of the Company on an "as-converted" basis or is an
officer or director of the Company will not effect any public sale or
distribution (other than those included in the registration) of any securities

                                       5
<PAGE>

of the Company, or any securities, options or rights convertible into or
exchangeable or exercisable for such securities during the seven (7) days prior
to and the ninety (90) -day period beginning on such effective date, unless (in
the case of an underwritten public offering) the managing underwriters otherwise
agree to a shorter period of time. Notwithstanding the foregoing, no Designated
Holder shall be required to enter into any such "lock up" agreement unless and
until all of the Company's executive officers and directors execute
substantially similar "lock up" agreements and the Company uses commercially
reasonable efforts to cause each holder of more than 5% of its outstanding
capital stock to execute substantially similar "lock up" agreements. Neither the
Company nor the underwriter shall amend, terminate or waive a "lock up"
agreement unless each "lock up" agreement with a Designated Holder is also
amended or waived in a similar manner or terminated, as the case may be.
Notwithstanding anything to the contrary in this Agreement, the lock up
provisions of this paragraph 1.5 (a) shall not be effective until after the
Required Registration Statement has become effective and it has remained
effective for One Hundred Twenty (120) days.

            (b) The Company shall have the right at any time to require that the
Designated Holders of Registrable Securities suspend further open market offers
and sales of Registrable Securities pursuant to a Registration Statement filed
hereunder whenever in the reasonable judgment of the Company after consultation
with counsel there is or may be in existence a Changing Event (as defined in
Section 1.6(e)). The Company will give the Designated Holders notice of any such
suspension and will use all reasonable best efforts to minimize the length of
such suspension.

            (c) In connection with the Required Registration Statement, the
Company shall cause each officer or director of the Company to agree to refrain
from effecting any public or private sale or distribution of any securities of
the Company during the seven (7) days prior to and the ninety (90) -day period
following the effective dated of the Required Registration Statement.

            1.6 Registration Procedures. Whenever any Registrable Securities are
required to be registered pursuant to this Agreement, the Company will use
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:

            (a) prepare and file with the SEC on any form, if not so otherwise
provided for, for which the Company qualifies, as soon as practicable after the
end of the period within which requests for registration may be given to the
Company, a Registration Statement with respect to the offer and sale of such
Registrable Securities and thereafter use reasonable best efforts to cause such
Registration Statement to become effective and remain effective until the
completion of the distribution contemplated thereby or the required time period
under this Agreement, whichever is shorter (and before filing such Registration
Statement, the Company will furnish to the counsel selected by the holders of a
majority of the Registrable Securities initiating such Registration Statement
copies of all such documents proposed to be filed); provided, however, that the
Company may postpone for not more than sixty (60) calendar days the filing or
effectiveness of any registration statement required pursuant to this Agreement
other than a Required Registration Statement required to be filed pursuant to
Section 1.1 of this Agreement if the Board of Directors, in its good faith
judgment, determines that such registration could reasonably be expected to have
a material adverse effect on the Company and its stockholders for any reason
including, but not limited to, any proposal or plan by the Company to engage in
any acquisition or sale of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or similar transaction then
under consideration (in which event, the Designated Holders shall be entitled to
withdraw such request, and if such request is withdrawn such registration will
not count as a registration statement pursuant to this Agreement) by delivering
written notice to the Designated Holders who requested inclusion of Registrable
Securities in such Registration Statement of its determination to postpone such
Registration Statement; provided, further, that (i) the Company shall not
disclose any information that could be deemed material non-public information to

                                       6
<PAGE>

any holder of Registrable Securities included in a Registration Statement that
is subject to such postponement, (ii) in no event may the Company postpone a
filing requested hereunder more than twice in any twelve (12) month period;
provided, that any two postponements must be at least three (3) months apart;
provided, further, that the Company shall delay the effectiveness of any such
registration statement if the SEC rules and regulations prohibit the Company
from declaring a Registration Statement effective because its financial
statements are stale at a time when its fiscal year has ended or it has made an
acquisition reportable under Item 2 of Form 8-K or any other similar situation
until the earliest time in which the SEC would allow the Company to declare a
Registration Statement effective (provided that the Company shall use its
reasonable best efforts to cure any such situation as soon as possible so that
the Registration Statement can be made effective at the earliest possible time);

            (b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for a period
provided for in the applicable Section above, or if not so provided, for a
period of twelve (12) months (for a registration pursuant to Rule 415 of the
Securities Act) or, if such Registration Statement relates to an underwritten
offering, such period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities covered by such Registration
Statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such Registration Statement. In the event the
Company shall give any notice pursuant to Section 1.5(b), the applicable time
period mentioned in this Section 1.6(b) during which a Registration Statement is
to remain effective shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
1.5(b) to and including the date when each seller of a Registrable Security
covered by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 1.6(e);

                                       7
<PAGE>

            (c) furnish to each seller of Registrable Securities, prior to
filing a Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;

            (d) register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller and to
keep each such registration or qualification (or exemption therefrom) effective
during the period which the Registration Statement is required to be kept
effective (provided, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);

            (e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event (a "Changing Event") as a result
of which, the prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as soon
as possible prepare and furnish to such seller (a "Correction Event") a
reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;

            (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on The Nasdaq Stock Market or the
Nasdaq SmallCap trading system or the Nasdaq OTC Bulletin Board;

            (g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;

            (h) enter into such customary agreements (including underwriting
agreements in customary form with any underwriter, if any is selected by the
Company) and take all such other actions as the holders of a majority of the
Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities, including causing its officers to participate in "road shows" and
other information meetings organized by an underwriter, if any, provided that
any underwriter shall have been selected by the Company;

                                       8
<PAGE>

            (i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;

            (j) before filing a Registration Statement or prospectus or any
amendments or supplements thereto, the Company shall provide counsel selected by
the Designated Holders holding a majority of the Registrable Securities being
registered in such registration ("Holders' Counsel") and any other Inspector (as
defined below) with an adequate and appropriate opportunity to review and
comment on such Registration Statement and each prospectus included therein (and
each amendment or supplement thereto) to be filed with the SEC, subject to such
documents being under the Company's control, and the Company shall notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC;

            (k) otherwise comply with all applicable rules and regulations of
the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months
beginning with the first day of the Company's first full calendar quarter after
the effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;

            (l) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;

            (m) obtain one or more comfort letters, dated the effective date of
such Registration Statement (and, if such registration includes an underwritten
offering, dated the date of the closing under the underwriting agreement),
signed by the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by comfort letters as the
holders of a majority of the Registrable Securities being sold reasonably
request;

                                       9
<PAGE>

            (n) provide a legal opinion of the Company's outside counsel, dated
the effective date of such Registration Statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), with respect to the Registration Statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature;

            (o) subject to execution and delivery of mutually satisfactory
confidentiality agreements, make available at reasonable times for inspection by
any seller of Registrable Securities, any managing underwriter participating in
any disposition of such Registrable Securities pursuant to a Registration
Statement, Holders' Counsel and any attorney, accountant or other agent retained
by any managing underwriter (each, an "Inspector" and collectively, the
"Inspectors"), during normal business hours of Company at Company's corporate
office in New York, New York and without unreasonable disruption of Company's
business or unreasonable expense to Company and solely for the purpose of due
diligence with respect to the registration statement, non-confidential, legally
disclosable, financial and other records and pertinent corporate documents of
the Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to make available for inspection, at such parties' offices during their
respective normal business hours and without unreasonable disruption of their
business or unreasonable expense to Company and solely for the purpose of due
diligence with respect to a registration statement covering Registrable
Securities pursuant to this Agreement all information reasonably requested by
any such Inspector in connection with such Registration Statement;

            (p) subject to execution and delivery of mutually satisfactory
confidentiality agreements, keep Holders' Counsel advised as to the initiation
and progress of any registration hereunder including, but not limited to,
providing Holders' Counsel with all correspondence with the SEC;

            (q) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD; and

            (r) take all other steps reasonably necessary to effect the
registration of the Registrable Securities contemplated hereby.

            (s) Conditions Precedent to Company's Obligations Pursuant to this
Agreement. It shall be a condition precedent to the obligations of Company to
take any action pursuant to this Agreement that each of the holders whose
Registrable Securities are to be registered pursuant to this Agreement shall
furnish such holder's written agreement to be bound by the terms and conditions
of this Agreement prior to performance by Company of its obligations under this
Agreement. By executing and delivering this Agreement, each holder represents
and warrants that the information concerning, and representations and warranties
by, such holder, including information concerning the securities of the Company
held, beneficially or of record, by such holder, furnished to the Company
pursuant to the Securities Purchase Agreement and the Purchasers Questionnaire

                                       10
<PAGE>

delivered pursuant thereto, are true and correct as if the same were represented
and warranted on the date of any registration statement by the Company pursuant
to this Agreement or any amendment thereto, and each holder covenants to
immediately notify the Company in writing of any change in any such information,
representation or warranty and to refrain from offering or disposing of any
securities pursuant to any such registration statement until the Company has
reflected such change in the registration statement. By executing and delivering
this Agreement, each such holder further agrees to furnish any additional
information as the Company may reasonably request in connection with any action
to be taken by the Company pursuant to this Agreement, and to pay such holder's
expenses which are not required to be paid by the Company pursuant to this
Agreement.

            (t) Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement including, without limitation,
all registration and filing fees payable by the Company, fees and expenses of
compliance by the Company with securities or blue sky laws, printing expenses of
the Company, messenger and delivery expenses of the Company, and fees and
disbursements of counsel for the Company and all independent certified public
accountants of the Company, underwriters (excluding discounts and commissions,
which will be paid by the sellers of Registrable Securities) and other Persons
retained by the Company will be borne by the Company, and the Company will pay
its internal expenses (including, without limitation, all salaries and expenses
of its Employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability insurance of the
Company and the expenses and fees for listing the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed or on The Nasdaq National Market, Nasdaq SmallCap Market or the OTC
Bulletin Board trading system. The Company shall not pay any underwriting
discounts or commissions attributable to the sale of Registrable Securities and
any of the other expenses incurred by any holder of Registrable Securities, all
of which fees and expenses shall be borne by such holder or holders including,
without limitation, underwriting fees, discounts and expenses, if any,
applicable to any holder's Registrable Securities; fees and disbursements of
counsel or other professionals that any holder may choose to retain in
connection with the registration statement filed pursuant to this Agreement;
selling commissions or stock transfer taxes applicable to the Registrable
Securities registered on behalf of any holder; any other expenses incurred by or
on behalf of such holder in connection with the offer and sale of such Holder's
Registrable Securities other than expenses which the Company is expressly
obligated to pay pursuant to this Agreement.

            1.7 Indemnification.

            (a) The Company agrees to indemnify and hold harmless, to the
fullest extent permitted by law, each holder of Registrable Securities and its
general or limited partners, officers, directors, members, managers, employees,
advisors, representatives, agents and Affiliates (collectively, the
"Representatives") from and against any loss, claim, damage, liability,
attorney's fees, cost or expense and costs and expenses of investigating and
defending any such claim (collectively, the "Losses"), joint or several, and any
action in respect thereof to which such holder of Registrable Securities or its
Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereto) arise out of or are based upon (i) any untrue or
alleged untrue statement of a material fact contained in any Registration

                                       11
<PAGE>

Statement, prospectus or preliminary or summary prospectus or any amendment or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company shall reimburse each such holder of
Registrable Securities and its Representatives for any legal or any other
expenses incurred by them in connection with investigating or defending or
preparing to defend against any such Loss, action or proceeding; provided,
however, that the Company shall not be liable to any such holder or other
indemnitee in any such case to the extent that any such Loss (or action or
proceeding, whether commenced or threatened, in respect thereof) arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission, made in such Registration Statement, any such prospectus or
preliminary or summary prospectus or any amendment or supplement thereto, in
reliance upon, and in conformity with, written information prepared and
furnished to the Company by any holder of Registrable Securities or its
Representatives expressly for use therein or by failure of any holder of
Registrable Securities to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder of Registrable Securities with a sufficient number of
copies of the same. In connection with an underwritten offering, the Company
will indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Registrable Securities.

            (b) In connection with any Registration Statement in which the
holders of Registrable Securities are participating pursuant to this Agreement,
the holders of Registrable Securities will furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any such Registration Statement or prospectus and, to the fullest extent
permitted by law, each such holder of Registrable Securities will indemnify and
hold harmless the Company and its Representatives from and against any Losses,
severally but not jointly, and any action in respect thereof to which the
Company and its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) the
purchase or sale of Registrable Securities during a suspension as set forth in
Section 1.5(b) after written receipt of notice of such suspension, (ii) any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, prospectus or preliminary or summary prospectus or any
amendment or supplement thereto, or (iii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, with respect to clauses (ii) and (iii) above, only
to the extent that such untrue statement or omission is made in such
Registration Statement, any such prospectus or preliminary or summary prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
written information prepared and furnished to the Company by such holder of
Registrable Securities expressly for use therein or by failure of such holder of
Registrable Securities to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder of Registrable Securities with a sufficient number of
copies of the same, and such holder of Registrable Securities will reimburse the

                                       12
<PAGE>

Company and each Representative for any legal or any other expenses incurred by
them in connection with investigating or defending or preparing to defend
against any such Loss, action or proceeding; provided, however, that such holder
of Registrable Securities shall not be liable in any such case to the extent
that prior to the filing of any such Registration Statement or prospectus or
amendment or supplement thereto, such holder of Registrable Securities has
furnished in writing to the Company information expressly for use in such
Registration Statement or prospectus or any amendment or supplement thereto
which corrected or made not misleading information previously furnished to the
Company; provided, further, however, that the obligation to indemnify will be
individual to each such holder of Registrable Securities and will be limited to
the net amount of proceeds received by such holder of Registrable Securities
from the sale of Registrable Securities pursuant to such Registration Statement.
In no event, however, shall any holder be liable for indirect, incidental or
consequential or special damages.

            (c) Promptly after receipt by any Person in respect of which
indemnity may be sought pursuant to Section 1.7(a) or 1.7(b) (an "Indemnified
Party") of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be made against the
Person against whom such indemnity may be sought (an "Indemnifying Party"),
promptly notify the Indemnifying Party in writing of the claim or the
commencement of such action; provided, that the failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which it may have to an Indemnified Party otherwise than under Section 1.7(a) or
1.7(b) except to the extent of any actual prejudice resulting therefrom. If any
such claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its Representatives who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the written opinion of counsel to such Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any claim or pending or threatened
proceeding in respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such claim or proceeding other than the
payment of monetary damages by the Indemnifying Party on behalf of the
Indemnified Party. Whether or not the defense of any claim or action is assumed
by the Indemnifying Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its consent, which consent will not be
unreasonably withheld.

            (d) If the indemnification provided for in this Section 1.7 is
unavailable to the Indemnified Parties in respect of any Losses referred to
herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the holders of the
Registrable Securities on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company on the one hand and the holders of the
Registrable Securities on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
holder of the Registrable Securities on the other shall be determined by
reference to, among other things, whether any action taken, including any untrue
or alleged untrue statement of a material fact, or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

            The Company and the holders of the Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this Section
1.7(d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
Indemnified Party as a result of the Losses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 1.7, no holder of the Registrable
Securities shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such holder were
offered to the public exceeds the amount of any Losses which such holder has
otherwise paid by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within

                                       13
<PAGE>

the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each holder's obligations to contribute pursuant to this
Section 1.7 is several in the proportion that the proceeds of the offering
received by such holder of the Registrable Securities bears to the total
proceeds of the offering received by all the holders of the Registrable
Securities and not joint.

            1.8 Participation in Underwritten Registrations.

            (a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s), provided, that each holder of
Registrable Securities shall not be required to sell more than the number of
Registrable Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.

            (b) Each Person that is participating in any registration under this
Agreement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 1.6(e) above, such
Person will forthwith discontinue the disposition of its Registrable Securities
pursuant to the Registration Statement and all use of the Registration Statement
or any prospectus or related document until such Person's receipt of the copies
of a supplemented or amended prospectus as contemplated by such Section 1.6(e)
and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
holder's possession of such documents at the time of receipt of such notice.
Furthermore, each holder agrees that if such holder uses a prospectus in
connection with the offering and sale of any of the Registrable Securities, the
holder will use only the latest version of such prospectus provided by Company.

      2. Transfers of Certain Rights.

            2.1 Transfer. The rights granted to the Purchaser under this
Agreement are transferable to any permitted transferee of the applicable
securities upon written notice of such transfer to the Company in accordance
with the provisions of this Agreement provided, that any such transfer shall be
subject to the provisions of Sections 2.2 and 2.3; and further provided, that
nothing contained herein shall be deemed to permit an assignment, transfer or
disposition of the Registrable Securities in violation of the terms and
conditions of the Securities Purchase Agreement or the other agreements and
instruments in connection therewith, the Certificate of Designations of the
Series A Preferred Stock, or applicable law.

            2.2 Transferees. Any permitted transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser under this Agreement to the same extent
as if such transferee were a Purchaser hereunder.

                                       14
<PAGE>

            2.3 Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 2 may not again transfer such rights to any
other person or entity, other than as provided in Sections 2.1 or 2.2 above.

      3. Certain Definitions. The following capitalized terms shall have the
meanings ascribed to them below:

            "Affiliate" means any Person that directly or indirectly controls,
or is under control with, or is controlled by such Person. As used in this
definition, "control" (including with its correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).

            "Closing Price" means, with respect to the Registrable Securities
(a) if the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price as reported on such exchange or market; (b) if the
shares are not listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the average of the last reported closing bid and asked quotation for the shares
as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such
information; (c) if the shares are not listed or admitted for trading on any
national securities exchange or included in The Nasdaq National Market or Nasdaq
SmallCap Market or quoted by NASDAQ or a similar service, the average of the
last reported bid and asked quotation for the shares as quoted by a market maker
in the shares (or if there is more than one market maker, the bid and asked
quotation shall be obtained from two market makers and the average of the lowest
bid and highest asked quotation). In the absence of any available public
quotations for the Common Stock, the Board and a majority of the Holders shall
determine in good faith the fair value of the Common Stock

            "Common Stock" means the common stock, par value $0.001 per share,
of the Company.

            "Employees" means any current, former, or retired employee, office
consultant, advisor, independent contractor, agent, officer or director of the
Company.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

            "Market Price" means, on any date of determination, the average of
the daily Closing Price of the Registrable Securities for the immediately
preceding five (5) on which the national securities exchanges are open for
trading.

                                       15
<PAGE>

            "Person" means any individual, company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.

            "Registrable Securities" means, subject to the immediately following
sentence, (i) shares of Common Stock issued or issuable upon the conversion of
either the Convertible Promissory Notes or shares of Series A Preferred Stock,
as applicable, the Warrant Shares, and the Placement Agent Warrant Shares issued
or issuable upon the exercise of the Placement Agent Warrants acquired by the
applicable Placement Agent or Other Participating Placement Agent, if any, and
(ii) any shares of Common Stock issued or issuable directly or indirectly with
respect to the securities referred to in clause (i) by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, or interest, or Registration
Event Penalty Payment hereunder. As to any particular shares of Common Stock
constituting Registrable Securities, such shares of Common Stock will cease to
be Registrable Securities when they (x) have been effectively registered under
the Securities Act and disposed of in accordance with a Registration Statement
covering them, (y) have been sold to the public pursuant to Rule 144 (or by
similar provision under the Securities Act), or (z) are eligible for resale
under Rule 144(k) (or by similar provision under the Securities Act) without any
limitation on the amount of securities that may be sold under paragraph (e)
thereof.

            "Registration Statement" means any registration statement of the
Company filed under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such registration statement.

            "SEC" means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

      4. Miscellaneous.

            4.1 Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to (i)
the Registrable Securities, (ii) any and all shares of Common Stock into which
the Registrable Securities are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and (iii) any
and all equity securities of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in conversion of, in exchange for or in
substitution of, the Registrable Securities and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations, recapitalizations

                                       16
<PAGE>

and the like occurring after the date hereof. The Company shall cause any
successor or assign (whether by merger, consolidation, sale of assets or
otherwise) to enter into a new registration rights agreement with the Designated
Holders on terms substantially the same as this Agreement as a condition of any
such transaction.

            4.2 No Inconsistent Agreements. The Company has not and shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Purchasers in this Agreement or grant any
additional registration rights to any Person or with respect to any securities
which are not Registrable Securities which are prior in right to or materially
inconsistent with the rights granted in this Agreement. The Purchasers expressly
acknowledge and agree that the Company has granted registration rights
heretofore and may hereafter grant registration rights to holders of Series A
Preferred Stock, which shall be pari passu with, and substantially the same as,
those granted to the Purchasers in the Offering, that such registration rights
are permitted under this Section 4.2 and shall not be deemed to conflict with
the registration rights of the Purchasers, and that holders of such registration
rights shall be treated pari passu with holders of the registration rights
granted under this Agreement with respect to priority in piggy-back
registrations, and vice versa.

            4.3 Amendments and Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if, but only if, the Company has
obtained the written consent of a majority in interest of the Registrable
Securities (and the securities convertible into or exercisable to acquire the
those securities) then in existence.

            4.4 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

            4.5 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

            4.6 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be deemed given or made as of the date delivered, if
delivered personally or by telecopy (provided that delivery by telecopy shall be
followed by delivery of an additional copy personally, by mail or overnight
courier), one day after being delivered by overnight courier or four business
days after being mailed by registered or certified mail (postage prepaid for the
most expeditious form of delivery, return receipt requested), to the parties at
the following addresses (or to such other address or telex or telecopy number as
a party may have specified by notice given to the other party pursuant to this
provision):

                                       17
<PAGE>

                  If to the Company, to:

                  Electronic Game Card, Inc.
                  (Attention: Private Placement)
                  712 Fifth Avenue, 19th Floor,
                  New York, New York 10019
                  USA
                  Attention:  Liza Mullins
                  Telephone: 1.212.332.4365
                  Facsimile: 1.212.581 1922

                  If to the Purchaser, to:

                  The address or facsimile number of each Purchaser as recorded
                  in the stockholders records of the Company.

            4.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflicts of laws rules or provisions.

            4.8 Forum; Service of Process. Any legal suit, action or proceeding
brought by any party or any of its affiliates arising out of or based upon this
Agreement shall be instituted in any federal or state court in New York County,
New York, and each party waives any objection which it may now or hereafter have
to the laying of venue or any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.

            4.9 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.

            4.10 No Prejudice. The terms of this Agreement shall not be
construed in favor of or against any party on account of its participation in
the preparation hereof.

            4.11 Words in Singular and Plural Form. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.

            4.12 Remedy for Breach. The Company hereby acknowledges that in the
event of any breach or threatened breach by the Company of any of the provisions
of this Agreement, the holders of the Registrable Securities would have no
adequate remedy at law and could suffer substantial and irreparable damage.
Accordingly, the Company hereby agrees that, in such event, the holders of the
Registrable Securities shall be entitled, and notwithstanding any election by
any holder of the Registrable Securities to claim damages, to obtain a temporary
and/or permanent injunction to restrain any such breach or threatened breach or
to obtain specific performance of any such provisions, all without prejudice to
any and all other remedies which any holder of the Registrable Securities may
have at law or in equity.

                                       18
<PAGE>

            4.13 Successors and Assigns; Third Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto, each subsequent holder of the Registrable
Securities and their respective permitted successors and assigns and executors,
administrators and heirs. Holders of the Registrable Securities are intended
third party beneficiaries of this Agreement and this Agreement may be enforced
by such holders.

            4.14 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

                [Remainder of page intentionally left blank.]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date and year first written
above.

                                    ELECTRONIC GAME CARD, INC.

                                    By:_________________________________
                                      Name:
                                       Title:

                                       20
<PAGE>

      IN WITNESS WHEREOF, the undersigned Purchaser has caused this Registration
Rights Agreement to be duly executed as of the date and year first above written
and to be bound hereby.

Securities

are in:
                                         ---------------------------------------
                                         Print Name of Investor

____ individual name                                  Principal Amount of
                                         Convertible Promissory Notes
                                         Subscribed For (Multiple of $48,000)

                                         _____________ Warrants (Warrants to
                                         Purchase 16,000 Shares of Series A
                                         Preferred Stock for every $48,000 of
                                         Principal Amount of Convertible
                                         Promissory Notes)

____ tenants in the entirety

                                         ---------------------------------------
                                         Print Name of Joint Investor
                                         (if applicable)

____ corporation (an officer must sign)

                                         ---------------------------------------
                                         Signature of Investor

____  partnership  (all general partners
must sign)

                                         ---------------------------------------
                                         Signature of Joint Investor

                                         ---------------------------------------
____ trust

                                         ---------------------------------------
                                         (with a copy to:)

                                         ---------------------------------------
                                         Address of Investor

____ limited liability company

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