Document:

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EXHIBIT 4.12

                                     WARRANT

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
         ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.

                          COMMON STOCK PURCHASE WARRANT

         1. ISSUANCE; CERTAIN DEFINITIONS. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by ADVANCED
TECHNOLOGY INDUSTRIES, INC., a Delaware corporation (the "Company"), Monarch
Capital Fund Ltd., or registered assigns (the "Holder") is hereby granted the
right to purchase at any time during the period (the "Exercise Period") from the
date hereof until 5:00 P.M., New York City time, on the second anniversary of
the Effective Date (the "Expiration Date"), 2,142,857 fully paid and
nonassessable shares of the Company's Common Stock (the "Common Stock"), at an
exercise price per share (the "Exercise Price") of $0.10 per share, as such
price may be adjusted as provided herein.

         This Warrant is being issued pursuant to the terms of the Securities
Purchase Agreement, dated of even date (the "Securities Purchase Agreement"), to
which the Company and the Holder (or the Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Securities Purchase Agreement.

         2. EXERCISE OF WARRANTS.

                  2.1 GENERAL.

                  (a) This Warrant is exercisable in whole or in part at any
time during the Exercise Period. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph and by delivering to the Company this
Warrant Certificate, together with appropriate payment of the Exercise Price for
the shares of Common Stock purchased (the date all such deliveries are
completed, the "Exercise Date"); provided that the Holder will only be able to
exercise this Warrant if such exercise is exempt from the registration
requirements of the Act, as defined below, (and the Company has received such
information as the Company may reasonable request to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Act). The Notice of Exercise shall be
executed by the Holder of this Warrant and shall indicate the number of shares
then being purchased pursuant to such exercise. Upon surrender of this Warrant
Certificate, together with appropriate payment of the Exercise Price for the
shares of Common Stock purchased, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. This
Warrant shall expire and be of no force or effect from and after the Expiration
Date.

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                  (b) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.

                  (c) The Holder shall pay the Exercise Price in cash; provided
that in the event that the Registration Statement is not effective on any
Exercise Date subsequent to the one year anniversary of the date hereof (other
than during a Permitted Suspension Period), then the Holder may pay the Exercise
Price with respect to the shares of Common Stock set forth in the Notice of
Exercise delivered in connection with such Exercise Date, pursuant to a cashless
exercise by surrendering this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

                    X = Y (A-B)/A
         where:
                    X = the number of Warrant Shares to be issued to the Holder.

                    Y = the number of Warrant Shares with respect to which this
                    Warrant is being exercised.

                    A = the average of the closing sale prices of the Common
                    Stock for the five (5) Trading Days immediately prior to
                    (but not including) the Exercise Date.

                    B = the Exercise Price.

For purposes of Rule 144 promulgated under the Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have been commenced, on the
issue date. If the Registration Statement has been declared effective on or
before the one year anniversary of the date hereof, and is effective on any
Exercise Date subsequent to the one year anniversary of the date hereof (other
than during a Permitted Suspension Period), the Holder shall not have a right of
cashless exercise, but shall pay the Exercise Price in cash as set forth in
subsection 9(a) above.

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                  (d) If the Average Price is equal to or greater than $0.50
during any period of twenty (20) consecutive Trading Day and the Closing Price
is equal to or greater than $0.50 for a least ten (10) Trading Days during such
period, then on the fifteenth (15th) Trading Day following the end of such
period, and delivery of written notice thereof from Company to Holder, the
Exercise Price shall be adjusted to $0.25 (the "Adjusted Exercise Price"), as
such price may be adjusted as provided herein. For purposes of this Section
2.1(d), (i) Average Price shall be the average closing bid prices of the Common
Stock during the applicable period, as reported by the Reporting Service, or, in
the event the Common Stock is listed on a stock exchange or traded on NASDAQ,
the Average Price shall be such closing prices on such exchange or NASDAQ, as
reported in the Wall Street Journal and (ii) Closing Bid Price shall be the
closing bid price of the Common Stock on the applicable date, as reported by the
Reporting Service, or, in the event the Common Stock is listed on a stock
exchange or traded on NASDAQ, the Closing Bid Price shall be such closing price
on such exchange or NASDAQ, as reported in the Wall Street Journal.

                  2.2 LIMITATION ON EXERCISE. Notwithstanding the provisions of
this Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) while there is outstanding a tender offer
for any or all of the shares of the Common Stock, or (iii) at the Holder's
option, on at least sixty-five (65) days' advance written notice from the
Holder) shall the Holder be entitled to exercise this Warrant, or shall the
Company have the obligation to issue shares upon such exercise of all or any
portion of this Warrant to the extent that, after such exercise the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrants or other
rights to purchase Common Stock or through the ownership of the unconverted
portion of the Debentures or other convertible securities), and (2) the number
of shares of Common Stock issuable upon the exercise of the Warrants with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its Affiliates of more than 4.99% of
the outstanding shares of Common Stock (after taking into account the shares to
be issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which would not be
considered such an Affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.

         3. RESERVATION OF SHARES. The Company hereby agrees that from the date
hereof to the Expiration Date there shall be reserved for issuance upon exercise
of this Warrant such number of shares of the Common Stock as shall be required
for issuance upon exercise of this Warrant (the "Warrant Shares").

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         4. MUTILATION OR LOSS OF WARRANT. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

         5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.

         6. PROTECTION AGAINST DILUTION AND OTHER ADJUSTMENTS.

                  6.1 ADJUSTMENT MECHANISM. If an adjustment of the Exercise
Price is required pursuant to Section 6.2, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause the
total number of shares of Common Stock the Holder is entitled to purchase
pursuant to this Warrant, multiplied by the adjusted Exercise Price per share,
to equal the dollar amount of the total number of shares of Common Stock Holder
is entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.

                  6.2 CAPITAL ADJUSTMENTS. If, at any time while this Warrant
remains outstanding, the Company effectuates a stock split or reverse stock
split of the Common Stock or issues a dividend on the Common Stock consisting of
shares of Common Stock, the Exercise Price, Adjusted Exercise Price and any
other amounts calculated as contemplated hereby shall be equitably adjusted to
reflect such action. By way of illustration, and not in limitation, of the
foregoing, (i) if the Company effectuates a 2:1 split of the Common Stock,
thereafter, with respect to any exercise for which the Company issues shares
after the record date of such split, the Exercise Price, Adjusted Exercise Price
and any market price from a date prior to such split which was used in the
calculation of the Average Price or Closing Bid Price shall be deemed to be
one-half of what it had been immediately prior to such split; (ii) if the
Company effectuates a 1:10 reverse split of the Common Stock, thereafter, with
respect to any exercise for which the Company issues shares after the record
date of such reverse split, the Exercise Price, Adjusted Exercise Price and any
market price from a date prior to such split which was used in the calculation
of the Average Price or Closing Bid Price shall be deemed to be ten times what
it had been calculated to be immediately prior to such split; and (iii) if the
Company declares a stock dividend of one share of Common Stock for every 10
shares outstanding, thereafter, with respect to any exercise for which the
Company issues shares after the record date of such dividend, the Exercise
Price, Adjusted Exercise Price and any market price from a date prior to such
split which was used in the calculation of the Average Price or Closing Bid
Price shall be deemed to be such amount multiplied by a fraction, of which the
numerator is the number of shares (10 in the example) for which a dividend share
will be issued and the denominator is such number of shares plus the dividend
share(s) issuable or issued thereon (11 in the example).

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                  6.3 MERGER, CONSOLIDATION, ETC. If, for as long as this
Warrant remains outstanding, the Company enters into a merger (other than where
the Company is the surviving entity) or consolidation with another corporation
or other entity or a sale or transfer of all or substantially all of the assets
of the Company to another person (collectively, a "Sale"), and the holders of
the Common Stock are entitled to receive stock, securities or property in
respect of or in exchange for Common Stock, then as a condition of such Sale,
the Company and any such successor, purchaser or transferee will agree that this
Warrant may thereafter be converted on the terms and subject to the conditions
set forth above into the kind and amount of stock, securities or property
receivable upon such merger, consolidation, sale or transfer by a holder of the
number of shares of Common Stock into which this Warrant might have been
converted immediately before such merger, consolidation, sale or transfer,
subject to adjustments which shall be as nearly equivalent as may be
practicable.

                  6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or a part of its
assets in a transaction (the "Spin Off") in which the Company does not receive
compensation for such business, operations or assets, but causes securities of
another entity (the "Spin Off Securities") to be issued to security holders of
the Company, then

                  (a) the Company shall cause (i) to be reserved Spin Off
         Securities equal to the number thereof which would have been issued to
         the Holder had all of the Holder's unexercised Warrants outstanding on
         the record date (the "Record Date") for determining the amount and
         number of Spin Off Securities to be issued to security holders of the
         Company (the "Outstanding Warrants") been exercised as of the close of
         business on the Trading Day immediately before the Record Date (the
         "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
         exercise of all or any of the Outstanding Warrants, such amount of the
         Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares
         multiplied by (y) a fraction, of which (I) the numerator is the amount
         of the Outstanding Warrants then being exercised, and (II) the
         denominator is the amount of the Outstanding Warrants; and

                  (b) the Exercise Price on the Outstanding Warrants shall be
         adjusted immediately after consummation of the Spin Off by multiplying
         the Exercise Price by a fraction (if, but only if, such fraction is
         less than 1.0), the numerator of which is the average closing bid price
         of the Common Stock for the five (5) Trading Days immediately following
         the fifth Trading Day after the Record Date, and the denominator of
         which is the average Closing Bid Price of the Common Stock on the five
         (5) Trading Days immediately preceding the Record Date; and such
         adjusted Exercise Price shall be deemed to be the Exercise Price with
         respect to the Outstanding Warrants after the Record Date.

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         7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION RIGHTS.

                  7.1 TRANSFER. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Except for transfers to officers, employees and
Affiliates of the Holder, neither this Warrant nor any of the Warrant Shares or
any other security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.

                  7.2 REGISTRATION RIGHTS. (a) The Holder shall have
registration rights with respect to the Warrant Shares as set forth in the
Securities Purchase Agreement and the Registration Rights Agreement. The
Holder's rights under this Section 7.2 shall expire at such time as the Holder
can sell all of the Warrant Shares held by such Holder under Rule 144 without
volume or other restrictions or limit.

         8. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:

                      (i) if to the Company, to:

                                    Advanced Technology Industries, Inc..
                                    211 Madison Avenue, #28B
                                    New York, New York 10016
                                    Attn:  Allan Klepfisz
                                    Telephone No.:  (212) 532-2736
                                    Telecopier No.:  (212) 532-2904

                                   With a copy to:
                                           Anthony J. Norris , Esq.
                                           Ropes & Gray LLP
                                           45 Rockefeller Plaza
                                           New York, NY 10111
                                           Tel: 212-841-0659
                                           Fax: 212-841-5725

                          (ii) if to the Holder, to:

                                    Harbor House
                                    Waterfront Drive
                                    Road Town, Tortola
                                    British Virgin Islands
                                    Telephone No.: (284) 494-4770
                                    Telecopier No.: (284) 494-4771

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                                    with a copy to:

                                    Krieger & Prager LLP, Esqs.
                                    39 Broadway
                                    Suite 1440
                                    New York, NY 10006
                                    Attn: Samuel M. Krieger, Esq.
                                    Telephone No.: (212) 363-2900
                                    Telecopier No.  (212) 363-2999

Any party may give notice in accordance with this Section to the other parties
designate to another address or person for receipt of notices hereunder.

         9. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This Warrant may be
amended or supplemented only by an instrument in writing signed by the Holder
and the Company. This Warrant contains the full understanding of the Holder and
the Company with respect to the subject matter hereof and thereof and there are
no representations, warranties, agreements or understandings other than
expressly contained herein and therein.

         10. GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. The Company and, by its acceptance of this Warrant, the Holder
each consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Warrant and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Company shall reimburse the Holder for any reasonable legal
fees and disbursements incurred by the Holder in enforcement of or protection of
any of its rights under this Warrant.

         11. JURY TRIAL WAIVER. The Company and, by its acceptance of this
Warrant, the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out or in connection with this Warrant.

         12. DESCRIPTIVE HEADINGS. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

<PAGE>

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
____ day of _____________, 2005.

                                           ADVANCED TECHNOLOGY INDUSTRIES, INC.

                                           By:__________________________________
                                           Title:   President

<PAGE>

                          NOTICE OF EXERCISE OF WARRANT

         The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, ____, to
purchase __________________ shares of the Common Stock of ADVANCED TECHNOLOGY
INDUSTRIES, INC., and tenders herewith payment in accordance with Section 1 of
said Common Stock Purchase Warrant.

__   CASH: $________________________ =  (Exercise Price x Exercise Shares)

         Payment is being made by:
               __  enclosed check
               __  wire transfer
               __  other

__   CASHLESS EXERCISE

         Net number of Warrant Shares to be issued to Holder :   ______________*

         * based on: CURRENT MARKET VALUE - (EXERCISE PRICE X EXERCISE SHARES)
                     --------------------------------------------------------
                                  Market Price of Common Stock

         where:
         Market Price of Common Stock ["MP"]           =        $_______________
         Current Market Value [MP x Exercise Shares]   =        $_______________

        It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder.

        To the extent that, pursuant to the exercise effected hereby, the Holder
would have more shares than permitted under said Section, this notice should be
amended and revised, ab initio, to refer to the exercise which would result in
the issuance of shares consistent with such provision. Any exercise above such
amount is hereby deemed void and revoked.

        Please deliver the stock certificate to:

Dated:

[Name of Holder]

By:____________________________<PAGE>
EXHIBIT 4.13

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT, dated as of_____, 2005 (this
"Agreement"), is made by and among ADVANCED TECHNOLOGY INDUSTRIES, INC., a
Delaware corporation, with headquarters located at 211 Madison Avenue, #28B, New
York, New York 10016 (the "Company"), and the entity (other than the Company)
named on the signature page hereto (the "Investor").

                              W I T N E S S E T H:

         WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of even date, between the Investor and the Company
(the "Securities Purchase Agreement"; capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Securities Purchase
Agreement), the Company has agreed to issue and sell to the Investor the
Debentures; and

         WHEREAS, the Debentures are convertible into shares of Common Stock
(the "Conversion Shares"; which term, for purposes of this Agreement, shall
include shares of Common Stock of the Company issuable in lieu of accrued
interest through the Maturity Date (as that term is defined in the Debentures))
upon the terms and subject to the conditions contained in the Debentures; and

         WHEREAS, upon and subject to the terms of the Securities Purchase
Agreement, the Company has agreed to issue the Warrants to the Investor in
connection with the issuance of the Debentures, and the Warrants may be
exercised for the purchase of shares of Common Stock (the "Warrant Shares") upon
the terms and conditions of the Warrants; and

         WHEREAS, to induce the Investor to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Registrable Securities (as defined
below);

<PAGE>

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investor hereby agree as follows:

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

         (a) "Effective Date" means the date the SEC declares a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.

         (b) "Held Shares Value" means, for shares of Common Stock acquired by
the Investor upon a conversion of a Debenture within the thirty (30) days
preceding the Restricted Sale Date, but not yet sold by the Investor, the
principal amount of the Debentures converted into such Conversion Shares;
provided, however, that if the Investor effected more than one such conversion
during such thirty (30) day period and sold less than all of such shares, the
sold shares shall be deemed to be derived first from the conversions in the
sequence of such conversions (that is, for example, until the number of shares
from the first of such conversions have been sold, all shares shall be deemed to
be from the first conversion; thereafter, from the second conversion until all
such shares are sold).

         (c) "Investor" means the Investor and any permitted transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and who holds Debentures, Warrants or
Registrable Securities.

         (d) "Payment Shares" means shares of Common Stock issued by the Company
as provided in Section 2(b) below.

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

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

<PAGE>

         (g) "Registrable Securities" means, collectively, the Conversion
Shares, the Warrant Shares and the Payment Shares.

         (h) "Registration Statement" means a registration statement of the
Company under the Securities Act covering Registrable Securities on Form S-3, if
the Company is then eligible to file using such form, and if not eligible, on
Form S-2 or other appropriate form which shall include only the Registrable
Securities and the such other securities as may be permitted by Section 5(b)
hereof.

         (i) "Required Effective Date" means the relevant Initial Required
Effective Date or Increased Required Effective Date (as those terms are defined
below).

         (j) "Required Filing Date" means October 5, 2005.

         (k) "Restricted Sale Date" means the first date, other than a date
during a Permitted Suspension Period (as defined below), on which the Investor
is restricted from making sales of Registrable Securities covered by any
previously effective Registration Statement.

         2. REGISTRATION.

         (a) MANDATORY REGISTRATION.

         (i) The Company shall prepare and file with the SEC, as soon as
practicable after the Certificate of Incorporation Amendment Filing Date, either
a Registration Statement or an amendment to an existing Registration Statement,
in either event registering for resale by the Investor a sufficient number of
shares of Common Stock for the Investor to sell the Registrable Securities, but
in no event less than the number of shares equal to one hundred fifty percent
(150%) of the aggregate of (x) the number of shares into which the Debentures
and all interest thereon through the Maturity Date would be convertible at the
time of filing of such Registration Statement (assuming for such purposes that
all Debentures had been issued, had been eligible to be converted, and had been
converted, into Conversion Shares in accordance with their terms, whether or not
such issuance, eligibility, accrual of interest or conversion had in fact
occurred as of such date) and (y) the number of Warrant Shares which would be
issuable on exercise of the Warrants (assuming for such purposes that all
Warrants had been issued, had been eligible for exercise and had been exercised
for Warrant Shares in accordance with their terms, whether or not such issuance,
eligibility or exercise had in fact occurred as of such date). Unless otherwise
specifically agreed to in writing in advance by the Investor, the Registration
Statement shall state that, in accordance with Rule 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the Debentures or
exercise of the Warrants to prevent dilution resulting from stock splits, or
stock dividends. If the Certificate of Incorporation Amendment Filing Date
occurs the Company will use its reasonable best efforts to cause such
Registration Statement to be declared effective on a date (the "Initial Required
Effective Date") which is no later than the earlier of (Y) five (5) days after
oral or written notice by the SEC that it may be declared effective or (Z)
November 30, 2005.

<PAGE>

         (ii) If at any time (an "Increased Registered Shares Date") after a
Registration Statement has been filed with the SEC, the number of shares of
Common Stock represented by the Registrable Shares, issued or to be issued as
contemplated by the Transaction Agreements, exceeds the aggregate number of
shares of Common Stock then registered or sought to be registered in a
Registration Statement which has not yet been declared effective, the Company
shall either

         (X) amend the relevant Registration Statement filed by the Company
         pursuant to the preceding provisions of this Section 2, if such
         Registration Statement has not been declared effective by the SEC at
         that time, to register, in the aggregate, at least the number of shares
         (the "Increased Shares Amount") equal to (A) the number of shares
         theretofore issued on conversion of the Debentures (including any
         interest paid on conversion by the issuance of Conversion Shares) ,
         plus (B) the number of shares theretofore issued on exercise of the
         Warrants, plus (C) the sum of:

                  (I) the number of shares into which the unconverted Debentures
                  and all interest thereon through the Maturity Date would be
                  convertible at the date of such filing (assuming for such
                  purposes that all such Debentures had been issued, had been
                  eligible to be converted, and had been converted, into
                  Conversion Shares in accordance with their terms, whether or
                  not such issuance eligibility, accrual of interest, or
                  conversion had in fact occurred as of such date), and

                  (II) the number of Warrant Shares which would be issuable on
                  exercise of the unexercised Warrants (assuming for such
                  purposes that all such Warrants had been issued, had been
                  eligible for exercise and had been exercised for Warrant
                  Shares in accordance with their terms, whether or not such
                  issuance, eligibility or exercise had in fact occurred as of
                  such date), or

         (Y) if such Registration Statement has been declared effective by the
         SEC at that time, file with the SEC an additional Registration
         Statement (an "Additional Registration Statement") to register the
         number of shares equal to the excess of the Increased Shares Amount
         over the aggregate number of shares of Common Stock already registered.

The Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (each, an "Increased Required
Effective Date") which is no later than (q) with respect to a Registration
Statement under clause (X) of this subparagraph (ii), the Initial Required
Effective Date and (r) with respect to an Additional Registration Statement, the
earlier of (I) five (5) days after notice by the SEC that it may be declared
effective or (II) thirty (30) days after the Increased Registered Shares Date.

<PAGE>

         (b) PAYMENTS BY THE COMPANY.

         (i) If the Registration Statement covering the Registrable Securities
is not filed in proper form with the SEC by the Required Filing Date, the
Company will make payment to the Investor in such amounts and at such times as
shall be determined pursuant to this Section 2(b).

         (ii) If the Registration Statement covering the Registrable Securities
is not effective by the relevant Required Effective Date or if there is a
Restricted Sale Date, then the Company will make payments to the Investor in
such amounts and at such times as shall be determined pursuant to this Section
2(b).

         (iii) The amount (the "Periodic Amount") to be paid by the Company to
the Investor shall be determined as of each Computation Date (as defined below)
and such amount shall be equal to the Periodic Amount Percentage (as defined
below) of the Purchase Price for all Debentures held by the Investor for the
period from the date following the relevant Required Filing Date or the Required
Effective Date or a Restricted Sale Date, as the case may be, to the first
relevant Computation Date, and thereafter to each subsequent Computation Date.
The "Periodic Amount Percentage" means (A) one percent (1%) of the Purchase
Price of all Debentures for the first two Computation Dates after the relevant
Required Filing Date; and (B) two percent (2%) of the Purchase Price of all
Debentures to any Computation Date thereafter. Anything in the preceding
provisions of this paragraph (iii) to the contrary notwithstanding, after the
relevant Effective Date the Purchase Price shall be deemed to refer to the sum
of (X) the principal amount of all Debentures not yet converted and (Y) the Held
Shares Value. By way of illustration and not in limitation of the foregoing, if
the Registration Statement is filed on or before the Required Filing Date, but
is not declared effective by January 6, 2006, the Periodic Amount will aggregate
two percent (2%).

         (iv) Each Periodic Amount will be payable by the Company, except as
provided in the other provisions of subparagraph (v), in cash or other
immediately available funds to the Investor (1) on the day after the Required
Filing Date, the Required Effective Date or a Restricted Sale Date, as the case
may be, and (2) on the earlier of (A) each thirtieth day thereafter, (B) the
third business day after the date the Registration Statement is filed or is
declared effective, or (C) the third business day after the Registration
Statement has its restrictions removed after the relevant Effective Date, in
each case without requiring demand therefor by the Investor.

         (v) Notwithstanding the provisions of the immediately preceding
subparagraph (iv),

         (i) at the option of the Company, exercisable in its discretion on the
         date the Periodic Amount is due; provided, however, that the Company
         may exercise this discretion if, but only if the Registration Statement
         covering the Payment Shares is then effective; or

<PAGE>

         (ii) at the option of the Investor, exercisable in its sole and
         absolute discretion by written notice to the Company at any time before
         the Periodic Amount is paid,

all or a portion of the Periodic Amount shall be paid by the issuance of
additional shares of Common Stock to such Investor ("Payment Shares") in an
amount equal to the Periodic Amount being paid thereby divided by the then
applicable Conversion Price; provided, further that the Delivery Date for the
Payment Shares shall be three (3) business days after the date the Periodic
Amount is due (if the election is made by the Company) or after the Investor
gives the notice contemplated by clause (ii) of this subparagraph.

         (vi) The parties acknowledge that the damages which may be incurred by
the Investor if the Registration Statement is not filed by the Required Filing
Date or the Registration Statement has not been declared effective by a Required
Effective Date, including if the right to sell Registrable Securities under a
previously effective Registration Statement is suspended or the shares of the
Company's stock are not listed on the Principal Trading Market, may be difficult
to ascertain. The parties agree that the amounts payable pursuant to the
foregoing provisions of this Section 2(b) represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of such
damages.

         (vii) Notwithstanding the foregoing, the amounts payable by the Company
pursuant to this provision shall not be payable to the extent any delay in the
filing or effectiveness of the Registration Statement occurs because of an act
of, or a failure to act or to act timely by the Investor or its counsel.

         (viii) "Computation Date" means (A) the date which is the earlier of
(1) thirty (30) days after the Required Filing Date, any relevant Required
Effective Date or a Restricted Sale Date, as the case may be, or (2) the date
after the Required Filing Date, such Required Effective Date or Restricted Sale
Date on which the Registration Statement is filed (with respect to payments due
as contemplated by Section 2(b) hereof) or is declared effective or has its
restrictions removed or the shares of the Company's stock are listed on the
Principal Trading Market (with respect to payments due as contemplated by
Section 2(b)(ii) hereof), as the case may be, and (B) each date which is the
earlier of (1) thirty (30) days after the previous Computation Date or (2) the
date after the previous Computation Date on which the Registration Statement is
filed (with respect to payments due as contemplated by Section 2(b) hereof) or
is declared effective or has its restrictions removed or the shares of the
Company's stock are listed on the Principal Trading Market (with respect to
payments due as contemplated by Section 2(b)(ii) hereof), as the case may be.

         (ix) Notwithstanding anything herein to the contrary the remedy set
forth in this Section 2(b) shall be the sole remedy for the Investor if the
Registration Statement covering the Registrable Securities is not filed in
proper form with the SEC by the Required Filing Date or if the Registration
Statement covering the Registrable Securities is not effective by the relevant
Required Effective Date or if there is a Restricted Sale Date.

<PAGE>

         3. OBLIGATIONS OF THE COMPANY. In connection with the registration of
the Registrable Securities, the Company shall do each of the following:

         (a) Prepare promptly, and file with the SEC by the later of (x) the
Required Filing Date and (y) five business days after the Certificate of
Incorporation Amendment Filing Date, a Registration Statement with respect to
not less than the number of Registrable Securities provided in Section 2(a)
above, and thereafter use its reasonable best efforts to cause such Registration
Statement relating to Registrable Securities to become effective by the Required
Effective Date and keep the Registration Statement effective at all times, other
than during Permitted Suspension Periods, during the period (the "Registration
Period") continuing until the earlier of (i) the date when the Investor may sell
all Registrable Securities under Rule 144 without volume or other restrictions
or limits or (ii) the date the Investor no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

         (b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period (except during Permitted Suspension Periods), and, during
the Registration Period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statement;

         (c) Permit a single firm of counsel designated by the Investor (which,
until further notice, shall be deemed to be Krieger & Prager LLP, Attn: Samuel
Krieger, Esq., which firm has requested to receive such notification; each, an
"Investor's Counsel") to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (but not less than three (3)
business days) prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects, unless the Company reasonably
determines that such document is required by law to be so filed;

         (d) Notify the Investor and the Investor's Counsel and any managing
underwriters immediately (and, in the case of (i)(A) below, not less than three
(3) business days prior to such filing) and (if requested by any such person)
confirm such notice in writing no later than one (1) business day following the
day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) whenever
the SEC notifies the Company whether there will be a "review" of such
Registration Statement; (C) whenever the Company receives (or a representative
of the Company receives on its behalf) any oral or written comments from the SEC
in respect of a Registration Statement (copies or, in the case of oral comments,
summaries of such comments shall be promptly furnished by the Company to the
Investor); and (D) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for

<PAGE>

amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations or warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose; and (vi) of the occurrence of any event that to the
best knowledge of the Company makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish the Investor's
Counsel with copies of all intended written responses to the comments
contemplated in clause (C) of this Section 3(d) not later than one (1) business
day in advance of the filing of such responses with the SEC so that the Investor
shall have the opportunity to comment thereon;

         (e) Furnish to the Investor and to Investor's Counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one (1) copy of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement thereto,
and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor;

         (f) As promptly as practicable after becoming aware thereof, notify the
Investor of the happening of any event of which the Company has knowledge, as a
result of which the prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and, subject to Section 4(c), use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement or other
appropriate filing with the SEC to correct such untrue statement or omission,
and deliver a number of copies of such supplement or amendment to the Investor
as the Investor may reasonably request;

         (g) [intentionally omitted ]

         (h) Comply with Regulation FD or any similar rule or regulation
regarding the dissemination of information regarding the Company, and in
furtherance of the foregoing, and not in limitation thereof, not disclose to the
Investor any non-public material information regarding the Company;

<PAGE>

         (i) Use its reasonable efforts to secure and maintain the designation
of all the Registrable Securities covered by the Registration Statement on the
Principal Trading Market and the quotation of the Registrable Securities on the
Principal Trading Market;

         (j) Provide a transfer agent ("Transfer Agent") and registrar, which
may be a single entity, for the Registrable Securities not later than the
initial Effective Date;

         (k) Cooperate with the Investor to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts as the case may
be, as the Investor may reasonably request, and, within five (5) business days
after a Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the Transfer Agent for the Registrable
Securities (with copies to the Investor) an appropriate instruction and opinion
of such counsel, which shall include, without limitation, directions to the
Transfer Agent to issue certificates of Registrable Securities (including
certificates for Registrable Securities to be issued after the Effective Date
and replacement certificates for Registrable Securities previously issued)
without legends or other restrictions, subject to compliance with applicable
law, including, without limitation, prospectus delivery requirements; and

         (l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.

         4. OBLIGATIONS OF THE INVESTOR. In connection with the registration of
the Registrable Securities, the Investor shall have the following obligations:

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

         (b) The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(d)(iii)
or 3(f), above, the Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(d)(iii) or 3(f)
and, if so directed by the Company, the Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice;

<PAGE>

         (c) Notwithstanding anything in this Agreement to the contrary, if at
any time or from time to time after the date of effectiveness of the
Registration Statement, the Company notifies the Investor in writing that the
effectiveness of the Registration Statement is suspended for any reason, whether
due to a Potential Material Event or otherwise, the Investor shall not offer or
sell any Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of such
notice until the Investor receives written notice from the Company that such the
effectiveness of the Registration Statement has been restored, whether because
the Potential Material Event has been disclosed to the public or it no longer
constitutes a Potential Material Event or otherwise; PROVIDED, HOWEVER, that the
Company may not so suspend the right to such holder of Registrable Securities
during the periods the Registration Statement is required to be in effect other
than during a Permitted Suspension Period (and the applicable provisions of
Section 2(b) shall apply with respect to any such suspension other than during a
Permitted Suspension Period) . The term "Permitted Suspension Period" means up
to two such suspension periods during any consecutive 12-month period, each of
which suspension period shall not either (i) be for more than ten (10) business
days or (ii) begin less than ten (10) business days after the last day of the
preceding suspension (whether or not such last day was during or after a
Permitted Suspension Period)

         5. EXPENSES OF REGISTRATION. (a) All reasonable expenses (other than
underwriting discounts and commissions of the Investor) incurred in connection
with registrations, filings or qualifications pursuant to Section 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company.

         (b) Except for the Registration Rights Agreements attached as Exhibits
to any filing made by the Company with the SEC prior to the date hereof (the
"Filed Registration Rights Agreements") neither the Company nor any of its
subsidiaries has, as of the date hereof, nor shall the Company nor any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except for the Filed Registration Rights Agreements neither the Company nor any
of its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that is
currently in effect. The Company shall be entitled to include all the shares
required to be registered hereunder, under the Filed Registration Rights
Agreements and under any registration rights agreement entered into after the
date of this Agreement and prior to September 15, 2005, that is not inconsistent
with the rights granted to the Holders in this Agreement or that otherwise
conflicts with the provisions hereof on a single registration statement under
the Securities Act.

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

         (a) To the extent permitted by law, the Company will indemnify and hold
harmless the Investor, the directors, if any, of the Investor, the officers, if
any, of the Investor, and each Lender Control Person (each, an "Lender
Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act") or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)

<PAGE>

arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively referred to as
"Violations"). Subject to clause (b) of this Section 6, the Company shall
reimburse the Investor, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to any Claim
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of such Lender Indemnified Party expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (II) be available to the extent such Claim is
based on a failure of any Lender Indemnified Party to deliver or cause to be
delivered the prospectus made available by the Company or the amendment or
supplement thereto made available by the Company; (III) be available to the
extent such Claim is based on the delivery of a prospectus by any Lender
Indemnified Party after receiving notice from the Company under Section
3(d)(iii) or 3(f) or Section 4(c) hereof (other than a notice regarding the
effectiveness of the Registration Statement or any amendment or supplement
thereto), or (IV) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed. The Investor will
indemnify the Company and its officers, directors and agents and each Company
Control Person (each, an "Company Indemnified Party", and together with each
Lender Indemnified Party, each an "Indemnified Party") against any claims
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company, by or on behalf
of the Investor, expressly for use in connection with the preparation of the
Registration Statement or the amendment or supplement thereto, subject to such
limitations and conditions as are applicable to the indemnification provided by
the Company to this Section 6. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.

         (b) Promptly after receipt by an Indemnified Party under this Section 6
of notice of the commencement of any action (including any governmental action),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,

<PAGE>

to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Party. In case any such action is
brought against any Indemnified Party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, assume the defense thereof, subject to the provisions
herein stated and after notice from the indemnifying party to such Indemnified
Party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such Indemnified Party under this Section 6 for any legal
or other reasonable out-of-pocket expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and reasonable out-of-pocket expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the Indemnified Party provided such counsel is of the opinion that all defenses
available to the Indemnified Party can be maintained without prejudicing the
rights of the indemnifying party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.

         7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; PROVIDED,
HOWEVER, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
except where the seller has committed fraud (other than a fraud by reason of the
information included or omitted from the Registration Statement as to which the
Company has not given notice as contemplated under Section 3 hereof) or
intentional misconduct, contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

         8. REPORTS UNDER SECURITIES ACT AND EXCHANGE ACT. With a view to making
available to the Investor the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investor to sell securities of the Company to the public
without Registration ("Rule 144"), for a period of two years after the date
hereof, the Company agrees to:

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

<PAGE>

         (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

         (c) furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) if not available on the SEC's EDGAR system, a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without Registration; and

         (d) at the request of the Investor, give its Transfer Agent
instructions to the effect that, upon the Transfer Agent's receipt from such
Holder of

         (i) a certificate (a "Rule 144 Certificate") certifying (A) that the
         Investor's holding period (as determined in accordance with the
         provisions of Rule 144) for the shares of Registrable Securities which
         the Investor proposes to sell (the "Securities Being Sold") is not less
         than (1) year and (B) as to such other matters as may be appropriate in
         accordance with Rule 144 under the Securities Act, and

         (ii) an opinion of counsel acceptable to the Company for which purpose
         it is agreed that Investor's Counsel shall be deemed acceptable if not
         given by Ropes and Gray that, based on the Rule 144 Certificate,
         Securities Being Sold may be sold pursuant to the provisions of Rule
         144, even in the absence of an effective Registration Statement,

the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the
Investor, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Investor). If the Transfer Agent reasonably requires any
additional documentation at the time of the transfer, the Company shall deliver
or cause to be delivered all such reasonable additional documentation as may be
necessary to effectuate the issuance of an unlegended certificate.

         9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investor to any transferee of the Registrable
Securities (or all or any portion of any unconverted Debentures) only if the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, (b) the securities with respect to which such registration rights are
being transferred or assigned and (c) written evidence of the transferee's
assumption of the Investor's obligations under this Agreement.

<PAGE>

         10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon the Investor
and the Company.

         11. MISCELLANEOUS.

         (a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

         (b) Notices required or permitted to be given hereunder shall be given
in the manner contemplated by the Securities Purchase Agreement, if to the
Company or to the Investor, to their respective address contemplated by the
Securities Purchase Agreement, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b).

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

         (d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions.

         (e) The Company and the Investor hereby waive a trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other in respect of any matter arising out of or in connection with
this Agreement or any of the other Transaction Agreements.

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

<PAGE>

         (g) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.

         (h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

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

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

         (k) Neither party shall be liable for consequential damages as a result
of any delay under this Agreement.

         (l) This Agreement (including to the extent relevant the provisions of
other Transaction Agreements) constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                    COMPANY:

                                    ADVANCED TECHNOLOGY INDUSTRIES, INC.

                                    By:_________________________________________
                                    Name:
                                    Title:

<PAGE>

                                    INVESTOR:

                                    SILVERLAKE HOLDINGS, INC.

                                    By:_____________________________

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