Document:

Exhibit 4.16

                          SECURITIES PURCHASE AGREEMENT

        This Securities  Purchase  Agreement  (this  "AGREEMENT") is dated as of
February ___, 2005 by and between Utix Group, Inc., a Delaware  corporation (the
"COMPANY"),  and each purchaser who has executed this Agreement on the signature
page hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").

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

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

                                   ARTICLE I
                                   DEFINITIONS

        1.1     DEFINITIONS.  In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:

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

                1.1.2   "BUSINESS DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

                1.1.3   "COMMISSION" OR "SEC" means the United States Securities
and Exchange Commission.

                1.1.4   "COMMON  STOCK"  means the common  stock of the Company,
par value $0.001 per share.

                1.1.5   "COMMON STOCK EQUIVALENTS" means, collectively,  Options
and Convertible Securities.

                1.1.6   "COMPANY  COUNSEL" means Gersten Savage Kaplowitz Wolf &
Marcus LP.

                1.1.7   "CONVERSION SHARES" means any Common Stock issuable upon
conversion of the Notes.

                1.1.8   "EFFECTIVE  DATE"  means the date that the  Registration
Statement is first declared effective by the Commission.

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                1.1.9   "ELIGIBLE  MARKET"  means  any of  the  New  York  Stock
Exchange  (the "NYSE"),  the American  Stock  Exchange (the "AMEX"),  the Nasdaq
National Market  ("NASDAQ  NNM"),  the Nasdaq Small Cap Market ("NASDAQ SCM") or
the National  Association  of Securities  Dealers,  Inc. OTC Bulletin Board (the
"OTC BULLETIN BOARD").

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

                1.1.11  "LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.

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

                1.1.13  "NOTES"  means  one or  more 5%  convertible  promissory
notes aggregating  $1,000,000 in principal amount, to be purchased at par by the
Purchasers  on the  Notes  Closing  Date;  which  Notes  shall be in the form of
SCHEDULE 1.1.13.

                1.1.14  "NOTES  CLOSING  DATE"  means the date of closing of the
purchase of not less than $1,000,000 of the Notes, pursuant to Section 2.1.1.

                1.1.15  "PERSON"   means   any   individual   or    corporation,
partnership,  trust, incorporated or unincorporated association,  joint venture,
limited  liability  company,  joint stock  company,  government (or an agency or
subdivision  thereof)  or any  court or  other  federal,  state,  local or other
governmental authority or other entity of any kind.

                1.1.16  "PURCHASER  DESIGNEE"  shall mean Great  Court  Capital,
LLC, a New York limited  liability  company,  or any other Person  designated in
writing  from time to time by the  holders  of a  majority  of the Notes and who
shall be reasonably acceptable to the Company.

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

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

                1.1.19  "REGISTRABLE  SECURITIES"  means:  (i) any Common  Stock
issuable  upon  conversion  of the  Notes;  and (ii) any  securities  issued  or
issuable upon any stock split, dividend or other distribution,  recapitalization
or similar event with respect to the foregoing.

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                1.1.20  "REGISTRATION    STATEMENT"   means   the   registration
statement required to be filed under Article VI below,  including (in each case)
the  Prospectus,  amendments and supplements to such  registration  statement or
Prospectus,  including pre- and post-effective amendments, all exhibits thereto,
and all  material  incorporated  by reference  or deemed to be  incorporated  by
reference in such registration statement.

                1.1.21  "REQUIRED  EFFECTIVENESS  DATE"  means  April 15,  2005,
unless such date shall be extended by mutual agreement of the Purchasers and the
Company.

                1.1.22  "RULE  144,"  "RULE 415," and "RULE 424" means Rule 144,
Rule 415 and Rule 424,  respectively,  promulgated by the Commission pursuant to
the  Securities  Act,  as such  Rules may be amended  from time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

                1.1.23  "SECURITIES" means the collective reference to the Notes
and the Conversion Shares.

                1.1.24  "SECURITIES  ACT" means the  Securities  Act of 1933, as
amended.

                1.1.25  "SUBSIDIARY"  means any  Person  in which  the  Company,
directly  or  indirectly,  owns  capital  stock or holds an  equity  or  similar
interest.

                1.1.26  "TRADING  DAY"  means  (a) any day on which  the  Common
Stock is listed or quoted and traded on any Eligible Market.

                1.1.27  "TRADING  MARKET" means any Eligible Market on which the
Common Stock is then listed or quoted.

                1.1.28  "TRANSACTION DOCUMENTS" means this Agreement,  the Notes
and  any  other  documents  or  agreements   executed  in  connection  with  the
transactions contemplated hereunder.

                                   ARTICLE II
                         PURCHASE AND SALE OF SECURITIES

        2.1     PURCHASE AND SALE OF THE NOTES.

                2.1.1   NOTES  CLOSING.  Subject to the terms and conditions set
forth herein:

                        (a)     On the Notes  Closing  Date,  the Company  shall
issue to each of those  Purchasers  listed on and who shall  have  executed  the
signature page to this Agreement entitled "PURCHASERS  SIGNATURE PAGE," and each
of such Purchasers  shall purchase from the Company,  severally and not jointly,
such principal  amount of Notes as is indicated below such  Purchaser's  name on
the  Purchasers  Signature  Page.  On such Notes  Closing  Date,  $1,000,000  in
principal amount of Notes shall be purchased and paid for by the Purchasers. The
closings of the sale of the Notes (collectively, the "NOTES CLOSING") shall take
place at the offices of Gersten Savage Kaplowitz Wolf & Marcus LP, 101 East 52nd
Street, New York, New York 10022, or at

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such other  location or time as all parties may agree,  on the date set forth in
Section 2.1.1(b) below.

                        (b)     On a date that shall be not later than  February
11, 2005 (the "NOTES  CLOSING  DATE") an  aggregate of  $1,000,000  in principal
amount of Notes shall be purchased and paid for by the Purchasers.

                2.1.2   NOTES CLOSING DELIVERABLES.

                        (a)     On the Notes  Closing  Date,  the Company  shall
deliver or cause to be  delivered  to each  Purchaser,  against  payment by such
Purchaser of an amount in immediately  available funds to an account  designated
in writing by the Company equal to the principal amount of Notes purchased,  the
following documents:

                                (i)     Notes    aggregating    $1,000,000    in
principal amount, free and clear of all restriction and other legends (except as
expressly provided in Section 4.1.2);

                                (ii)    a  signed   legal   opinion  of  Company
Counsel,  substantially  in the form of  SCHEDULE  2.1.2(b),  adapted to reflect
transactions occurring on the Initial Notes Closing Date.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

        3.1     REPRESENTATIONS  AND  WARRANTIES  OF THE  COMPANY.  The  Company
hereby represents and warrants to each of the Purchasers as follows:

                3.1.1   SUBSIDIARIES. The Company has one Subsidiary,  Corporate
Sports Incentives, Inc.

                3.1.2   ORGANIZATION AND QUALIFICATION. The Company is an entity
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction of its  incorporation  or organization  (as  applicable),  with the
requisite  power and authority to own and use its  properties  and assets and to
carry on its business as currently conducted. The Company is not in violation of
any  of  the   provisions  of  its   respective   certificate   or  articles  of
incorporation,  bylaws or other organizational or charter documents. The Company
is  duly  qualified  to  do  business  and  is in  good  standing  as a  foreign
corporation  or other  entity in each  jurisdiction  in which the  nature of the
business conducted or property owned by it makes such  qualification  necessary,
except where the failure to be so qualified or in good standing, as the case may
be,  could not,  individually  or in the  aggregate,  (i)  adversely  affect the
legality,  validity or enforceability of any Transaction Document,  (ii) have or
result in a  material  adverse  effect on the  results  of  operations,  assets,
prospects,  business or condition (financial or otherwise) of the Company, taken
as a whole, or (iii) adversely impair the Company's  ability to perform fully on
a timely basis its obligations  under any of the  Transaction  Documents (any of
(i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").

                3.1.3   AUTHORIZATION;   ENFORCEMENT.   The   Company   has  the
requisite  corporate  power and  authority to enter into and to  consummate  the
transactions contemplated by each of

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the Transaction  Documents and otherwise to carry out its obligations  hereunder
and thereunder.  The execution and delivery of each of the Transaction Documents
by the  Company  and the  consummation  by it of the  transactions  contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company and no further consent or action is required by the Company,  its
Board of Directors or its  stockholders.  Each of the Transaction  Documents has
been (or upon  delivery  will be) duly  executed  by the Company and is, or when
delivered in accordance with the terms hereof,  will  constitute,  the valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms.

                3.1.4   NO CONFLICTS. The execution, delivery and performance of
the Transaction  Documents by the Company and the consummation by the Company of
the  transactions  contemplated  hereby  and  thereby  do not and  will  not (i)
conflict with or violate any provision of the Company's  certificate or articles
of  incorporation,  bylaws or other  organizational or charter  documents,  (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both  would  become a  default)  under,  or give to others any rights of
termination,  amendment,  acceleration or cancellation  (with or without notice,
lapse  of time or  both)  of,  any  agreement,  credit  facility,  debt or other
instrument  (evidencing a Company debt or otherwise) or other  understanding  to
which the Company is a party or by which any property or asset of the Company is
bound  or  affected,  except  to the  extent  that  such  conflict,  default  or
termination  right could not  reasonably be expected to have a Material  Adverse
Effect,  or (iii) result in a violation  of any law,  rule,  regulation,  order,
judgment,  injunction,  decree or other restriction of any court or governmental
authority  to  which  the  Company  is  subject  (including  federal  and  state
securities   laws  and   regulations  and  the  rules  and  regulations  of  any
self-regulatory  organization  to  which  the  Company  or  its  securities  are
subject), or by which any property or asset of the Company is bound or affected.

                3.1.5   ISSUANCE OF THE NOTES AND CONVERSION  SHARES.  The Notes
and Conversion  Shares each are duly authorized and, when issued and paid for in
accordance  with the  Transaction  Documents,  will be duly and validly  issued,
fully  paid and  nonassessable,  free and  clear of all  Liens  and shall not be
subject to preemptive rights or similar rights of stockholders.

                3.1.6   CAPITALIZATION.  The  number of  shares  and type of all
authorized,  issued and outstanding capital stock,  options and other securities
of the Company  (whether or not presently  convertible  into or  exercisable  or
exchangeable  for  shares of  capital  stock of the  Company)  is set forth on a
fully-diluted  basis in SCHEDULE 3.1.6. All outstanding  shares of capital stock
are duly authorized,  validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as disclosed in
SCHEDULE 3.1.6,  there are no outstanding  options,  warrants,  script rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities,   rights  or   obligations   convertible   into  or  exercisable  or
exchangeable  for, or giving any Person any right to  subscribe  for or acquire,
any  shares  of Common  Stock,  or  contracts,  commitments,  understandings  or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common  Stock.  Except as  disclosed in SCHEDULE  3.1.6,  there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement  providing rights to security  holders) and the
issue and sale of the  Securities  will not obligate the Company to issue shares
of Common Stock or other  securities to any Person  (other than the  Purchasers)
and will not result in a right of

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any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such  securities.  To the knowledge of the Company,  except as
specifically  disclosed in SCHEDULE 3.1.6, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act),
or has the right to acquire, by agreement with or by obligation binding upon the
Company,  beneficial  ownership  of in  excess of 5% of the  outstanding  Common
Stock,  ignoring  for such  purposes any  limitation  on the number of shares of
Common Stock that may be owned at any single time.

                3.1.7   SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act,  including  pursuant to Section 13(a) or 15(d) thereof,  since February 12,
2004 (the foregoing materials being collectively  referred to herein as the "SEC
REPORTS" and,  together with this Agreement and the Schedules to this Agreement,
the "DISCLOSURE  MATERIALS") on a timely basis or has received a valid extension
of such  time of  filing  and has  filed  any  such  SEC  Reports  prior  to the
expiration of any such extension.  The Company has delivered (or made available)
to the  Purchasers  true,  correct and complete  copies of all SEC Reports filed
within  the ten (10) days  preceding  the date  hereof.  As of their  respective
dates, the SEC Reports  complied in all material  respects with the requirements
of the Securities Act and the Exchange Act and the rules and  regulations of the
Commission  promulgated  thereunder,  and none of the SEC  Reports,  when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated  therein or necessary in order to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.  The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting  requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial  statements have been prepared in accordance with
United States generally accepted  accounting  principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such  financial  statements or the notes  thereto,  and fairly present in all
material  respects the  financial  position of the Company and its  consolidated
subsidiaries  as of and for the dates thereof and the results of operations  and
cash  flows  for the  periods  then  ended,  subject,  in the case of  unaudited
statements,  to normal,  immaterial,  year-end audit  adjustments.  All material
agreements  to which the  Company or any  Subsidiary  is a party or to which the
property or assets of the Company or any  Subsidiary  is subject are included as
part of or specifically identified in the SEC Reports.

                3.1.8   MATERIAL  CHANGES.  Since the date of the latest audited
financial  statements  included  within the SEC Reports,  except as specifically
disclosed in the SEC Reports or in the Company's  registration statement on Form
SB-2 declared  effective by the  Commission on September 8, 2004,  (i) there has
been no event, occurrence or development that, individually or in the aggregate,
has had or that could result in a Material Adverse Effect,  (ii) the Company has
not incurred any  liabilities  (contingent  or  otherwise)  other than (A) trade
payables  and  accrued  expenses  incurred  in the  ordinary  course of business
consistent  with past practice and (B)  liabilities not required to be reflected
in the  Company's  financial  statements  pursuant  to  GAAP or  required  to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting  or the identity of its auditors,  (iv) the Company has
not declared or made any dividend or  distribution  of cash or other property to
its  stockholders  or purchased,  redeemed or made any agreements to purchase or
redeem any shares of its capital  stock,  and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except

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pursuant to existing  Company stock option plans;  provided that the Company may
issue capital stock in accordance with Sections 5.3.4 and 5.3.5. At the time the
Registration  Statement becomes  effective,  the Company will have all necessary
procedures  in  place  that  are  required  by the  Commission  and  will  be in
compliance with the Sarbanes-Oxley  Act of 2002, as amended,  to the extent then
binding upon the Company as a matter of law.

                3.1.9   ABSENCE OF LITIGATION.  There is no action, suit, claim,
proceeding,  inquiry  or  investigation  before or by any court,  public  board,
government  agency,  self-regulatory  organization  or body  pending  or, to the
knowledge  of the  Company,  threatened  against or  affecting  the Company that
could, individually or in the aggregate, have a Material Adverse Effect.

                3.1.10  COMPLIANCE.   Except   in  each   case  as   could   not
individually or in the aggregate  share or result in a material  adverse effect,
the Company  (i) is not in default  under or in  violation  of (and no event has
occurred  that has not been waived  that,  with notice or lapse of time or both,
would result in a default by the Company  under),  nor has the Company  received
notice of a claim that it is in default under or that it is in violation of, any
indenture,  loan or credit  agreement or any other  agreement or  instrument  to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived),  (ii) is not in violation of any
order of any court,  arbitrator or governmental body, or (iii) is not or has not
been in  violation  of any  statute,  rule  or  regulation  of any  governmental
authority,  including without limitation all foreign,  federal,  state and local
laws  relating  to taxes,  environmental  protection,  occupational  health  and
safety,  product quality and safety and employment and labor matters,  except in
each case as could not,  individually  or in the aggregate,  have or result in a
Material Adverse Effect.

                3.1.11  TITLE TO ASSETS.  Neither the Company nor any Subsidiary
owns any real property.  The Company and the Subsidiary have good and marketable
title in all personal property owned by them that is material to their business,
in each case free and clear of all Liens,  except for Liens as do not materially
affect the value of such property and do not  materially  interfere with the use
made and proposed to be made of such property by the Company or Subsidiary.  Any
real property and  facilities  held under lease by the Company or the Subsidiary
is held by it under  valid,  subsisting  and  enforceable  leases  of which  the
Company or any Subsidiary are in compliance.

                3.1.12  CERTAIN FEES.  Except for the fees and  compensation set
forth on SCHEDULE  3.1.12 to this  Agreement,  no brokerage or finder's  fees or
commissions  are or will be payable  by the  Company  to any  broker,  financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions  contemplated by this Agreement, and the
Company has not taken any action that would cause any Purchaser to be liable for
any such fees or commissions.

                3.1.13  PRIVATE  PLACEMENT.  Neither  the Company nor any Person
acting on the  Company's  behalf has sold or offered  to sell or  solicited  any
offer  to buy the  Notes  by  means  of any  form  of  general  solicitation  or
advertising. Neither the Company nor any of its Affiliates nor any Person acting
on the Company's behalf has, directly or indirectly, at any time within the past
six months,  made any offer or sale of any security or solicitation of any offer
to buy any security

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under  circumstances that would eliminate the availability of the exemption from
registration  under Regulation D under the Securities Act in connection with the
offer and sale of the Notes as contemplated  hereby.  The Company is not, and is
not  an  Affiliate  of,  an  "investment  company"  within  the  meaning  of the
Investment  Company Act of 1940, as amended.  The Company is not a United States
real property holding  corporation  within the meaning of the Foreign Investment
in Real Property Tax Act of 1980.

                3.1.14  TRADING.  The Company's Common Stock currently is traded
on the NASD OTC-Bulletin Board.

                3.1.15  REGISTRATION  RIGHTS.  Except as  described  in SCHEDULE
3.1.15,  the Company has not granted or agreed to grant to any Person any rights
(including  "piggy-back"  registration  rights)  to have any  securities  of the
Company registered with the Commission or any other governmental  authority that
have not been satisfied.

                3.1.16  APPLICATION OF TAKEOVER PROTECTIONS. There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights  agreement) or other similar  anti-takeover  provision  under the
Company's  charter  documents  that is or could become  applicable to any of the
Purchasers  as a result  of the  Purchasers  and the  Company  fulfilling  their
obligations  or  exercising  their  rights  under  the  Transaction   Documents,
including,  without  limitation,  as a result of the  Company's  issuance of the
Notes and the Purchasers' ownership of the Notes.

                3.1.17  DISCLOSURE. The Company confirms that neither it nor any
other Person  authorized to act on its behalf has provided any of the Purchasers
or their  agents or  counsel  with any  information  that  constitutes  or might
constitute material, nonpublic information. The Company understands and confirms
that  each of the  Purchasers  will  rely on the  foregoing  representations  in
effecting  transactions in securities of the Company. All disclosure provided to
the  Purchasers  regarding  the  Company,  its  business  and  the  transactions
contemplated hereby, including the Schedules to this Agreement,  furnished by or
on behalf of the  Company  are true and  correct  and do not  contain any untrue
statement  of a material  fact or omit to state any material  fact  necessary in
order to make the  statements  made therein,  in the light of the  circumstances
under  which  they were  made,  not  misleading.  No event or  circumstance  has
occurred or information  exists with respect to the Company or the Subsidiary or
its  or  their  business,   properties,   prospects,   operations  or  financial
conditions,  which,  under  applicable law, rule or regulation,  requires public
disclosure  or  announcement  by the  Company but which has not been so publicly
announced or disclosed.  The Company  acknowledges  and agrees that no Purchaser
makes  or has  made  any  representations  or  warranties  with  respect  to the
transactions  contemplated  hereby  other than those  specifically  set forth in
Section 3.2.

                3.1.18  ACKNOWLEDGMENT  REGARDING PURCHASERS' PURCHASE OF NOTES.
The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm's length  purchaser with respect to this Agreement and
the transactions  contemplated  hereby. The Company further acknowledges that no
Purchaser  is acting as a financial  advisor or  fiduciary of the Company or any
other Purchaser (or in any similar  capacity) with respect to this Agreement and
the  transactions  contemplated  hereby and any advice given by any Purchaser or
any of their  respective  representatives  or  agents  in  connection  with this
Agreement and the

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transactions  contemplated  hereby  is  merely  incidental  to such  Purchaser's
purchase of the Notes. The Company further represents to each Purchaser that the
Company's  decision to enter into this  Agreement  has been based  solely on the
independent  evaluation of the transactions  contemplated  hereby by the Company
and its representatives.

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

                3.1.20  INSURANCE. The Company and its Subsidiary are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such amounts as are prudent and customary in the  businesses in which the
Company and Subsidiary are engaged.  Neither the Company nor its Subsidiary have
reason to believe that they will not be able to renew their  existing  insurance
coverage as and when such coverage  expires or to obtain  similar  coverage from
similar  insurers  as may be  necessary  to  continue  its  business  without  a
significant increase in cost.

                3.1.21  REGULATORY  PERMITS.  The  Company  and  its  Subsidiary
possess all certificates,  authorizations  and permits issued by the appropriate
federal,  state,  local or foreign regulatory  authorities  necessary to conduct
their  business as  described  in the SEC  Reports,  except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material  Adverse  Effect  ("MATERIAL  PERMITS"),  and the  Company and its
Subsidiary  have  not  received  any  notice  of  proceedings  relating  to  the
revocation or modification of any Material Permit.

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

                3.1.23  INTERNAL  ACCOUNTING  CONTROLS.   The  Company  and  its
Subsidiary  maintain a system of  internal  accounting  controls  sufficient  to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's general or specific

                                                                               9
<PAGE>

authorization,  and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

        3.2     REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

                3.2.1   ORGANIZATION; AUTHORITY. Such Purchaser is an individual
or entity duly organized,  validly  existing and in good standing under the laws
of  the  jurisdiction  of its  organization  with  the  requisite  corporate  or
partnership power and authority to enter into and to consummate the transactions
contemplated  by the  Transaction  Documents  and  otherwise  to  carry  out its
obligations  hereunder  and  thereunder.  The purchase by such  Purchaser of the
Notes hereunder has been duly authorized by all necessary  action on the part of
such  Purchaser.  This  Agreement  has been duly  executed and delivered by such
Purchaser and  constitutes  the valid and binding  obligation of such Purchaser,
enforceable against it in accordance with its terms.

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

                3.2.3   PURCHASER STATUS. At the time such Purchaser was offered
the Notes it was,  and at the date  hereof it is, an  "accredited  investor"  as
defined in Rule 501(a) under the Securities Act.

                3.2.4   EXPERIENCE OF SUCH  PURCHASER.  Such  Purchaser,  either
alone or together with its representatives,  has such knowledge,  sophistication
and  experience  in business and financial  matters,  including  investments  in
entities that are listed on the "Over the Counter Bulletin  Board",  so as to be
capable of evaluating the merits and risks of the prospective  investment in the
Notes  and has so  evaluated  the  merits  and  risks of such  investment.  Such
Purchaser  is (i) aware that the volume of the  trading  market for the Notes is
limited or may be  non-existent  for a period of time; and (ii) able to bear the
economic risk of an  investment in the Notes,  and, at the present time, is able
to afford a complete loss of such investment.

                3.2.5   ACCESS TO INFORMATION.  Such Purchaser acknowledges that
it has  reviewed  the  Disclosure  Materials  and  has  been  afforded  (i)  the
opportunity to ask such questions as it has deemed  necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Notes and the merits and risks of investing in the Notes;
(ii) access to  information  about the Company  and the  Subsidiaries  and their
respective financial  condition,  results of operations,  business,  properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the  opportunity to obtain such  additional  information  that the Company
possesses  or can  acquire  without  unreasonable  effort  or  expense  that  is
necessary  to  make  an  informed   investment  decision  with  respect  to  the

                                                                              10
<PAGE>

investment.  Neither such inquiries nor any other investigation  conducted by or
on behalf of such  Purchaser or its  representatives  or counsel  shall  modify,
amend or  affect  such  Purchaser's  right to rely on the  truth,  accuracy  and
completeness of the Disclosure  Materials and the Company's  representations and
warranties contained in the Transaction Documents.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

        4.1     TRANSFER RESTRICTIONS.

                4.1.1   The Notes or  Conversion  Shares may only be disposed of
pursuant to an effective  registration  statement  under the  Securities  Act or
pursuant to an available  exemption from the  registration  requirements  of the
Securities Act, and in compliance with any applicable  state securities laws. In
connection  with any  transfer  of the Notes or  Conversion  Shares  other  than
pursuant to an effective registration statement or to the Company or pursuant to
Rule 144(k),  except as otherwise set forth herein,  the Company may require the
transferor  to provide to the  Company  an  opinion of counsel  selected  by the
transferor  (with the costs associated with the production of such opinion borne
by the  Company),  the form and  substance of which  opinion shall be reasonably
satisfactory  to the Company,  to the effect that such transfer does not require
registration  under the  Securities  Act.  Notwithstanding  the  foregoing,  the
Company  hereby  consents  to and agrees to register on the books of the Company
and with its Transfer  Agent,  without any such legal  opinion,  any transfer of
Notes or  Conversion  Shares by a Purchaser to an  Affiliate of such  Purchaser,
provided that the transferee  certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. In addition,  if a
Purchaser reasonably believes that a transfer may be made in compliance with the
rules and regulations of the Commission, the Purchaser may request a transfer of
Notes or Conversion Shares without obtaining such legal opinion, but the Company
(if it is unsure of  transferability)  may itself  seek a legal  opinion  before
being required to take any action.

                4.1.2   The Purchasers  agree to the  imprinting,  so long as is
required by this  SECTION  4.1.2,  of the  following  legend on any Notes or any
certificate evidencing Conversion Shares:

        THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH  THE  SECURITIES  AND
        EXCHANGE  COMMISSION  OR  THE  SECURITIES  COMMISSION  OF ANY  STATE  IN
        RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
        1933, AS AMENDED (THE "SECURITIES  ACT"), AND,  ACCORDINGLY,  MAY NOT BE
        OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
        UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM, OR
        IN A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE
        SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS.
        NOTWITHSTANDING  THE  FOREGOING,  THESE  SECURITIES  MAY BE  PLEDGED  IN
        CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER

                                       11
<PAGE>

        LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

Certificates  evidencing  Notes shall not be required to contain  such legend or
any other legend (i) while a Registration  Statement covering the resale of such
Notes is effective  under the Securities Act, or (ii) following any sale of such
Notes  pursuant to Rule 144, or (iii) if such Notes are  eligible for sale under
Rule 144(k), or (iv) if (in the written opinion of competent  securities counsel
rendered to the Company,  with the costs  associated with the production of such
opinion  borne by the  Company)  such legend is not  required  under  applicable
requirements  of the  Securities  Act (including  judicial  interpretations  and
pronouncements  issued by the Staff of the Commission).  The Company shall cause
Company  Counsel  to issue the legal  opinion  included  in the  Transfer  Agent
Instructions  to  the  Transfer  Agent  on the  Effective  Date.  Following  the
Effective  Date or at such  earlier  time as a legend is no longer  required for
certain  Notes,  the Company will no later than three Trading Days following the
delivery  by a  Purchaser  to the  Company or the  Transfer  Agent of a legended
certificate  representing  such Notes,  deliver or cause to be delivered to such
Purchaser  a  certificate   representing  such  Notes  that  is  free  from  all
restrictive  and other  legends.  The Company  may not make any  notation on its
records or give  instructions  to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.

                4.1.3   The Company acknowledges and agrees that a Purchaser may
from time to time  pledge  or grant a  security  interest  in some or all of the
Notes in connection with a bona fide margin agreement or other loan or financing
arrangement  secured  by the  Notes  and,  if  required  under the terms of such
agreement,  loan or arrangement,  such Purchaser may transfer pledged or secured
Notes to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the pledgee,  secured
party or pledgor shall be required in connection  therewith.  Further, no notice
shall be required of such pledge. At the appropriate  Purchaser's  expense,  the
Company will execute and deliver such reasonable  documentation  as a pledgee or
secured party of Notes may  reasonably  request in  connection  with a pledge or
transfer of the Notes,  including  the  preparation  and filing of any  required
prospectus  supplement  under  Rule  424(b)(3)  of the  Securities  Act or other
applicable  provision of the Securities Act to  appropriately  amend the list of
selling stockholders thereunder.

        4.2     FURNISHING OF INFORMATION.  As long as any Purchaser owns Notes,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any  Purchaser,  the  Company  shall  deliver  to such  Purchaser  a  written
certification  of a duly  authorized  officer as to whether it has complied with
the preceding  sentence.  As long as any Purchaser owns Notes, if the Company is
not required to file reports  pursuant to such laws, it will prepare and furnish
to the Purchasers and make publicly  available in accordance  with paragraph (c)
of Rule 144 such information as is required for the Purchasers to sell the Notes
under Rule 144.  The Company  further  covenants  that it will take such further
action as any holder of Notes may  reasonably  request to satisfy the provisions
of Rule 144 applicable to the issuer of securities  relating to transactions for
the sale of securities pursuant to Rule 144.

                                       12
<PAGE>

        4.3     RESERVATION AND LISTING OF COMMON STOCK; BLUE SKY.

                4.3.1   The  Company  shall  maintain  a  reserve  from its duly
authorized  shares of Common  Stock for  issuance  pursuant  to the  Transaction
Documents in such amount as may be required to fulfill its  obligations  in full
under  the  Transaction  Documents.  In the  event  that at any  time  the  then
authorized  shares of Common Stock are  insufficient  for the Company to satisfy
its  obligations  in full under the  Transaction  Documents,  the Company  shall
promptly  take  such  actions  as may be  required  to  increase  the  number of
authorized shares.

                4.3.2   Following  the  Notes  Closing,  the  Company  shall use
commercially reasonable best efforts to maintain the listing of its Common Stock
on an Eligible Market.

        4.4     SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, on the
Final Notes  Closing Date or as soon as  reasonably  practicable,  issue a press
release reasonably acceptable to the Purchasers disclosing all material terms of
the transactions  contemplated  hereby. Not later than five days after the Final
Notes Closing Date, the Company shall file a Current Report on Form 8-K with the
Commission (the "8-K FILING")  describing the material terms of the transactions
contemplated  by the  Transaction  Documents  and  including as exhibits to such
Current  Report on Form 8-K this  Agreement in the form required by the Exchange
Act. Thereafter,  the Company shall timely file any filings and notices required
by  the  Commission  or  applicable   law  with  respect  to  the   transactions
contemplated  hereby and provide copies thereof to the Purchasers promptly after
filing.  Except with respect to the 8-K Filing and the press release  referenced
above,  the  Company  shall,  at least two  Trading  Days prior to the filing or
dissemination  of any  disclosure  required  by this  paragraph,  provide a copy
thereof to the Purchasers for their review. The Company and the Purchasers shall
consult with each other in issuing any press releases or otherwise making public
statements  or  filings  and other  communications  with the  Commission  or any
regulatory   agency  or  Trading   Market  with  respect  to  the   transactions
contemplated  hereby,  and neither  party shall issue any such press  release or
otherwise make any such public statement,  filing or other communication without
the prior consent of the other, except if such disclosure is required by law, in
which case the  disclosing  party  shall  promptly  provide the other party with
prior  notice  of  such  public  statement,   filing  or  other   communication.
Notwithstanding the foregoing,  the Company shall not publicly disclose the name
of any  Purchaser,  or include the name of any  Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such  Purchaser,  except to the extent such  disclosure  (but not any
disclosure as to the controlling  Persons thereof) is required by law or Trading
Market regulations,  in which case the Company shall provide the Purchasers with
prior notice of such disclosure.  The Company shall not, and shall cause each of
its  Subsidiaries  and its and each of  their  respective  officers,  directors,
employees and agents not to, provide any Purchaser  with any material  nonpublic
information  regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing without the express  written consent of such Purchaser.
In the event of a breach of the  foregoing  covenant by the Company,  any of its
Subsidiaries, or any of its or their respective officers,  directors,  employees
and  agents,  in  addition  to  any  other  remedy  provided  herein  or in  the
Transaction  Documents,  a  Purchaser  shall  have  the  right  to make a public
disclosure,  in the form of a press release,  public advertisement or otherwise,
of such  material  nonpublic  information  without  the  prior  approval  by the
Company,  its  Subsidiaries,  or  any  of  its  or  their  respective  officers,
directors,  employees or agents.  No Purchaser  shall have any  liability to the
Company,

                                                                              13
<PAGE>

its  Subsidiaries,  or  any  of its or  their  respective  officers,  directors,
employees,  stockholders  or  agents  for any such  disclosure.  Subject  to the
foregoing,  neither the Company nor any Purchaser shall issue any press releases
or any other public  statements  with respect to the  transactions  contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Purchaser,  to make any press release or other public disclosure
with respect to such  transactions  (i) in substantial  conformity  with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) each Purchaser shall be
consulted  by the  Company in  connection  with any such press  release or other
public disclosure prior to its release).  Each press release disseminated during
the 12  months  preceding  the  date of this  Agreement  did not at the  time of
release  contain  any untrue  statement  of a  material  fact or omit to state a
material  fact  required to be stated  therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.

        4.5     REIMBURSEMENT.  If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED  PERSON")  becomes involved in any capacity
in any  Proceeding  brought by or against any Person in connection  with or as a
result  of the  transactions  contemplated  by the  Transaction  Documents,  the
Company will  indemnify and hold harmless such  Purchaser or Related  Person for
its  reasonable   legal  and  other   expenses   (including  the  costs  of  any
investigation, preparation and travel) and for any Losses incurred in connection
therewith,  as such expenses or Losses are incurred,  excluding only Losses that
result directly from such Purchaser's or Related Person's  negligence or willful
misconduct.  In addition,  the Company  shall  indemnify  and hold harmless each
Purchaser and Related  Person from and against any and all Losses,  as incurred,
arising  out  of or  relating  to  any  breach  by  the  Company  of  any of the
representations,  warranties or covenants  made by the Company in this Agreement
or any other Transaction  Document,  or any allegation by a third party that, if
true, would  constitute such a breach.  The conduct of any Proceedings for which
indemnification  is available  under this paragraph shall be governed by Section
6.4(c)  below.  The  indemnification  obligations  of  the  Company  under  this
paragraph  shall be in addition to any liability  that the Company may otherwise
have and shall be  binding  upon and  inure to the  benefit  of any  successors,
assigns,  heirs and  personal  representatives  of the  Purchasers  and any such
Related  Persons.  The Company also agrees that neither the  Purchasers  nor any
Related Persons shall have any liability to the Company or any Person  asserting
claims on behalf of or in right of the Company in connection with or as a result
of the  transactions  contemplated by the Transaction  Documents,  except to the
extent that any Losses  incurred by the Company  result from the  negligence  or
willful  misconduct of the applicable  Purchaser or Related Person in connection
with such  transactions.  If the  Company  breaches  its  obligations  under any
Transaction Document, then, in addition to any other liabilities the Company may
have under any Transaction  Document or applicable law, the Company shall pay or
reimburse the Purchasers on demand for all costs of collection  and  enforcement
(including  reasonable  attorneys  fees  and  expenses).  Without  limiting  the
generality of the foregoing,  the Company  specifically  agrees to reimburse the
Purchasers on demand for all costs of enforcing the indemnification  obligations
in this paragraph.

                                                                              14
<PAGE>

        4.6     FUTURE EQUITY OFFERINGS.

                (a)     Subject to the  exceptions  described in Section  4.6(b)
below,  for a period of six (6) months  following the Notes  Closing  Date,  the
Company will not,  without the prior written consent of the Purchaser  Designee,
sell, offer to sell or contract with any Person to obtain proceeds from the sale
of Equity Equivalents that involves:

                        (i)     the  issuance  of shares  of  Common  Stock at a
        price  per  share  that  shall  be  less  than  $0.40  (unless  in  such
        connection,  the Company shall offer to reduce the  conversion  price of
        the Notes to such lower conversion price), or

                        (ii)    the  issuance  of  Equity  Equivalents  that are
        convertible into or exercisable for an indeterminate number of shares of
        Common Stock, or

                        (iii)   are not  subject to  restrictions  on the public
        resale or distribution  thereof of for at least six (6) months following
        the effective date of the Registration Statement

(the  limitations  referred  to in this  Section  4.6(a) are  referred to as the
"CAPITAL RAISING LIMITATIONS").

                (b)     The  Capital  Raising  Limitations  set forth in Section
        4.6(a)  shall NOT  apply to any  transaction  or series of  transactions
        involving issuances of securities:

                        (i)     to employees,  directors or  consultants  of the
        Company pursuant to a Company stock option plan;

                        (ii)    upon the exercise or conversion, as the case may
        be,  of  currently   outstanding   options,   warrants  or   convertible
        securities;

                        (iv)    upon the conversion of the Notes issued pursuant
        to the Transaction Documents;

                        (v)     in  connection  with any business  acquisitions,
        mergers or strategic partnerships;

                        (vi)    Persons  who  purchase,  in a private  placement
        exempt from the  registration  requirements  of the Securities  Act, not
        more than  $3,000,000 of shares of Company  Common Stock or other Equity
        Equivalents  at a per share  purchase  price,  conversion  price  and/or
        exercise  price of not less than $0.40 per share  (unless,  in each such
        case,  the  Company  shall offer to reduce the  conversion  price of the
        Notes to such lower conversion price); or

                        (vii)   Persons who  purchase  shares of Company  Common
        Stock or other Equity  Equivalents,  pursuant to any public  offering of
        securities  for the account of the Company now or  hereafter  registered
        under the Securities  Act, at per share prices that shall be equal to or
        greater  than $0.40 per share  (unless,  in each such case,  the Company
        shall  offer to reduce the  conversion  price of the Notes to such lower
        conversion price).

                                       15
<PAGE>

                                    ARTICLE V
                                   CONDITIONS

        5.1     CONDITIONS  PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS.  The
obligation  of each  Purchaser  to acquire  Notes on the Notes  Closing  Date is
subject to the  satisfaction or waiver by such  Purchaser,  on or before each of
the Notes Closing Date, of each of the following conditions:

                5.1.1   REPRESENTATIONS AND WARRANTIES.  The representations and
warranties  of the  Company  contained  herein  shall be true and correct in all
material  respects as of the date when made on the Notes Closing Date, as though
made on such date; and

                5.1.2   PERFORMANCE.  The Company and each other Purchaser shall
have  performed,  satisfied  and  complied  in all  material  respects  with all
covenants, agreements and conditions required by the Transaction Documents to be
performed,  satisfied  or complied  with by it at or prior to the Notes  Closing
Date.

        5.2     CONDITIONS  PRECEDENT TO THE  OBLIGATIONS  OF THE  COMPANY.  The
obligation  of the Company to sell Notes at the Notes  Closing is subject to the
satisfaction  or waiver by each  Purchaser,  at or before each such Closing,  of
each of the following conditions:

                5.2.1   REPRESENTATIONS AND WARRANTIES.  The representations and
warranties of the Purchasers  contained  herein shall be true and correct in all
material respects as of the date when made and as of the applicable Closing Date
as though made on and as of such date; and

                5.2.2   PERFORMANCE.   The  Purchasers   shall  have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by the Transaction Documents to be performed,  satisfied
or complied with by the Purchasers at or prior to such Closing.

                                   ARTICLE VI
                               REGISTRATION RIGHTS

        6.1     REGISTRATION

                6.1.1   Not later than February 11, 2005, the Company shall have
prepared and filed with the Commission the Registration  Statement  covering the
sale to the  Purchasers,  and the resale by the  Purchasers  of all  Registrable
Securities  for an offering to be made on a  continuous  basis  pursuant to Rule
415. The Company shall have the right to include in such Registration Statement,
securities of the Company  previously  issued or committed to be issued,  to the
extent and to the Persons disclosed on SCHEDULE 3.1.15.

                6.1.2   The  Company  shall  promptly  respond to all letters of
comment that the Company shall receive from the staff of the SEC with respect to
such  Registration  Statement  and shall use its  commercially  reasonable  best
efforts to cause the Registration  Statement to be declared effective by the SEC
as soon as practicable  thereafter;  provided,  that the Purchasers  acknowledge
that such  registration  efforts  may be delayed  in the event that the  Company
enters into any agreement or  commitment  for the  acquisition  of any assets or
securities of any Person

                                                                              16
<PAGE>

prior to the  effectiveness of such Registration  Statement,  and is required to
cause an audit to be  conducted  in  accordance  with the rules and  regulations
promulgated by the SEC.

                6.1.3   The Company shall use its  commercially  reasonable best
efforts to keep the  Registration  Statement  continuously  effective  under the
Securities  Act until  the  second  anniversary  of the  Effective  Date or such
earlier  date  when all  Registrable  Securities  covered  by such  Registration
Statement have been sold (the "EFFECTIVENESS PERIOD").

                6.1.4   The company  shall  deliver to each  Purchaser at his or
its last known address, a final prospectus promptly after receiving notification
from the Commission that the Registration Statement has been declared effective.

                6.1.5   Upon the  occurrence of any Event (as defined below) and
on every monthly  anniversary  thereof until the applicable  Event is cured,  as
partial relief for the damages suffered therefrom by any Purchaser (which remedy
shall not be exclusive of any other remedies available under this Agreement,  at
law or in equity),  the Company shall pay or issue,  as the case may be, to each
Purchaser  as to which an Event  relates,  as  liquidated  damages  and not as a
penalty,  cash or,  upon the  payment of the par value  thereof,  such number of
shares  of Common  Stock as shall  equal  three  percent  (3%) of the  aggregate
outstanding  principal  amount of the Notes  purchased by such Purchasers at the
Notes Closing.  Such additional shares are designated "EVENT SHARES" and will be
treated by all parties,  after issuance,  in the same manner as all other Shares
of  Common  Stock  and  shall  thereafter  be  included  in  the  definition  of
"Registrable  Securities."  Event Shares will be issued on a pro-rata  basis for
any portion of a month prior to the cure of an Event.

For such  purposes,  each of the  following if occurring  prior to or during the
Effectiveness Period shall constitute an "EVENT":

                        (i)     the  Registration  Statement  shall not be filed
with the Commission on or prior to February 11, 2005; or

                        (ii)    the  Registration   Statement  is  not  declared
effective  by the  Commission  on or prior to the Required  Effectiveness  Date,
provided,  however,  that if the  effectiveness of such  Registration  Statement
shall be  delayed  as a  result  of a  pending  acquisition  or  other  material
transaction that requires public disclosure, for so long as the Company is using
its best effects to accelerate the effectiveness of such Registration Statement,
the  Required  Effectiveness  Date may be extended on one  occasion  only by the
Company for up to an additional 45 days.

                        (iii)   after the Effective  Date, a Purchaser  (without
fault  on the  part of any  Purchaser)  is not  permitted  to  sell  Registrable
Securities under the Registration  Statement (or a subsequent Statement filed in
replacement  thereof) for any reason for five or more  Trading Days  (whether or
not consecutive),  unless due to circumstances  beyond the reasonable control of
the Company; or

                        (iv)    after  the  Effective   Date,  any   Registrable
Securities covered by such Registration  Statement are not listed on an Eligible
Market,  unless  due to  circumstances  beyond  the  reasonable  control  of the
Company; or

                                                                              17
<PAGE>

                        (v)     after the  Effective  Date,  the Common Stock is
not listed or quoted, or is suspended from trading,  on an Eligible Market for a
period of three  Trading  Days (which  need not be  consecutive  Trading  Days);
unless due to circumstances beyond the reasonable control of the Company; or

                        (vi)    the  Company  fails for any  reason to deliver a
certificate  evidencing  any Shares of Common Stock to a Purchaser  within three
Trading  Days after  delivery of such  certificate  is required  pursuant to any
Transaction  Document or the exercise  rights of the Purchasers  pursuant to the
Transaction Documents are otherwise suspended for any reason.

In connection with the foregoing, it is understood that the Company will, at all
times,  use its reasonable  best efforts to comply with covenants and agreements
contained in this Article VI.

        6.2     REGISTRATION  PROCEDURES.   In  connection  with  the  Company's
registration obligations hereunder, the Company shall:

                6.2.1   Not less than three  Trading Days prior to the filing of
a  Registration  Statement  or  any  related  Prospectus  or  any  amendment  or
supplement  thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference),  the Company shall (i) furnish to each
Purchaser  and any counsel  designated  by any  Purchaser  (each,  a  "PURCHASER
COUNSEL"),  copies of all such documents  proposed to be filed,  which documents
(other than those  incorporated  or deemed to be incorporated by reference) will
be subject to the review of such Purchasers and each Purchaser Counsel, and (ii)
cause its officers  and  directors,  counsel and  independent  certified  public
accountants  to  respond  to  such  inquiries  as  shall  be  necessary,  in the
reasonable  opinion  of  each  Purchaser   Counsel,   to  conduct  a  reasonable
investigation  within the meaning of the  Securities  Act. The Company shall not
file a  Registration  Statement  or any such  Prospectus  or any  amendments  or
supplements  thereto to which  Purchasers  holding a majority of the Registrable
Securities shall reasonably object.

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

                                                                              18
<PAGE>

                6.2.3   Notify the  Purchasers of  Registrable  Securities to be
sold and each  Purchaser  Counsel as promptly as  reasonably  possible,  and (if
requested by any such  Person)  confirm such notice in writing no later than one
Trading Day  thereafter,  of any of the  following  events:  (i) the  Commission
notifies  the  Company  whether  there  will be a "review"  of any  Registration
Statement; (ii) the Commission comments in writing on any Registration Statement
(in which  case the  Company  shall  deliver  to each  Purchaser  a copy of such
comments and of all written responses thereto); (iii) any Registration Statement
or any post-effective  amendment is declared  effective;  (iv) the Commission or
any other  Federal or state  governmental  authority  requests any  amendment or
supplement to any  Registration  Statement or Prospectus or requests  additional
information related thereto; (v) the Commission issues any stop order suspending
the effectiveness of any Registration Statement or initiates any Proceedings for
that  purpose;  (vi)  the  Company  receives  notice  of any  suspension  of the
qualification or exemption from qualification of any Registrable  Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose;  or  (vii)  the  financial  statements  included  in  any  Registration
Statement become  ineligible for inclusion  therein or any statement made in any
Registration  Statement or Prospectus or any document  incorporated or deemed to
be  incorporated  therein by reference is untrue in any material  respect or any
revision to a Registration  Statement,  Prospectus or other document is required
so that it will not contain any untrue  statement of a material  fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.

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

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

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

                6.2.7   Once applicable:  (i) in the time and manner required by
each Trading  Market,  prepare and file with such Trading  Market an  additional
shares listing application covering all of the Registrable Securities; (ii) take
all steps  necessary  to cause such  Registrable  Securities  to be approved for
listing on each Trading Market as soon as possible thereafter;  (iii) provide to
the Purchasers  evidence of such listing;  and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.

                                       19
<PAGE>

                6.2.8   Prior to any public offering of Registrable  Securities,
use its best  efforts  to  register  or qualify or  cooperate  with the  selling
Purchasers  and  each  applicable  Purchaser  Counsel  in  connection  with  the
registration  or   qualification   (or  exemption  from  such   registration  or
qualification)  of such  Registrable  Securities  for offer  and sale  under the
securities  or blue sky laws of such  jurisdictions  within the United States as
any  Purchaser   requests  in  writing,   to  keep  each  such  registration  or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things  necessary or advisable to enable the
disposition in such  jurisdictions  of the Registrable  Securities  covered by a
Registration  Statement;  PROVIDED,  HOWEVER,  that  the  Company  shall  not be
obligated  to file any general  consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so  qualified  or to subject  itself to taxation in any  jurisdiction  in
which it is not otherwise subject.

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

                6.2.10  Upon the  occurrence  of any event  described in Section
6.2.3(vii),  as  promptly  as  reasonably  possible,  prepare  a  supplement  or
amendment,  including a post-effective  amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that,  as  thereafter  delivered,  neither the  Registration  Statement nor such
Prospectus will contain an untrue  statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.

                6.2.11  Cooperate   with   any   due   diligence   investigation
undertaken  by the  Purchasers  in  connection  with  the  sale  of  Registrable
Securities,  including without  limitation by making available any documents and
information; provided that the Company will not deliver or make available to any
Purchaser  material,  nonpublic  information unless such Purchaser  specifically
requests in advance to receive  material,  nonpublic  information in writing and
agrees to utilize such information in a manner consistent with applicable law.

                6.2.12  If Holders of a majority of the  Registrable  Securities
being offered pursuant to a Registration  Statement select  underwriters for the
offering,  the Company  shall enter into and  perform its  obligations  under an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,   by  providing  customary  legal  opinions,   comfort  letters  and
indemnification and contribution obligations.

                6.2.13  Comply with all applicable  rules and regulations of the
Commission.

        6.3     REGISTRATION  EXPENSES.  The Company shall pay (or reimburse the
Purchasers  for)  all  fees  and  expenses  incident  to the  performance  of or
compliance with this Agreement by the Company,  including without limitation (a)
all  registration  and filing fees and expenses,  including  without  limitation
those  related  to  filings  with the  Commission,  any  Trading  Market  and in

                                                                              20
<PAGE>

connection  with  applicable  state  securities  or Blue Sky laws,  (b) printing
expenses  (including  without limitation  expenses of printing  certificates for
Registrable   Securities   and  of  printing   prospectuses   requested  by  the
Purchasers),  (c)  messenger,  telephone  and  delivery  expenses,  (d) fees and
disbursements  of counsel for the Company and up to $10,000 in the aggregate for
the fees and expenses of one legal  counsel  designated by the  Purchasers,  (e)
fees and  expenses of all other  Persons  retained by the Company in  connection
with the  consummation of the transactions  contemplated by this Agreement,  and
(f) all listing fees to be paid by the Company to the Trading Market.

        6.4     INDEMNIFICATION

                6.4.1   INDEMNIFICATION  BY  THE  COMPANY.  The  Company  shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Purchaser,  the officers,  directors,  partners,  members,  agents, brokers
(including  brokers who offer and sell Registrable  Securities as principal as a
result of a pledge  or any  failure  to  perform  under a margin  call of Common
Stock),  investment  advisors  and  employees  of each of them,  each Person who
controls any such Purchaser  (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange  Act) and the officers,  directors,  partners,
members,  agents and employees of each such controlling  Person,  to the fullest
extent  permitted by  applicable  law,  from and against any and all Losses,  as
incurred,  arising out of or relating to any untrue or alleged untrue  statement
of a material fact contained in the  Registration  Statement,  any Prospectus or
any form of  prospectus  or in any  amendment  or  supplement  thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact  required to be stated  therein or necessary to make
the  statements  therein (in the case of any Prospectus or form of prospectus or
supplement  thereto,  in the light of the  circumstances  under  which they were
made) not  misleading,  except to the extent,  but only to the extent,  that (i)
such  untrue  statements,  alleged  untrue  statements,   omissions  or  alleged
omissions are based solely upon information  regarding such Purchaser  furnished
in writing to the Company by such Purchaser expressly for use therein, or to the
extent  that such  information  relates to such  Purchaser  or such  Purchaser's
proposed method of  distribution of Registrable  Securities and was reviewed and
expressly  approved  in  writing  by  such  Purchaser  expressly  for use in the
Registration  Statement,  such  Prospectus  or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 6.2.3(v)-(vii), the use by such Purchaser of an
outdated or defective  Prospectus  after the Company has notified such Purchaser
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice  contemplated  in Section 6.5. The Company shall
notify the Purchasers  promptly of the  institution,  threat or assertion of any
Proceeding  of which the Company is aware in  connection  with the  transactions
contemplated by this Agreement.

                6.4.2   INDEMNIFICATION  BY PURCHASERS.  Each  Purchaser  shall,
severally  and not  jointly,  indemnify  and  hold  harmless  the  Company,  its
directors,  officers, agents and employees, each Person who controls the Company
(within  the meaning of Section 15 of the  Securities  Act and Section 20 of the
Exchange  Act),  and  the  directors,  officers,  agents  or  employees  of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as  determined  by a court of  competent  jurisdiction  in a
final judgment not subject to appeal or review) arising solely out of any untrue
statement of a material fact contained in the Registration

                                                                              21
<PAGE>

Statement,  any  Prospectus,  or any form of prospectus,  or in any amendment or
supplement  thereto,  or arising  solely out of any omission of a material  fact
required to be stated  therein or necessary to make the  statements  therein (in
the case of any Prospectus or form of prospectus or supplement  thereto,  in the
light of the  circumstances  under which they were made) not  misleading  to the
extent,  but only to the  extent,  that such  untrue  statement  or  omission is
contained in any  information  so furnished in writing by such  Purchaser to the
Company  specifically  for  inclusion  in such  Registration  Statement  or such
Prospectus  or to the extent that (i) such untrue  statements  or omissions  are
based solely upon information  regarding such Purchaser  furnished in writing to
the Company by such Purchaser  expressly for use therein,  or to the extent that
such information  relates to such Purchaser or such Purchaser's  proposed method
of  distribution  of  Registrable  Securities  and was  reviewed  and  expressly
approved  in writing by such  Purchaser  expressly  for use in the  Registration
Statement,  such  Prospectus  or such form of  Prospectus or in any amendment or
supplement  thereto or (ii) in the case of an occurrence of an event of the type
specified in SECTION 6.2.3(v)-(vii), the use by such Purchaser of an outdated or
defective  Prospectus  after the Company has notified such  Purchaser in writing
that the  Prospectus  is outdated or defective  and prior to the receipt by such
Purchaser  of the Advice  contemplated  in SECTION  6.5.  In no event  shall the
liability  of any  selling  Purchaser  hereunder  be greater in amount  than the
dollar  amount  of the net  proceeds,  in  excess  of the  amount  paid for such
Registrable  Securities,  received  by  such  Purchaser  upon  the  sale  of the
Registrable Securities giving rise to such indemnification obligation.

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

                An  Indemnified  Party  shall have the right to employ  separate
counsel in any such  Proceeding and to participate in the defense  thereof,  but
the  fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
Indemnified  Party or Parties unless:  (i) the Indemnifying  Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed  promptly to assume the defense of such  Proceeding and to employ counsel
reasonably  satisfactory to such Indemnified  Party in any such  Proceeding;  or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include  both  such  Indemnified  Party  and the  Indemnifying  Party,  and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified  Party
and the Indemnifying  Party (in which case, if such  Indemnified  Party notifies
the  Indemnifying  Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which

                                                                              22
<PAGE>

consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

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

                6.4.4   CONTRIBUTION.  If  a  claim  for  indemnification  under
SECTION 6.4.1 or .2 is  unavailable  to an  Indemnified  Party (by reasons other
than the specified exclusions to indemnification), then each Indemnifying Party,
in lieu of indemnifying such Indemnified  Party,  shall contribute to the amount
paid or payable by such  Indemnified  Party as a result of such Losses,  in such
proportion as is appropriate  to reflect the relative fault of the  Indemnifying
Party and  Indemnified  Party in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such  Indemnifying  Party and Indemnified
Party shall be  determined  by  reference  to, among other  things,  whether any
action in  question,  including  any untrue or  alleged  untrue  statement  of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information  supplied by, such  Indemnifying  Party or
Indemnified  Party,  and the  parties'  relative  intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such  action,  statement or
omission.  The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in SECTION 6.4.3, any
reasonable  attorneys'  or other  reasonable  fees or expenses  incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified  for such fees or expenses if the  indemnification  provided  for in
this Section was available to such party in accordance with its terms.

                The parties hereto agree that it would not be just and equitable
if  contribution  pursuant to this  SECTION  6.4.4 were  determined  by pro rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding  the  provisions of this SECTION  6.4.4,  no Purchaser  shall be
required to contribute,  in the aggregate, any amount in excess of the amount by
which the net proceeds  actually received by such Purchaser from the sale of the
Registrable  Securities  subject  to the  Proceeding  exceeds  the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                                                                              23
<PAGE>

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

        6.5     DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus  delivery  requirements  of the Securities Act as applicable to it in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company  of the  occurrence  of any  event of the  kind  described  in  SECTIONS
6.2.3(v),  (vi) or (vii),  such Purchaser will  discontinue  disposition of such
Registrable  Securities under the Registration  Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by SECTION 6.2.10, or until it is advised in writing (the
"ADVICE")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.

        6.6     PURCHASERS' PIGGY-BACK REGISTRATIONS.  If at any time during the
Effectiveness Period there is not an effective  Registration  Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the  Commission a registration  statement  relating to an offering for
its own account or the account of others under the  Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents  relating to equity  securities to
be issued solely in connection with any acquisition of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans,  then the Company shall send to each Purchaser  written notice of
such determination and if, within fifteen days after receipt of such notice, any
such  Purchaser  shall so request in writing,  the Company shall include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Purchaser requests to be registered.  In such event, the following provisions of
this Agreement shall apply: Sections 6.2.5, 6.2.6, 6.4 and 6.5.

                                  ARTICLE VII
                                  MISCELLANEOUS

        7.1     TERMINATION.  Unless  otherwise  agreed  by  the  Company,  this
Agreement shall automatically terminate and be of no further force if Purchasers
fail to purchase  $1,000,000  of the Notes by February 11, 2005. In the event of
such termination no party hereto shall have any further liability to the other.

        7.2     FEES AND EXPENSES.  On the Notes Closing Date, the Company shall
pay to counsel for all Purchasers  $25,000 for legal fees and expenses  incurred
in connection with the preparation and negotiation of the Transaction Documents.
Except  as  otherwise  set forth  herein,  the  Company  shall  have no  further
obligation to pay fees of counsel for any Purchaser at any other time. Except as
expressly set forth in the  Transaction  Documents to the  contrary,  each party
shall pay the fees and expenses of its advisers, counsel,  accountants and other
experts,  if any, and all other expenses  incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer

                                       24
<PAGE>

Agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Notes.

        7.3     ENTIRE AGREEMENT.  The Transaction Documents,  together with the
Exhibits and Schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents,  exhibits and schedules. At or
after the Notes Closing Date,  and without  further  consideration,  the parties
will  execute  and  deliver  to each  other  such  further  documents  as may be
reasonably  requested in order to give practical  effect to the intention of the
parties under the Transaction Documents.

        7.4     NOTICES.   Any  and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified in this Section  prior to 6:30 p.m.  (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or  communication  is delivered  via  facsimile at the  facsimile
number  specified  in this  Section on a day that is not a Trading  Day or later
than 6:30 p.m.  (New York City time) on any  Trading  Day,  (c) the  Trading Day
following the date of mailing, if sent by U.S. nationally  recognized  overnight
courier service,  or (d) upon actual receipt by the party to whom such notice is
required to be given.  The addresses and facsimile  numbers for such notices and
communications  are those set forth on the signature pages hereof, or such other
address or facsimile  number as may be designated in writing  hereafter,  in the
same  manner,  by  such  Person.  Any  party  providing  notice  to the  Company
simultaneously  shall  provide  a copy  of  that  notice  and  all  accompanying
materials to Gersten Savage Kaplowitz Wolf & Marcus, LP, at the address shown on
the signature page hereto.

        7.5     AMENDMENTS;  WAIVERS.  No  provision  of this  Agreement  may be
waived  or  amended  except in a written  instrument  signed,  in the case of an
amendment,  by the  Company  and  each of the  Purchasers  or,  in the case of a
waiver,  by the party against whom enforcement of any such waiver is sought.  No
waiver of any default with respect to any provision, condition or requirement of
this  Agreement  shall be deemed to be a  continuing  waiver in the  future or a
waiver of any subsequent  default or a waiver of any other provision,  condition
or  requirement  hereof,  nor  shall any delay or  omission  of either  party to
exercise  any right  hereunder  in any manner  impair the  exercise  of any such
right.  Notwithstanding  the  foregoing,  a waiver or consent to depart from the
provisions  hereof with  respect to a matter  that  relates  exclusively  to the
rights of  Purchasers  under ARTICLE VI and that does not directly or indirectly
affect  the rights of other  Purchasers  may be given by  Purchasers  holding at
least a majority of the  Registrable  Securities to which such waiver or consent
relates.

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

                                       25
<PAGE>

        7.7     SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of the  Purchasers.  Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser  assigns or
transfers  any Notes,  provided such  transferee  agrees in writing to be bound,
with respect to the transferred  Notes,  by the provisions  hereof that apply to
the "Purchasers."  Notwithstanding anything to the contrary herein, Notes may be
assigned to any Person in  connection  with a bona fide margin  account or other
loan or financing arrangement secured by such Notes.

        7.8     NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

        7.9     GOVERNING  LAW;  VENUE;  WAIVER  OF JURY  TRAIL.  all  questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the STATE OF NEW YORK.  THE COMPANY AND  PURCHASERS  Hereby  Irrevocably
Submit To The Exclusive  Jurisdiction Of The State And Federal Courts Sitting In
The CITY OF NEW YORK,  STATE OF NEW YORK,  For The  Adjudication  Of Any Dispute
BROUGHT BY THE COMPANY OR ANY PURCHASER  Hereunder,  In  Connection  Herewith Or
With Any Transaction  Contemplated  Hereby Or Discussed  Herein  (Including With
Respect To The  Enforcement  Of Any Of The  Transaction  Documents),  And Hereby
Irrevocably  Waive,  And Agree Not To Assert In Any Suit,  Action Or  ProceedinG
BROUGHT BY THE  COMPANY OR ANY  PURCHASER,  Any Claim That It Is Not  Personally
Subject To The  Jurisdiction  Of Any Such  Court,  OR That Such Suit,  Action Or
Proceeding Is Improper. Each party Hereby Irrevocably Waives Personal Service Of
Process  And  Consents  To  Process  Being  Served In Any Such  Suit,  Action Or
Proceeding  By  Mailing A Copy  Thereof  Via  Registered  Or  Certified  Mail Or
Overnight  Delivery  (With Evidence Of Delivery) To Such Party At The Address In
Effect For Notices To It Under This Agreement And Agrees That Such Service Shall
Constitute Good And Sufficient  Service Of Process And Notice  Thereof.  Nothing
Contained  Herein Shall Be Deemed To Limit In Any Way Any Right To Serve Process
In Any Manner  Permitted  By Law.  The Company AND  PURCHASERS  Hereby Waive All
Rights To A Trial By Jury.

        7.10    SURVIVAL.  The  representations,   warranties,   agreements  and
covenants  contained  herein  shall  survive all Closings  hereunder,  including
without  limitation  the delivery of the Notes and the exercise of all Warrants,
as applicable.

                                                                              26
<PAGE>

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

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

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

        7.14    REMEDIES.  In addition to being  entitled to exercise all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate. The parties further agree that no bond or other
security shall be required in obtaining  such  equitable  relief and the parties
hereby  consent to the  ordering  of  specific  performance.  The  parties  also
understand  that other  action may be taken and  remedies  enforced  against the
breaching party.

        7.15    PAYMENT  SET  ASIDE.  To the  extent  that the  Company  makes a
payment or payments to any  Purchaser  hereunder  or any  Purchaser  enforces or
exercises its rights  hereunder or  thereunder,  and such payment or payments or
the  proceeds  of  such   enforcement  or  exercise  or  any  part  thereof  are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

        7.16    ADJUSTMENTS  IN SHARE  NUMBERS AND  PRICES.  In the event of any
stock split,  subdivision,  dividend or distribution payable in shares of Common
Stock (or other securities or

                                                                              27
<PAGE>

rights  convertible into, or entitling the holder thereof to receive directly or
indirectly   shares   of   Common   Stock),   combination   or   other   similar
recapitalization or event occurring after the date hereof, each reference in any
Transaction Document to a number of shares or a price per share shall be amended
to appropriately account for such event.

        7.17    INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS AND RIGHTS.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser  under any  Transaction  Document.  The decision of each  Purchaser to
purchase  Notes  pursuant  to this  Agreement  has been  made by such  Purchaser
independently  of any other  Purchaser  and  independently  of any  information,
materials,  statements  or opinions  as to the  business,  affairs,  operations,
assets, properties,  liabilities, results of operations, condition (financial or
otherwise)  or prospects of the Company which may have been made or given by any
other  Purchaser  or by any agent or  employee  of any other  Purchaser,  and no
Purchaser  or any of its agents or  employees  shall have any  liability  to any
other  Purchaser  (or any other  Person)  relating  to or arising  from any such
information,  materials,  statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Document.  Each
Purchaser  acknowledges  that no other  Purchaser  has  acted as agent  for such
Purchaser in connection  with making its investment  hereunder and that no other
Purchaser  will  be  acting  as  agent  of such  Purchaser  in  connection  with
monitoring  its  investment  hereunder.  Each  Purchaser  shall be  entitled  to
independently  protect and enforce its rights,  including without limitation the
rights arising out of this Agreement or out of the other Transaction  Documents,
and it shall  not be  necessary  for any  other  Purchaser  to be  joined  as an
additional party in any proceeding for such purpose.

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                                                              28
<PAGE>

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

                                     UTIX GROUP, INC.

                                     By: _______________________________
                                     Name:    Anthony G. Roth
                                     Title:   President and CEO

                                     AS TO THE PROVISIONS OF SECTION 6.1.2 ONLY:

                                     ___________________________________
                                              Anthony G. Roth

                                     Address for Notice:

                                     Anthony G. Roth
                                     Utix Group, Inc.
                                     170 Cambridge Street
                                     Burlington, MA 01803
                                     Facsimile No.: 781-229-8886
                                     Telephone No.: 781-229-2589

                 With a copy to:     Gersten Savage Kaplowitz
                                     Wolf & Marcus LP
                                     101 East 52nd Street
                                     New York, NY 10022
                                     Facsimile No.: 212-980-5192
                                     Telephone No.: 212-752-9700
                                     Attn: Stephen A. Weiss, Esq.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

<PAGE>

                            PURCHASER SIGNATURE PAGE

Intergroup Corporation

By:______________________________________
         Name and Title

Intergroup Corporation
Address:
820 Moraga Drive
Los Angeles, California  90049

$500,000
Dollar Amount of Notes Purchased

<PAGE>

                            PURCHASER SIGNATURE PAGE

______________________________________
         JOHN WINFIELD

Address:
____________________________

____________________________

$500,000
Dollar Amount of Notes Purchased

<PAGE>

                                   SCHEDULES:

---------------- ---------------------------------------------------------------
NUMBER           DESCRIPTION
---------------- ---------------------------------------------------------------
1.1.14           Form of Note
---------------- ---------------------------------------------------------------
1.1.18           Form of Warrant
---------------- ---------------------------------------------------------------
2.1.2(b)         Opinion of Company's Counsel
---------------- ---------------------------------------------------------------
3.1.6            Capitalization
---------------- ---------------------------------------------------------------
3.1.12           Certain Finders Fee Agreements
---------------- ---------------------------------------------------------------
3.1.15           Existing Registration Rights
---------------- ---------------------------------------------------------------Exhibit 4.17

THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES  AND EXCHANGE
COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE  IN  RELIANCE  UPON AN
EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN  AVAILABLE   EXEMPTION  FROM,  OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE
REGISTRATION   REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN  ACCORDANCE  WITH
APPLICABLE  STATE  SECURITIES  LAWS.   NOTWITHSTANDING   THE  FOREGOING,   THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

                                UTIX GROUP, INC.
                               5% Promissory Note

No.__________                             Issue Date:  February 10, 2005

        UTIX GROUP, INC., a Delaware corporation  ("UTIX"),  for value received,
hereby promises to pay to Intergroup Corporation,  with an address at 820 Moraga
Drive, Los Angeles,  California 90049 or registered assigns (the "HOLDER"),  the
principal amount of Five Hundred Thousand Dollars ($500,000) and, subject to the
terms and conditions  hereof,  to pay interest on the unpaid  principal  balance
hereof at the rate  (calculated  on the basis of a 360-day  year  consisting  of
twelve  30-day  months) of 5% per annum from the date hereof  until the Maturity
Date (as  defined  below),  all as  hereafter  provided.  In no event  shall any
interest to be paid  hereunder  exceed the maximum rate permitted by law. In any
such event,  this Note shall  automatically be deemed amended to permit interest
charges at an amount equal to, but no greater than,  the maximum rate  permitted
by law.

1.      OFFERING; CONVERSION; SECURITY.

        (a)     This Note was issued by UTIX in an offering of up to  $1,000,000
principal amount of 5% Promissory Notes (collectively,  the "NOTES") pursuant to
the Securities Purchase Agreement,  dated as of February 10, 2005 (the "PURCHASE
AGREEMENT"), among UTIX, Intergroup Corporation and the other "Purchasers" named
therein.  Capitalized  terms  used and not  otherwise  defined  herein  have the
meanings as defined in the Purchase Agreement.

2.      PAYMENTS.

        (a)     INTEREST.  Interest shall accrue on this Note, at the rate of 5%
per annum based on a 360 day calendar  year,  calculated  from the Issue Date to
the Maturity Date (as defined below), and shall be payable on the Maturity Date.

        (b)     PRINCIPAL AND MATURITY DATE. Unless converted into Common Stock,
as  hereinafter  provided,  the principal  amount of this Note together with all
interest  accrued  hereon,  shall be due and payable in full on February 9, 2008
(the "MATURITY  DATE").  If pursuant to the

<PAGE>

foregoing,  the Maturity Date would fall on a day that is not a Business Day (as
defined  below),  the Maturity Date shall be the next  succeeding  Business Day.
"BUSINESS  DAY" means any day which is not a Saturday or Sunday and is not a day
on which banking  institutions are generally authorized or obligated to close in
the City of New York, New York.

        (c)     PAYMENTS.  Payments of principal and interest on this Note shall
be made by check sent to the  Holder.  All  payments  will be  delivered  to the
address set forth therefor on the note register  described below, and will be in
such coin or currency of the United  States of America as at the time of payment
shall be legal tender for the payment of public and private debts.

        (d)     PREPAYMENT.  UTIX  shall not have the right to prepay all or any
part of this Note prior to the Maturity Date.

        (e)     WAIVER  OF  DEFENSES.  The  obligations  to  make  the  payments
provided for in this Note are absolute and  unconditional and not subject to any
defense, set-off, counterclaim, rescission, recoupment or adjustment whatsoever.
UTIX hereby  expressly  waives  demand and  presentment  for payment,  notice of
non-payment,  notice of dishonor,  protest, notice of protest,  bringing of suit
and diligence in taking any action to collect any amount  called for  hereunder,
and shall be directly and primarily liable for the payment of all sums owing and
to be owing  hereon,  regardless  of and without any notice,  diligence,  act or
omission with respect to the collection of any amount called for hereunder.

3.      CONVERSION.

        (a)     After the Issue  Date,  the  Holder  shall  have the right  (the
"CONVERSION  RIGHT"),  on the terms set forth in this  Section 3, to convert the
principal  amount of this Note and the accrued but unpaid interest  thereon into
Common Stock on the terms and conditions hereinafter set forth.

        (b)     Holder may  exercise  such  Conversion  Right by delivery to the
Company of a written  notice of conversion not less than three (3) Business Days
prior to the date upon which such  conversion  shall occur.  The date upon which
such conversion shall occur is the conversion date ("CONVERSION DATE").

        (c)     Notwithstanding  anything  contained  herein  to  the  contrary,
pursuant to the terms of this Note,  the Holder shall not be entitled to convert
this Note into that number of shares of Common Stock which would be in excess of
the sum (i) the number of shares of Common  Stock  actually  owned by the Holder
and its  affiliates  and (ii) the number of shares of Common Stock issuable upon
the conversion of this Note held by such Holder and its affiliates  with respect
to which the  determination  of this proviso is being made which would result in
beneficial  ownership by the Holder and its affiliates of more than 9.99% of the
outstanding  shares of Common  Stock of the  Company.  For the  purposes  of the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d)  of  the  Exchange  Act  and  Regulation  13d-3
thereunder.

        (d)     In the  event  that the  Holder  elects  to  convert  all or any
portion of this Note into Common Stock,  the Holder shall give written notice of
such election by delivering to the

                                       2
<PAGE>

Company  an  executed  and  completed  notice  of  conversion  (the  "NOTICE  OF
CONVERSION"),  such Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal  Amount,  accrued interest and fees being converted.  On
each Conversion Date (as hereinafter  defined) and in accordance with the Notice
of Conversion,  the Holder shall make the appropriate reduction to the Principal
Amount,  accrued  interest and fees as entered in its records and shall  provide
written  notice  thereof to the Company  within two (2) Business  Days after the
Conversion  Date.  Each date on which a Notice of  Conversion  is  delivered  or
telecopied  to the Company in  accordance  with the  provisions  hereof shall be
deemed,  for all purposes of this Note, to be the Conversion  Date.  Pursuant to
the terms of the Notice of Conversion,  the Company will issue  instructions  to
the transfer agent (together with such other documents as the transfer agent may
request)  within two (2) Business Days of the date of the delivery to Company of
the Notice of  Conversion.  The Company  shall use its best efforts to cause its
transfer  agent to  transmit  the  certificates  representing  the Common  Stock
issuable  upon  full or  partial  conversion  of this  Note  to any  address  or
depositary directed by the Holder within five (5) Business Days after receipt by
the Company of the Notice of Conversion.

        (e)     The  number  of shares  of  Common  Stock to be issued  upon any
conversion  of this  Note  (the  "CONVERSION  SHARES")  shall be  determined  by
dividing that portion of the  principal,  interest and fees to be converted,  if
any, by forty cents ($0.40) (the "CONVERSION PRICE").

        (f)     The  Conversion  Price  and  number  and kind of shares or other
securities to be issued upon  conversion  is subject to adjustment  from time to
time upon the occurrence of certain events, as follows:

                (i)     RECLASSIFICATION, ETC. If the Company at any time shall,
by  reclassification  or  otherwise,  change the Common Stock into the same or a
different number of securities of any class or classes,  the Principal Amount of
this Note, and any accrued interest thereon and fees incurred  hereunder,  shall
thereafter  be deemed to evidence  the right to  purchase an adjusted  number of
such securities and kind of securities as would have been issuable as the result
of such  change  with  respect to the  Common  Stock  immediately  prior to such
reclassification or other change.

                (ii)    STOCK SPLITS,  COMBINATIONS AND DIVIDENDS. If the shares
of Common Stock  outstanding at any time after the date hereof are subdivided or
combined  into a greater or smaller  number of shares of Common  Stock,  or if a
dividend is paid on the Common Stock in shares of Common Stock,  the  Conversion
Price or the  Conversion  Shares  to be  issued,  as the  case may be,  shall be
proportionately  reduced in case of  subdivision  of shares or stock dividend or
proportionately  increased in the case of  combination  of shares,  in each such
case by the ratio which the total number of shares of Common  Stock  outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.

4.      EVENTS OF DEFAULT.  The occurrence of any of the following  events shall
constitute an event of default (an "EVENT OF DEFAULT"):

                                       3
<PAGE>

        (a)     A default in the payment of the principal of or interest on this
Note,  when and as the same shall become due and payable,  which  default  shall
continue for a period of three Business Days after the date fixed for the making
of such payment.

        (b)     A failure  to  perform  or  observe  any  material  covenant  or
agreement  contained in the  Purchase  Agreement or this Note within 10 Business
Days after the giving of notice by the Holder of such failure.

        (c)     The  entry of a decree or order by a court  having  jurisdiction
adjudging  UTIX  bankrupt  or  insolvent,   or  approving  a  petition   seeking
reorganization,  arrangement,  adjustment,  or  composition  of or in respect of
UTIX,  under federal  bankruptcy  law, as now or hereafter  constituted,  or any
other applicable  federal or state bankruptcy,  insolvency or other similar law,
and the  continuance  of any such decree or order  unstayed  and in effect for a
period of 60 consecutive  days; or the  commencement by UTIX of a voluntary case
under  federal  bankruptcy  law, as now or hereafter  constituted,  or any other
applicable federal or state bankruptcy,  insolvency or other similar law, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it,  or  the  filing  by  it  of  a  petition  or  answer  or  consent   seeking
reorganization  or relief under federal  bankruptcy law or any other  applicable
federal or state law, or the consent by it to the filing of such  petition or to
the appointment of a receiver,  liquidator,  assignee, trustee, sequestration or
similar  official of UTIX or of any  substantial  part of its  property,  or the
making by it of an assignment for the benefit of creditors,  or the admission by
it in writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by UTIX in furtherance of any such action.

5.      REMEDIES UPON DEFAULT.

        (a)     Upon the occurrence, and during the continuance,  of an Event of
Default  specified  in Section  4(a) or (b), the Holder of this Note may declare
all or any part of the unpaid  principal  amount of this Note,  and all interest
accrued  and  unpaid  thereon,  to  be  immediately  due  and  payable,  without
presentment,  demand, protest or other formalities of any kind, all of which are
hereby expressly waived by UTIX.

        (b)     Upon the occurrence of an Event of Default  specified in Section
4(c), all of the principal  amount then outstanding of, and all interest accrued
and unpaid on, the Notes shall automatically  become immediately due and payable
without  presentment,  demand,  protest or other formalities of any kind, all of
which are hereby expressly waived by UTIX.

        (c)     The Holder may institute  such actions or  proceedings in law or
equity as it shall  deem  expedient  for the  protection  of its  rights and may
prosecute and enforce its claims against all assets of UTIX.

6.      REGISTRATION AND TRANSFER.

        (a)     UTIX shall maintain books for the  registration  and transfer of
the Notes.

        (b)     Prior to due  presentment  for  registration of transfer of this
Note,  UTIX may deem and  treat the  registered  Holder  as the  absolute  owner
thereof. UTIX shall be entitled to treat the

                                       4
<PAGE>

registered  holder of any Note on the note register as the owner in fact thereof
for all  purposes  and shall not be bound to  recognize  any  equitable or other
claim to or interest in such Note on the part of any other person, and shall not
be liable for any  registration or transfer of the Notes which are registered or
to be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual  knowledge  that a  fiduciary  or nominee is  committing  a
breach  of  trust in  requesting  such  registration  or  transfer,  or with the
knowledge of such facts that its participation  therein amounts to bad faith. In
all cases of transfer by an  attorney,  executor,  administrator,  guardian,  or
other legal representative,  duly authenticated evidence of his or its authority
shall be produced.

        (c)     This Note has not been  registered  under the  Securities Act of
1933,  as amended  (the  "Securities  Act").  The  Holders  are  entitled to the
benefits of the Purchase  Agreement,  which  provides,  among other things,  for
certain  registration rights and certain  restrictions on the disposition of the
Notes,  and each Holder,  by acceptance of a Note,  accepts the restrictions and
other provisions of the Purchase Agreement.  Without limiting the foregoing,  no
Holder may make any disposition of this Note unless:

                (i)     each transferee is an accredited investor,  as such term
        is defined in Regulation D promulgated under the Securities Act, and has
        delivered  certification  thereof to UTIX,  reasonably  satisfactory  to
        UTIX; and

                (ii)    (A) each transferee has agreed in writing to be bound by
        the terms of this Note and the Purchase Agreement,  (B) the Holder shall
        have notified UTIX of the proposed  disposition and shall have furnished
        UTIX with a detailed  statement  of the  circumstances  surrounding  the
        proposed disposition,  and (C) the Holder shall have furnished UTIX with
        an opinion of counsel (with the costs of obtaining such opinion borne by
        UTIX),  which counsel and opinion are reasonably  satisfactory  to UTIX,
        that this Note has been registered under the Securities Act or that such
        registration is not required.

        (d)     Each Note shall be stamped or otherwise  imprinted with a legend
substantially similar to the following (in addition to any legend required under
other applicable securities laws):

        THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH  THE  SECURITIES  AND
        EXCHANGE  COMMISSION  OR  THE  SECURITIES  COMMISSION  OF ANY  STATE  IN
        RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
        1933, AS AMENDED (THE "SECURITIES  ACT"), AND,  ACCORDINGLY,  MAY NOT BE
        OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
        UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM, OR
        IN A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE
        SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS.
        NOTWITHSTANDING  THE  FOREGOING,  THESE  SECURITIES  MAY BE  PLEDGED  IN
        CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER LOAN OR  FINANCING
        ARRANGEMENT SECURED BY SUCH SECURITIES.

                                       5
<PAGE>

        (e)     UTIX shall  register  upon its books any  permitted  transfer of
this Note, upon surrender of same to UTIX with a written instrument of transfer,
in the form attached as Exhibit A, duly executed by the registered  Holder or by
a duly authorized attorney thereof and (unless being transferred to UTIX) by the
transferee or by a duly authorized  attorney  thereof,  together with such other
documents as may be required for such transfer as provided above.  Upon any such
registration of transfer,  new Note(s) shall be issued to the  transferee(s) and
the surrendered Note shall be canceled by UTIX. This Note may also be exchanged,
at the option of the Holder,  for new Notes  representing  in the  aggregate the
principal amount of this Note then outstanding.

        (f)     Upon receipt by UTIX of reasonable  evidence of the ownership of
and the loss, theft, destruction, or mutilation of this Note and, in the case of
loss, theft, or destruction,  of indemnity reasonably  satisfactory to UTIX, or,
in the case of  mutilation,  upon  surrender and  cancellation  of the mutilated
Note, UTIX shall execute and deliver in lieu thereof a new Note representing the
principal amount of such Note then outstanding.

7.      MISCELLANEOUS.

        (a)     This Note shall be governed by and construed in accordance  with
the laws of the State of New York, without giving effect to principles governing
conflicts of law.

        (b)     Any notice or other  communication  required or  permitted to be
given  hereunder  shall be in  writing  and shall be given by  Federal  Express,
Express Mail or similar  overnight  delivery or courier service or delivered (in
person or by telecopy,  telex or similar  telecommunications  equipment) against
receipt to the party to whom it is to be given,  (i) if to UTIX,  at its address
at UTIX Group,  Inc., 170 Cambridge  Street,  Burlington,  MA 01803,  Attention:
President and Chief Executive Officer, (ii) if to the Holder, at its address set
forth on the first page hereof,  or (iii) in either case,  to such other address
as the party shall have  furnished in writing in accordance  with the provisions
of this  Section  7(b).  Any notice shall be deemed given at the time of receipt
thereof.

        (c)     No course of dealing and no delay or omission on the part of the
Holder in exercising  any right or remedy shall  operate as a waiver  thereof or
otherwise prejudice the Holder's rights,  powers or remedies. No right, power or
remedy  conferred  by this Note upon the Holder  shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter  available at law,
in equity,  by statute or  otherwise,  and all such  remedies  may be  exercised
singly or concurrently.

                                       6
<PAGE>

         IN WITNESS WHEREOF,  UTIX has caused this Note to be executed and dated
the day and year first above written.

                                         UTIX GROUP, INC.

                                         By:
                                             --------------------------
                                             Name:  Anthony G. Roth
                                             Title: President

                                       7
<PAGE>

                                    EXHIBIT A
                               FORM OF ASSIGNMENT

                    (To be executed by the registered holder
             if such holder desires to transfer the attached Note)

        FOR VALUE RECEIVED,  ______________________ (the "Holder") hereby sells,
assigns, and transfers unto

                  Name _______________________________________

                  Address_____________________________________

                  ____________________________________________

                  ____________________________________________

                  Social Security or Tax Identification Number

                  ____________________________________________

______ Notes,  together with all right,  title, and interest  therein,  and does
hereby irrevocably constitute and appoint  _______________  attorney to transfer
such  Note on the  books  of UTIX  Group,  Inc.  ("UTIX"),  with  full  power of
substitution.

Dated: _________________

                          ______________________________________________________
                          Name of Holder

                          ______________________________________________________
                          Signature

                          ______________________________________________________
                          If executed in a representative or fiduciary capacity,
                          print  name and  title of  individual  executing  this
                          notice on behalf of the Holder.

                          NOTE: The above signature  should  correspond  exactly
                          with the name on the first page of the attached Note.

                          ______________________________________________________
                          Social Security or Tax Identification Number of Holder

                          Address of Holder:

                          ______________________________________________________

                          ______________________________________________________

                                       8
<PAGE>

        The  undersigned  transferee,  by execution  hereof,  (i) represents and
warrants to UTIX that (a) such transferee is an accredited investor,  and agrees
to provide such evidence thereof as may be reasonably requested by UTIX, (b) the
undersigned  is acquiring  the Note,  and will acquire any shares of  Conversion
Shares (as defined in the Note) issued in conversion thereof, for investment and
without a view to a distribution other than pursuant to a registration statement
under the Securities Act of 1933, as amended,  and applicable  state  securities
laws, or an exemption therefrom,  and (c) the name, address, and social security
or tax identification  number of the undersigned is as set forth above, and (ii)
agrees  to be bound by the  terms of the  Note and the  Purchase  Agreement  (as
defined in the Note).

Dated: _________________

                          ______________________________________________________
                          Name of Transferee

                          ______________________________________________________
                          Signature

                          ______________________________________________________
                          If executed in a representative or fiduciary capacity,
                          print  name and  title of  individual  executing  this
                          notice on behalf of the transferee.

NOTE:  The above  signature  should  correspond  exactly with the name set forth
above.

                                       2

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