<SUBMISSION>
<ACCESSION-NUMBER>0000932440-05-000071
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>7
<PERIOD>20050209
<ITEMS>1.01
<ITEMS>8.01
<ITEMS>9.01
<FILING-DATE>20050210
<DATE-OF-FILING-DATE-CHANGE>20050210
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ACCESS INTEGRATED TECHNOLOGIES INC
<CIK>0001173204
<ASSIGNED-SIC>7389
<IRS-NUMBER>223720962
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-31810
<FILM-NUMBER>05593627
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>55 MADISON AVE
<CITY>MORRISTOWN
<STATE>NJ
<ZIP>07960
<PHONE>973-290-0080
</BUSINESS-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k_991612.txt
<DESCRIPTION>FORM 8-K
<TEXT>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K


                                 CURRENT REPORT
                         PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                                FEBRUARY 9, 2005
                        (Date of earliest event reported)

                      ACCESS INTEGRATED TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


        DELAWARE                   001-31810                    22-3720962
    (State or other         (Commission File Number)          (IRS Employer
      jurisdiction                                          Identification No.)
   of incorporation)


 55 MADISON AVENUE, SUITE 300, MORRISTOWN NJ                   07960
   (Address of principal executive offices)                 (Zip Code)



                                 (973) 290-0080
              (Registrant's telephone number, including area code)

           ----------------------------------------------------------
          (Former name or former address, if changed since last report)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:

|_|  Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

|_|  Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

|_|  Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

|_|  Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))

================================================================================

<PAGE>



SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

            On  February  9,  2005,  Access  Integrated  Technologies,  Inc.,  a
Delaware  corporation  (the  "Company"),  entered  into  a  Securities  Purchase
Agreement  (the  "Purchase  Agreement")  with a  limited  number  of  accredited
investors  ("Purchasers")  in a private  placement  exempt from the registration
requirements  under  the  Securities  Act of  1933,  as  amended  (the  "Private
Placement").  In connection with the Purchase Agreement,  the Company has agreed
to sell for an aggregate  amount of $7,600,000,  prior to the placement  agent's
fee and various other expenses,  unsecured convertible debentures ("Debentures")
convertible  into,  and warrants  ("Initial  Warrants")  exercisable  for, up to
2,427,519  shares of the Company's  Class A Common Stock  ("Common  Stock").  In
addition to the Debentures  and Warrants to be sold by the Company,  pursuant to
the terms and  conditions of the  Debentures,  the Company may also issue to the
Purchasers from time to time additional shares of Common Stock (a) as payment of
interest due on the Debentures  ("Interest  Shares") or (b) upon the exercise of
additional  warrants  exercisable for shares of Common Stock,  which  additional
warrants  may be  issued  by  the  Company  upon  redemption  of the  Debentures
("Redemption  Warrants").  The  Company  intends to use the net  proceeds of the
Private Placement for capital investments (including a contemplated  acquisition
and costs associated with acquisition related expenses and capital improvements)
and to provide working capital for general corporate purposes.

            In  connection  with the Private  Placement,  the Company will enter
into a Registration Rights Agreement  ("Registration Rights Agreement") with the
Purchasers,  in which the Company  will agree to file a  registration  statement
within an  ascribed  period of time (x)  following  the  closing of the  Private
Placement and (y)  following the issuance of the Interests  Shares or Redemption
Warrants, covering resales from time to time of the Purchasers' shares of Common
Stock issued or issuable pursuant to the Private Placement,  as further provided
in such agreement.

            Additionally,  in connection  with the Purchase  Agreement,  certain
subsidiaries  of the Company have agreed to  guarantee  the  obligations  of the
Company under the Debentures pursuant to a Subsidiary Guarantee, a form of which
is filed  herewith  as  Exhibit  4.20  hereto,  and is  incorporated  herein  by
reference.

            A copy of the Purchase  Agreement is filed  herewith as Exhibit 2.10
hereto and is incorporated herein by reference.  Forms of each of the Debenture,
Warrant and Registration Rights Agreement, which documents are to be executed at
the consummation of the Private  Placement,  are filed herewith as Exhibit 4.21,
Exhibit 4.22 and Exhibit 4.23 hereto, respectively,  and are incorporated herein
by reference.

SECTION 8 - OTHER EVENTS

ITEM 8.01 OTHER EVENTS AND REGULATION FD DISCLOSURE.

      On February 10, 2005,  the Company  issued a press release  announcing the
execution  of the  Purchase  Agreement,  a copy of which is  attached  hereto as
Exhibit 99.1 and incorporated herein by reference.


SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS


     (c)   EXHIBITS.

     2.10 Securities Purchase Agreement,  dated as of February 9, 2005 among the
          Company and the several investors party thereto.

     4.20 Form  of   Subsidiary   Guarantee   to  be  entered  into  by  certain
          subsidiaries of the Company pursuant to the Purchase Agreement

     4.21 Form of  Debenture  to be issued  to the  Purchasers  pursuant  to the
          Purchase Agreement

     4.22 Form  of  Warrant  to be  issued  to the  Purchasers  pursuant  to the
          Purchase Agreement

     4.23 Form of  Registration  Rights  Agreement,  among the  Company  and the
          Purchasers

     99.1 Press Release of the Company, dated February 10, 2005




<PAGE>



                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereto duly authorized.


                                    ACCESS INTEGRATED TECHNOLOGIES, INC.



                                    By: /s/ A. Dale Mayo
                                        ------------------------------------
                                        Name:  A. Dale Mayo
                                        Title: President and Chief Executive
                                               Officer

                                    Dated: February 10, 2005


<PAGE>



                                  EXHIBIT INDEX


     2.10 Securities Purchase Agreement,  dated as of February 9, 2005 among the
          Company and the several investors party thereto.

     4.20 Form  of   Subsidiary   Guarantee   to  be  entered  into  by  certain
          subsidiaries of the Company pursuant to the Purchase Agreement

     4.21 Form of  Debenture  to be issued  to the  Purchasers  pursuant  to the
          Purchase Agreement

     4.22 Form  of  Warrant  to be  issued  to the  Purchasers  pursuant  to the
          Purchase Agreement

     4.23 Form of  Registration  Rights  Agreement,  among the  Company  and the
          Purchasers

     99.1 Press Release of the Company, dated February 10, 2005

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>2
<FILENAME>a991575.txt
<DESCRIPTION>EXHIBIT 2.10 SECURITIES PURCHASE AGREEMENT
<TEXT>
                                                                    Exhibit 2.10
                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
February  9,  2005  among  Access  Integrated  Technologies,  Inc.,  a  Delaware
corporation  (the  "COMPANY"),  and each  purchaser  identified on the signature
pages hereto (each,  including its  successors  and assigns,  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 "SECURITIES ACT") and Rule 506 promulgated thereunder,  the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly, desires to purchase from the Company, 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 Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

     1.1  DEFINITIONS.  In  addition  to the  terms  defined  elsewhere  in this
Agreement:  (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein),  and (b) the
following terms have the meanings indicated in this Section 1.1:

               "ACTION" shall have the meaning  ascribed to such term in Section
          3.1(j).

               "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 under the Securities  Act. With respect to a Purchaser,
          any  investment   fund  or  managed  account  that  is  managed  on  a
          discretionary  basis by the same investment  manager as such Purchaser
          will be deemed to be an Affiliate of such Purchaser.

               "ACQUISITION REDEMPTION WARRANTS" shall have the meaning ascribed
          to such term in the Debenture.

               "CLOSING"  means  the  closing  of the  purchase  and sale of the
          Securities pursuant to Section 2.1.

               "CLOSING DATE" means the Trading Day when all of the  Transaction
          Documents have been executed and delivered by the  applicable  parties
          thereto,   and  all  conditions   precedent  to  (i)  the  Purchasers'
          obligations  to pay the  Subscription  Amount  and (ii) the  Company's
          obligations to deliver the Securities have been satisfied or waived.

               "CLOSING PRICE" means,  for any date, the price determined by the
          first of the following  clauses that applies:  (a) if the Common Stock
          is then  listed  or  quoted on a  Trading  Market,  the last  reported
          closing  sale price of the Common  Stock for such date (or the nearest


                                       1
<PAGE>

          preceding  date) on the  Trading  Market on which the Common  Stock is
          then listed or quoted as reported by Bloomberg  Financial L.P.  (based
          on a  Trading  Day from 9:30 a.m.  Eastern  Time to 4:02 p.m.  Eastern
          Time);  (b) if the  Common  Stock is not then  listed  or  quoted on a
          Trading  Market and if prices for the Common  Stock are then quoted on
          the OTC Bulletin  Board,  the last reported  closing sale price of the
          Common Stock for such date (or the nearest  preceding date) on the OTC
          Bulletin  Board;  (c) if the Common Stock is not then listed or quoted
          on the OTC Bulletin  Board and if prices for the Common Stock are then
          reported in the "Pink Sheets" published by the Pink Sheets,  LLC (or a
          similar   organization  or  agency  succeeding  to  its  functions  of
          reporting prices),  the last reported closing sale price of the Common
          Stock so reported; or (d) in all other cases, the fair market value of
          a share of Common  Stock as  determined  by an  independent  appraiser
          selected in good faith by the Purchasers and reasonably  acceptable to
          the Company.

               "COMMISSION"  means  the  Securities  and  Exchange   Commission.

               "COMMON  STOCK" means the Class A Common Stock,  par value $0.001
          per share,  of the Company and stock of any other class of  securities
          into which such  securities  may hereafter have been  reclassified  or
          changed into

               "COMMON STOCK EQUIVALENTS" means any securities of the Company or
          the Subsidiaries  which would entitle the holder thereof to acquire at
          any  time  Common  Stock,  including  without  limitation,  any  debt,
          preferred stock, rights, options, warrants or other instrument that is
          at any  time  convertible  into  or  exchangeable  for,  or  otherwise
          entitles the holder thereof to receive, Common Stock.

               "COMPANY COUNSEL" means Kelley Drye & Warren LLP.

               "CONVERSION  PRICE" shall have the meaning  ascribed to such term
          in the Debentures.

               "DEBENTURES" means, the 7% Convertible Debentures due, subject to
          the terms therein, four (4) years from their date of issuance,  issued
          by the Company to the Purchasers hereunder, in the form of EXHIBIT A.

               "DISCLOSURE  SCHEDULES"  shall have the meaning  ascribed to such
          term in Section 3.1.

               "EFFECTIVE  DATE"  means the date that the  initial  Registration
          Statement  filed by the Company  pursuant to the  Registration  Rights
          Agreement is first declared effective by the Commission.

               "EVALUATION DATE" shall have the meaning ascribed to such term in
          Section 3.1(r).

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

               "EXEMPT  ISSUANCE"  means the  issuance  of (a)  shares of Common
          Stock or options to  employees,  officers or  directors of the Company


                                       2
<PAGE>

          pursuant to any stock or option plan duly adopted by a majority of the
          non-employee  members of the Board of  Directors  of the  Company or a
          majority  of the  members of a  committee  of  non-employee  directors
          established  for such purpose,  (b) securities upon the exercise of or
          conversion of any Securities issued hereunder, convertible securities,
          options  or  warrants  issued  and  outstanding  on the  date  of this
          Agreement,  provided that such  securities have not been amended since
          the  date of this  Agreement  to  increase  (other  than  pursuant  to
          existing  terms)  the number of such  securities  or to  decrease  the
          exercise or conversion  price of any such  securities,  and securities
          issued or issuable  pursuant to agreements  outstanding as of the date
          of this Agreement,  (c) securities  issued pursuant to acquisitions or
          strategic  transactions,  but shall not include a transaction in which
          the Company is issuing securities primarily for the purpose of raising
          capital  or to an  entity  whose  primary  business  is  investing  in
          securities,  (d) securities  issued or issuable  (whether  directly or
          indirectly  issued or issuable  upon the exercise of or  conversion of
          any  Securities   issued)  pursuant  to  the  Transaction   Documents,
          including without limitation,  Securities issued pursuant to Section 2
          of the Debenture and (e) up to 40,000 shares of Common Stock  (subject
          to adjustment  for reverse and forward stock splits and the like),  in
          the aggregate, to OLP Brooklyn Pavilion LLC or its affiliates.

               "FW" means  Feldman  Weinstein  LLP with offices at 420 Lexington
          Avenue, Suite 2620, New York, New York 10170-0002.

               "GAAP"  shall have the  meaning  ascribed to such term in Section
          3.1(h).

               "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed to
          such term in Section 3.1(o).

               "LEGEND  REMOVAL  DATE" shall have the  meaning  ascribed to such
          term in Section 4.1(c).

               "LIENS" means a lien,  charge,  security  interest,  encumbrance,
          right of first refusal or preemptive right.

               "MATERIAL ADVERSE EFFECT" shall have the meaning assigned to such
          term in Section 3.1(b).

               "MATERIAL  PERMITS" shall have the meaning  ascribed to such term
          in Section 3.1(m).

               "MAXIMUM  RATE" shall have the  meaning  ascribed to such term in
          Section 5.17.

               "PERSON" means an 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 other entity of any kind.

               "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.



                                       3
<PAGE>

               "PURCHASER PARTY" shall have the meaning ascribed to such term in
          Section 4.11.

               "REDEMPTION  WARRANTS"  shall have the  meaning  ascribed to such
          term in the Debenture.

               "REGISTRATION  RIGHTS  AGREEMENT" means the  Registration  Rights
          Agreement,   dated  the  date  hereof,   among  the  Company  and  the
          Purchasers, in the form of EXHIBIT B attached hereto.

               "REGISTRATION  STATEMENT" means a registration  statement meeting
          the requirements  set forth in the  Registration  Rights Agreement and
          covering the resale of the Underlying  Shares by each Purchaser or the
          issuance of the Underlying Shares or the Warrants by the Company along
          with the  resale of the  Underlying  Shares,  as  provided  for in the
          Registration Rights Agreement.

               "REQUIRED APPROVALS" shall have the meaning ascribed to such term
          in Section 3.1(e).

               "REQUIRED  MINIMUM" means, as of any date, the maximum  aggregate
          number of shares of Common Stock then issued or  potentially  issuable
          in the future  pursuant to the  Transaction  Documents,  including any
          Underlying  Shares issuable upon exercise or conversion in full of all
          Warrants  and  Debentures  (including  Underlying  Shares  issuable as
          payment of interest),  ignoring any conversion or exercise  limits set
          forth therein,  and assuming that the Conversion Price is at all times
          on and  after  the date of  determination  75% of the then  Conversion
          Price  on  the   Trading  Day   immediately   prior  to  the  date  of
          determination.

               "RULE 144" means Rule 144 promulgated by the Commission  pursuant
          to the Securities  Act, as such Rule 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.

               "SEC  REPORTS"  shall have the  meaning  ascribed to such term in
          Section 3.1(h).

               "SECURITIES"   means  the   Debentures,   the  Warrants  and  the
          Underlying Shares.

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

               "SHAREHOLDER  APPROVAL" means such approval as may be required by
          the  applicable  rules and  regulations  of the Trading Market (or any
          successor entity) from the shareholders of the Company with respect to
          the transactions contemplated by the Transaction Documents,  including
          the  issuance  of all of the  Underlying  Shares  and shares of Common
          Stock  issuable  upon  exercise of the Warrants in excess of 19.99% of
          the issued and outstanding Common Stock on the Closing Date.

               "SHORT  SALES"  shall  include,  without  limitation,  all "short
          sales" as defined in Rule 3b-3 of the Exchange Act.

                                      4
<PAGE>

               "SUBSCRIPTION AMOUNT" means, as to each Purchaser,  the aggregate
          amount to be paid for Debentures and Warrants  purchased  hereunder as
          specified  below such  Purchaser's  name on the signature page of this
          Agreement  and next to the heading  "Subscription  Amount",  in United
          States Dollars and in immediately available funds.

               "SUBSIDIARY" means any direct and indirect domestic  subsidiaries
          of the Company as of the date hereof,  but not including Aries Trading
          Corp., Rightsmart.com and Theatricaldistribution.com which the Company
          hereby represents are non-operating subsidiaries that have no assets.

               "SUBSIDIARY   GUARANTEES"  shall  mean  the  guarantees  of  each
          existing  Subsidiary  guaranteeing  the Company's  obligations  to the
          holders of the  Debentures  pursuant to the  Debentures in the form of
          EXHIBIT E attached hereto.

               "TRADING  DAY" means a day on which the Common Stock is traded on
          a Trading Market.

               "TRADING  MARKET"  means the  following  markets or  exchanges on
          which the Common  Stock is listed or quoted for trading on the date in
          question: the Nasdaq SmallCap Market, the American Stock Exchange, the
          New York Stock Exchange or the Nasdaq National Market.

               "TRANSACTION DOCUMENTS" means this Agreement, the Debentures, the
          Warrants, the Registration Rights Agreement and any other documents or
          agreements  executed in connection with the transactions  contemplated
          hereunder.

               "UNDERLYING  SHARES"  means the shares of Common  Stock  issuable
          upon  conversion  of the  Debentures,  the  Warrant  Shares and shares
          issued and  issuable  in lieu of the cash  payment of  interest on the
          Debentures.

               "WARRANTS"  means  collectively  (i) the  Common  Stock  purchase
          warrants,  in the form of EXHIBIT C delivered to the Purchasers at the
          Closing in accordance with Section 2.2(a) hereof, which Warrants shall
          be exercisable beginning seven months from the Closing Date and have a
          term of exercise  equal to five (5) years from such  initial  exercise
          date,   (ii)  the  Redemption   Warrants  and  (iii)  the  Acquisition
          Redemption Warrants.

               "WARRANT  SHARES" means the shares of Common Stock  issuable upon
          exercise  of the  Warrants,  shares  of  Common  Stock  issuable  upon
          exercise  of the  Redemption  Warrants  and  shares  of  Common  Stock
          issuable upon exercise of the Acquisition Redemption Warrants.

                                  ARTICLE II.
                                PURCHASE AND SALE

     2.1  CLOSING.  On the  Closing  Date,  upon the  terms and  subject  to the
conditions set forth herein,  concurrent with the execution and delivery of this
Agreement by the parties hereto,  the Company agrees to sell, and each Purchaser
agrees to purchase in the  aggregate,  severally and not jointly,  the principal


                                       5
<PAGE>

amount of the Debentures set forth opposite its name on the signature  page, not
to exceed in the aggregate for all Purchasers,  $7,600,000  principal  amount of
the Debentures. Each Purchaser shall deliver to the Company via wire transfer or
a certified check immediately available funds equal to their Subscription Amount
and the Company shall deliver to each Purchaser their  respective  Debenture and
Warrants as determined  pursuant to Section 2.2(a) and the other items set forth
in Section 2.2 issuable at the Closing.  Upon satisfaction of the conditions set
forth in Sections 2.2 and 2.3, the Closing  shall occur at the offices of FW, or
such other location as the parties shall mutually agree.

     2.2  DELIVERIES.

          a) On the  Closing  Date,  the  Company  shall  deliver or cause to be
     delivered to each Purchaser the following:

               (i) this Agreement duly executed by the Company;

               (ii)  a  Debenture   with  a  principal   amount  equal  to  such
          Purchaser's  Subscription  Amount,  registered  in the  name  of  such
          Purchaser;

               (iii) a  Warrant  registered  in the  name of such  Purchaser  to
          purchase up to a number of shares of Common Stock equal to 30% of such
          Purchaser's  Subscription Amount divided by the Conversion Price, with
          an exercise price equal to $4.44, subject to adjustment therein;

               (iv) the  written  voting  agreement,  in the form of  EXHIBIT  G
          attached  hereto,  of A. Dale Mayo,  MidMark Equity Partners II, L.P.,
          Kevin  Farrell and Brett Marks and all holders of Class B Common Stock
          to vote all Common Stock or Class B Common Stock, as applicable, owned
          by each such  Person as of the record  date for the annual  meeting of
          shareholders of the Company in favor of Shareholder Approval amounting
          to, in the  aggregate,  at least 50% of voting class of the issued and
          outstanding Common Stock and Class B Common Stock;

               (v)  the  Registration  Rights  Agreement  duly  executed  by the
          Company;

               (vi)  a   Subsidiary   Guarantee   from  each  of  the   existing
          Subsidiaries, including, but not limited to, ADM Cinema Corporation, a
          Delaware corporation;

               (vii) a legal opinion of Company Counsel,  in the form of EXHIBIT
          D attached hereto; and

               (viii) a legal opinion of the Company's  General Counsel,  in the
          form of EXHIBIT F attached hereto.

          b) On the Closing Date,  each  Purchaser  shall deliver or cause to be
     delivered to the Company the following:

                                       6
<PAGE>

               (i) this Agreement duly executed by such Purchaser;

               (ii) such Purchaser's Subscription Amount by wire transfer to the
          account as specified in writing by the Company; and

               (iii) the  Registration  Rights  Agreement  duly executed by such
          Purchaser.

     2.3 CLOSING CONDITIONS.

          a) The  obligations  of the Company  hereunder in connection  with the
     Closing are subject to the following conditions being met:

               (i) the  accuracy in all material  respects  when made and on the
          Closing Date of the  representations  and warranties of the Purchasers
          contained herein;

               (ii) all obligations,  covenants and agreements of the Purchasers
          required to be  performed  at or prior to the Closing  Date shall have
          been performed; and

               (iii) the  delivery by the  Purchasers  of the items set forth in
          Section 2.2(b) of this Agreement.

          b)  The  respective   obligations  of  the  Purchasers   hereunder  in
     connection with the Closing are subject to the following  conditions  being
     met:

               (i) the accuracy in all material  respects on the Closing Date of
          the representations and warranties of the Company contained herein;

               (ii) all  obligations,  covenants  and  agreements of the Company
          required to be  performed  at or prior to the Closing  Date shall have
          been performed;

               (iii)  the  delivery  by the  Company  of the  items set forth in
          Section 2.2(a) of this Agreement;

               (iv)  there  shall  have been no  Material  Adverse  Effect  with
          respect to the Company since the date hereof; and

               (v) From the date  hereof to the  Closing  Date,  trading  in the
          Common Stock shall not have been suspended by the  Commission  (except
          for any  suspension  of trading of limited  duration  agreed to by the
          Company,  which  suspension shall be terminated prior to the Closing),
          and,  at any time prior to the  Closing  Date,  trading in  securities
          generally as reported by Bloomberg  Financial  Markets  shall not have
          been  suspended  or  limited,  or minimum  prices  shall not have been
          established  on securities  whose trades are reported by such service,


                                       7
<PAGE>

          or on any Trading  Market,  nor shall a banking  moratorium  have been
          declared either by the United States or New York State authorities nor
          shall there have  occurred  any  material  outbreak or  escalation  of
          hostilities  or  other  national  or  international  calamity  of such
          magnitude  in its effect on, or any  material  adverse  change in, any
          financial  market which,  in each case, in the reasonable  judgment of
          each Purchaser,  makes it impracticable or inadvisable to purchase the
          Debentures at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1  REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY.  Except as set forth
under the  corresponding  section of the disclosure  schedules  delivered to the
Purchasers  concurrently herewith (the "DISCLOSURE  SCHEDULES") which Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser.

          a)  SUBSIDIARIES.  All of the existing  Subsidiaries  are set forth on
     SCHEDULE  3.1(A).  The Company  owns,  directly or  indirectly,  all of the
     capital stock or other equity  interests of each  Subsidiary free and clear
     of any Liens, and all the issued and outstanding shares of capital stock of
     each Subsidiary are validly issued and are fully paid,  non-assessable  and
     free  of  preemptive  and  similar  rights  to  subscribe  for or  purchase
     securities.  The Company owns, directly or indirectly,  no capital stock or
     other equity interest in any foreign entity.

          b)  ORGANIZATION  AND  QUALIFICATION.  The  Company is an entity  duly
     incorporated or otherwise organized,  validly existing and in good standing
     under the laws of the jurisdiction of its incorporation or organization (as
     applicable),  with the requisite  corporate  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  or  default  of any of the
     provisions  of  its   certificate   of   incorporation,   bylaws  or  other
     organizational  or charter  documents.  The  Company is duly  qualified  to
     conduct 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 have or  reasonably  be  expected  to  result  in (i) a  material
     adverse  effect  on  the  legality,   validity  or  enforceability  of  any
     Transaction  Document,  (ii) a material  adverse  effect on the  results of
     operations,  assets, business or financial condition of the Company and the
     Subsidiaries,  taken as a whole, or (iii) a material  adverse effect on the
     Company's  ability to perform in any material respect on a timely basis its
     obligations  under any  Transaction  Document (any of (i), (ii) or (iii), a
     "MATERIAL ADVERSE EFFECT") and to the Company's knowledge no Proceeding has
     been instituted in any such jurisdiction  revoking,  limiting or curtailing
     or  seeking  to  revoke,  limit or  curtail  such  power and  authority  or
     qualification.

                                       8
<PAGE>

          c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
     power  and  authority  to enter  into and to  consummate  the  transactions
     contemplated  by each of the  Transaction  Documents and otherwise to carry
     out its obligations  thereunder.  The execution and delivery of each of the
     Transaction  Documents  by the  Company and the  consummation  by it of the
     transactions   contemplated  thereby  have  been  duly  authorized  by  all
     necessary  action  on the part of the  Company  and no  further  action  is
     required by the Company in  connection  therewith  other than in connection
     with the Required  Approvals.  Each Transaction  Document has been (or upon
     delivery will have been) duly  executed by the Company and, 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 except (i) as limited by applicable bankruptcy,  insolvency,
     reorganization,  moratorium and other laws of general application affecting
     enforcement  of  creditors'  rights  generally  and (ii) as limited by laws
     relating to the availability of specific performance,  injunctive relief or
     other equitable remedies.

          d) NO  CONFLICTS.  The  execution,  delivery  and  performance  of the
     Transaction Documents by the Company and the consummation by the Company of
     the  other  transactions  contemplated  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, or (ii) conflict with, or constitute a default (or an event that
     with notice or lapse of time or both would become a default) under,  result
     in the  creation  of any Lien upon any of the  properties  or assets of the
     Company,   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,  or (iii)  subject to the Required  Approvals,  conflict
     with  or  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),  or by which any property or
     asset of the  Company is bound or  affected;  except in the case of each of
     clauses (ii) and (iii), such as would not have a Material Adverse Effect.

          e) FILINGS,  CONSENTS  AND  APPROVALS.  The Company is not required to
     obtain any consent, waiver,  authorization or order of, give any notice to,
     or make any filing or registration with, any court or other federal, state,
     local or other  governmental  authority or other Person in connection  with
     the execution,  delivery and  performance by the Company of the Transaction
     Documents,  other than (i) filings  required  pursuant to Section 4.6, (ii)
     the filing with the  Commission of the  Registration  Statement,  (iii) the
     notice and/or  application(s)  to each  applicable  Trading  Market for the
     issuance  and sale of the  Debentures  and  Warrants and the listing of the
     Underlying  Shares for  trading  thereon  in the time and  manner  required
     thereby and (iv) the filing of Form D with the  Commission and such filings
     as  are  required  to  be  made  under  applicable  state  securities  laws
     (collectively, the "REQUIRED APPROVALS").

          f) ISSUANCE OF THE SECURITIES. The Securities are duly authorized and,
     when  issued and paid for in  accordance  with the  applicable  Transaction


                                       9
<PAGE>

     Documents,  will be duly and validly issued,  fully paid and nonassessable,
     free and clear of all Liens imposed by the Company other than  restrictions
     on transfer  provided  for in the  Transaction  Documents.  The  Underlying
     Shares,  when  issued  in  accordance  with the  terms  of the  Transaction
     Documents,  will be validly issued, fully paid and nonassessable,  free and
     clear of all Liens  imposed by the Company.  The Company has reserved  from
     its duly  authorized  capital  stock a number of shares of Common Stock for
     issuance of the Underlying Shares at least equal to the Required Minimum on
     the date hereof.

          g)  CAPITALIZATION.  The capitalization of the Company is as set forth
     on SCHEDULE 3.1(G).  The Company has not issued any capital stock since its
     most recently  filed  periodic  report under the Exchange  Act,  other than
     pursuant to the  exercise of employee  stock  options  under the  Company's
     stock  option  plans,  the  issuance of shares of Common Stock to employees
     pursuant to the Company's  employee stock purchase plan and pursuant to the
     conversion or exercise of outstanding Common Stock  Equivalents.  No Person
     has any right of first refusal,  preemptive right,  right of participation,
     or any similar right to participate in the transactions contemplated by the
     Transaction  Documents.  Except as a result of the purchase and sale of the
     Securities,  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 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 Common  Stock  Equivalents.  The  issuance 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 any  holder  of  Company  securities  to  adjust  the
     exercise, conversion, exchange or reset price under such securities. All of
     the outstanding  shares of capital stock of the Company are validly issued,
     fully  paid and  nonassessable,  have been  issued in  compliance  with all
     federal and state securities laws, and none of such outstanding  shares was
     issued in violation of any preemptive rights or similar rights to subscribe
     for or purchase securities. Except as otherwise provided in this Agreement,
     no further  approval  or  authorization  of any  stockholder,  the Board of
     Directors of the Company or others is required for the issuance and sale of
     the Securities. There are no stockholders agreements,  voting agreements or
     other similar  agreements  with respect to the  Company's  capital stock to
     which the Company is a party or, to the  knowledge of the Company,  between
     or among any of the Company's stockholders.

          h) SEC  REPORTS;  FINANCIAL  STATEMENTS.  The  Company  has  filed all
     reports,  schedules,  forms,  statements and other documents required to be
     filed  by it under  the  Securities  Act and the  Exchange  Act,  including
     pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the
     date hereof (or such  shorter  period as the Company was required by law to
     file such  material)  (the  foregoing  materials,  including  the  exhibits
     thereto and documents incorporated by reference therein, being collectively
     referred to herein as the "SEC  REPORTS") 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.  As of their  respective
     dates,  the  SEC  Reports  complied  in  all  material  respects  with  the


                                       10
<PAGE>

     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 light of the  circumstances
     under which they were made, not misleading. The financial statements of the
     Company included in the SEC Reports complied 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 except that unaudited
     financial  statements  may not contain all footnotes  required by GAAP, 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.

          i) MATERIAL  CHANGES.  Since the date of the latest audited  financial
     statements  included  within  the  SEC  Reports,   except  as  specifically
     disclosed in the SEC Reports,  (i) there has been no event,  occurrence  or
     development  that has had 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 (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 and (C) expenses  incurred in
     connection with the transactions contemplated hereunder,  (iii) the Company
     has not altered its method of accounting, (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
     pursuant to existing  Company stock option plans. The Company does not have
     pending  before the Commission  any request for  confidential  treatment of
     information.

          j) LITIGATION. There is no action, suit, inquiry, notice of violation,
     proceeding  or  investigation  pending or, to the knowledge of the Company,
     threatened against or affecting the Company, any Subsidiary or any of their
     respective properties before or by any court,  arbitrator,  governmental or
     administrative  agency or regulatory  authority  (federal,  state,  county,
     local or foreign)  (collectively,  an "ACTION") which (i) adversely affects
     or  challenges  the  legality,  validity  or  enforceability  of any of the
     Transaction  Documents or the  Securities  or (ii) could,  if there were an
     unfavorable decision,  have a Material Adverse Effect.  Neither the Company
     nor any Subsidiary, nor any director or officer thereof, is or has been the
     subject of any Action  involving a claim of violation of or liability under
     federal or state  securities  laws or a claim of breach of fiduciary  duty.
     There has not  been,  and to the  knowledge  of the  Company,  there is not
     pending or contemplated,  any investigation by the Commission involving the
     Company or any current or former  director or officer of the  Company.  The
     Commission  has not  issued any stop order or other  order  suspending  the
     effectiveness  of any  registration  statement  filed by the Company or any
     Subsidiary  under  the  Exchange  Act  or  the  Securities  Act.

          k) LABOR  RELATIONS.  No  material  labor  dispute  exists  or, to the
     knowledge of the Company,  is imminent with respect to any of the employees
     of the Company which would have a Material Adverse Effect.



                                       11
<PAGE>

          l)  COMPLIANCE.  Neither  the  Company  nor any  Subsidiary  (i) is 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 or any Subsidiary under), nor has the Company or any
     Subsidiary  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 in  violation  of any order of any court,  arbitrator  or
     governmental  body,  or (iii) is or has been in  violation  of any statute,
     rule  or  regulation  of  any  governmental  authority,  including  without
     limitation  all foreign,  federal,  state and local laws  applicable to its
     business except in each case as would not have a Material Adverse Effect.

          m) REGULATORY  PERMITS.  The Company and the Subsidiaries  possess all
     certificates, authorizations and permits issued by the appropriate federal,
     state, local or foreign regulatory  authorities  necessary to conduct their
     respective  businesses  as described  in the SEC Reports,  except where the
     failure to possess such permits  would not have a Material  Adverse  Effect
     ("MATERIAL  PERMITS"),  and  neither the  Company  nor any  Subsidiary  has
     received  any  notice  of   proceedings   relating  to  the  revocation  or
     modification of any Material Permit.

          n) TITLE TO ASSETS.  The  Company and the  Subsidiaries  have good and
     marketable  title in fee simple to all real property  owned by them that is
     material to the business of the Company and the  Subsidiaries  and good and
     marketable title in all personal property owned by them that is material to
     the  business of the Company  and the  Subsidiaries,  in each case free and
     clear of all Liens.  Any real property and  facilities  held under lease by
     the Company and the Subsidiaries  are held by them under valid,  subsisting
     and  enforceable  leases of which the Company and the  Subsidiaries  are in
     material compliance.

          o) PATENTS AND TRADEMARKS.  The Company and the Subsidiaries  have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications,  service marks, trade names,  copyrights,  licenses and other
     similar  rights  necessary  or material  for use in  connection  with their
     respective businesses as described in the SEC Reports and which the failure
     to so  have  would  have  a  Material  Adverse  Effect  (collectively,  the
     "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
     received a written notice that the Intellectual Property Rights used by the
     Company or any  Subsidiary  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 of others.

          p) INSURANCE. The Company and the Subsidiaries 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


                                       12
<PAGE>

     Company and the  Subsidiaries are engaged,  including,  but not limited to,
     directors and officers  insurance  coverage at least equal to the aggregate
     Subscription  Amount.  To the best of Company's  knowledge,  such insurance
     contracts and policies are accurate and  complete.  Neither the Company nor
     any  Subsidiary has any reason to believe that it will not be able to renew
     its existing  insurance  coverage as and when such  coverage  expires or to
     obtain  similar  coverage  from  similar  insurers as may be  necessary  to
     continue its business without a significant increase in cost.

          q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  Except as set forth in
     the 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 any  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,  in each case in excess of
     $60,000  other  than (i) for  payment  of  salary  or  consulting  fees for
     services  rendered,  (ii)  reimbursement for expenses incurred on behalf of
     the Company and (iii) for other employee  benefits,  including stock option
     agreements under any stock option plan of the Company.

          r) SARBANES-OXLEY;  INTERNAL  ACCOUNTING  CONTROLS.  The Company is in
     material  compliance with all provisions of the  Sarbanes-Oxley Act of 2002
     which  are  applicable  to it as of  the  Closing  Date.  The  Company  has
     established  disclosure controls and procedures (as defined in Exchange Act
     Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
     controls and procedures to ensure that material information relating to the
     Company,  including  its  Subsidiaries,  is made  known  to the  certifying
     officers by others within those entities, particularly during the period in
     which the Company's most recently filed periodic  report under the Exchange
     Act,  as the  case may be,  is being  prepared.  The  Company's  certifying
     officers have  evaluated the  effectiveness  of the Company's  controls and
     procedures  as of the date  prior to the filing  date of the most  recently
     filed periodic  report under the Exchange Act (such date,  the  "EVALUATION
     DATE").  The Company  presented in its most recently filed periodic  report
     under the Exchange Act the conclusions of the certifying officers about the
     effectiveness  of the  disclosure  controls and  procedures  based on their
     evaluations as of the Evaluation  Date.  Since the Evaluation  Date,  there
     have been no  significant  changes in the Company's  internal  controls (as
     such term is defined in Item 307(b) of  Regulation  S-K under the  Exchange
     Act)  or,  to  the  Company's  knowledge,   in  other  factors  that  could
     significantly affect the Company's internal controls.

          s) CERTAIN  FEES.  Neither  the Company  nor any of its  officers  has
     retained any broker,  financial  advisor or consultant,  finder,  placement
     agent,   investment   banker,   bank   or   other   Person   (collectively,
     "Intermediary")  with  respect  to the  transactions  contemplated  by this
     Agreement and the Company shall  indemnify and hold harmless the Purchasers
     from any liability for any  compensation to any  Intermediary  and the fees
     and expenses of defending against said liability or alleged liability.



                                       13
<PAGE>

          t)  PRIVATE  PLACEMENT.   Assuming  the  accuracy  of  the  Purchasers
     representations  and warranties  set forth in Section 3.2, no  registration
     under  the  Securities  Act is  required  for  the  offer  and  sale of the
     Debentures or the Warrants to be delivered at Closing by the Company to the
     Purchasers as contemplated  hereby. The issuance and sale of the Securities
     hereunder  does not  contravene  the rules and  regulations  of the Trading
     Market.

          u) INVESTMENT COMPANY. The Company is not, and is not an Affiliate of,
     and immediately after receipt of payment for the Securities, will not be or
     be an  Affiliate  of, an  "investment  company"  within the  meaning of the
     Investment  Company Act of 1940, as amended.  The Company shall conduct its
     business in a manner so that it will not become  subject to the  Investment
     Company Act.

          v) REGISTRATION RIGHTS.  Other than each of the Purchasers,  no Person
     has any right to cause the  Company  to effect the  registration  under the
     Securities Act of any securities of the Company.

          w) LISTING AND MAINTENANCE REQUIREMENTS. The Company's Common Stock is
     registered  pursuant to Section  12(g) of the Exchange Act, and the Company
     has taken no action  designed  to, or which to its  knowledge  is likely to
     have the effect of,  terminating the registration of the Common Stock under
     the Exchange Act nor has the Company  received  any  notification  that the
     Commission is contemplating terminating such registration.  The Company has
     not, in the 12 months  preceding the date hereof,  received notice from any
     Trading Market on which the Common Stock is or has been listed or quoted to
     the  effect  that the  Company  is not in  compliance  with the  listing or
     maintenance requirements of such Trading Market. The Company is, and has no
     reason to believe that it will not in the  foreseeable  future  continue to
     be, in compliance with all such listing and maintenance requirements.

          x) APPLICATION OF TAKEOVER  PROTECTIONS.  The Company and its Board of
     Directors  have  taken all  necessary  action,  if any,  in order to render
     inapplicable any control share acquisition,  business  combination,  poison
     pill (including any distribution under a rights agreement) or other similar
     anti-takeover  provision under the Company's  Certificate of  Incorporation
     (or similar  charter  documents) or the laws of its state of  incorporation
     that is or could become  applicable  to 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  Securities  and the  Purchasers'
     ownership of the Securities.

          y)  DISCLOSURE.  The Company  confirms  that  neither it nor any other
     Person  acting 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
     the Purchasers will rely on the foregoing  representations and covenants 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 Disclosure  Schedules to


                                       14
<PAGE>

     this  Agreement,  furnished  by or on behalf of the Company with respect to
     the  representations and warranties made herein are true and correct in all
     material respects with respect to such  representations  and warranties 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
     light of the circumstances  under which they were made, and when taken as a
     whole,  not  misleading.  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 hereof.

          z) NO INTEGRATED  OFFERING.  Assuming the accuracy of the  Purchasers'
     representations  and  warranties  set forth in  Section  3.2,  neither  the
     Company,  nor any of its affiliates,  nor any Person acting on its or their
     behalf  has,  directly  or  indirectly,  made  any  offers  or sales of any
     security or solicited any offers to buy any security,  under  circumstances
     that would cause this  offering of the  Securities  to be  integrated  with
     prior  offerings by the Company for purposes of the  Securities  Act or any
     applicable shareholder approval provisions,  including, without limitation,
     under the rules and  regulations  of any Trading Market on which any of the
     securities of the Company are listed or designated.

          aa) SOLVENCY.  Based on the  financial  condition of the Company as of
     the Closing Date after  giving  effect to the receipt by the Company of the
     proceeds from the sale of the Securities hereunder,  (i) the Company's fair
     saleable value of its assets exceeds the amount that will be required to be
     paid on or in respect of the Company's existing debts and other liabilities
     (including known contingent liabilities) as they mature; (ii) the Company's
     assets  do not  constitute  unreasonably  small  capital  to  carry  on its
     business for the current fiscal year as now conducted and as proposed to be
     conducted  including its capital  needs taking into account the  particular
     capital  requirements  of  the  business  conducted  by  the  Company,  and
     projected capital requirements and capital availability  thereof; and (iii)
     the  current  cash flow of the  Company,  together  with the  proceeds  the
     Company would receive, were it to liquidate all of its assets, after taking
     into account all anticipated  uses of the cash,  would be sufficient to pay
     all amounts on or in respect of its debt when such  amounts are required to
     be paid.  The Company  does not intend to incur debts beyond its ability to
     pay such debts as they mature  (taking  into account the timing and amounts
     of cash to be payable on or in respect  of its debt).  The  Company  has no
     knowledge of any facts or circumstances which lead it to reasonably believe
     that it will file for reorganization or liquidation under the bankruptcy or
     reorganization  laws of any  jurisdiction  within one year from the Closing
     Date.  The SEC  Reports set forth as of the dates  thereof all  outstanding
     secured and unsecured Indebtedness of the Company or any Subsidiary, or for
     which the Company or any  Subsidiary has  commitments.  For the purposes of
     this Agreement,  "INDEBTEDNESS" shall mean (a) any liabilities for borrowed
     money or amounts  owed in excess of  $50,000  (other  than  trade  accounts
     payable  incurred in the ordinary course of business),  (b) all guaranties,
     endorsements and other contingent obligations in respect of Indebtedness of
     others, whether or not the same are or should be reflected in the Company's
     balance sheet (or the notes thereto),  except  guaranties by endorsement of
     negotiable instruments for deposit or collection or similar transactions in
     the  ordinary  course of business;  and (c) the present  value of any lease
     payments in excess of $50,000 due under leases  required to be  capitalized


                                       15
<PAGE>

     in  accordance  with GAAP.  Neither the Company  nor any  Subsidiary  is in
     default with respect to any Indebtedness.

          bb) FORM S-3  ELIGIBILITY.  The Company is  eligible  to register  the
     resale  of the  Underlying  Shares  (with  respect  to the  Debentures  and
     Warrants to be delivered  at Closing)  for resale by the  Purchaser on Form
     S-3 promulgated under the Securities Act.

          cc) TAX STATUS.  Except for matters that would not, individually or in
     the  aggregate,  have a  Material  Adverse  Effect,  the  Company  and each
     Subsidiary  has filed all necessary  federal,  state and foreign income and
     franchise  tax  returns  and has paid or  accrued  all  taxes  shown as due
     thereon,  and the Company has no  knowledge of a tax  deficiency  which has
     been asserted or threatened against the Company or any Subsidiary.

          dd) NO GENERAL SOLICITATION. Neither the Company nor any person acting
     on behalf of the Company has offered or sold any of the  Securities  by any
     form of  general  solicitation  or general  advertising.  The  Company  has
     offered the  Securities  for sale only to the  Purchasers and certain other
     "accredited  investors" within the meaning of Rule 501 under the Securities
     Act.

          ee)  FOREIGN  CORRUPT  PRACTICES.  Neither  the  Company,  nor  to the
     knowledge of the Company, any agent or other person acting on behalf of the
     Company,  has (i)  directly  or  indirectly,  used any funds  for  unlawful
     contributions,  gifts,  entertainment or other unlawful expenses related to
     foreign or domestic political  activity,  (ii) made any unlawful payment to
     foreign or domestic government  officials or employees or to any foreign or
     domestic  political parties or campaigns from corporate funds, (iii) failed
     to  disclose  fully any  contribution  made by the  Company (or made by any
     person  acting on its  behalf of which the  Company  is aware)  which is in
     violation of law, or (iv) violated in any material respect any provision of
     the Foreign Corrupt Practices Act of 1977, as amended

          ff) ACCOUNTANTS.  The Company's  accountants are set forth on SCHEDULE
     3.1(FF)  of the  Disclosure  Schedule.  To the  Company's  knowledge,  such
     accountants,  who the Company  expects  will  express  their  opinion  with
     respect to the financial  statements to be included in the Company's Annual
     Report on Form 10-KSB for the year ending  March 31, 2005 are a  registered
     public accounting firm as required by the Securities Act.

          gg) SENIORITY. As of the Closing Date, no indebtedness or other equity
     of the Company is senior to the  Debentures  in right of  payment,  whether
     with respect to interest or upon liquidation or dissolution,  or otherwise,
     other than indebtedness secured by purchase money security interests (which
     is senior only as to underlying assets covered thereby).

          hh) NO  DISAGREEMENTS  WITH  ACCOUNTANTS  AND  LAWYERS.  There  are no
     disagreements of any kind presently existing, or reasonably  anticipated by
     the Company to arise,  between  the  accountants  and  lawyers  formerly or
     presently  employed by the Company and the Company is current  with respect
     to any fees owed to its accountants and lawyers.



                                       16
<PAGE>

          ii) ACKNOWLEDGMENT  REGARDING PURCHASERS' PURCHASE OF SECURITIES.  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 the
     Transaction Documents and the transactions contemplated hereby. The Company
     further  acknowledges that no Purchaser is acting as a financial advisor or
     fiduciary of the Company (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 transactions  contemplated hereby is
     merely  incidental  to the  Purchasers'  purchase  of the  Securities.  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.

          jj) ACKNOWLEDGEMENT  REGARDING PURCHASERS' TRADING ACTIVITY.  Anything
     in this  Agreement  or  elsewhere  herein to the  contrary  notwithstanding
     (except  for  Section  4.16  hereof),  it is  understood  and agreed by the
     Company (i) that none of the Purchasers  have been asked to agree,  nor has
     any Purchaser  agreed,  to desist from  purchasing or selling,  long and/or
     short,  securities  of the Company,  or  "derivative"  securities  based on
     securities  issued  by the  Company  or to  hold  the  Securities  for  any
     specified term; (ii) that past or future open market or other  transactions
     by any  Purchaser,  including  Short  Sales,  and  specifically  including,
     without  limitation,  Short Sales or "derivative"  transactions,  before or
     after the closing of this or future  private  placement  transactions,  may
     negatively  impact  the  market  price  of  the  Company's  publicly-traded
     securities;   and  (iii)  that  any  Purchaser,   and  counter  parties  in
     "derivative"  transactions to which any such Purchaser is a party, directly
     or indirectly, presently may have a "short" position in the Common Stock.

          kk)  ACKNOWLEDGMENT  REGARDING  THE TRADING  MARKET FOR COMMON  STOCK.
     Since the Discussion Time (as defined below),  neither the Company, nor any
     of its officers and directors,  nor, to the best of its  knowledge,  any of
     their  respective  Affiliates  have taken any action  that has had or could
     reasonably have been expected to have any effect on the market price of the
     Common Stock, including, without limitation, any actions that would violate
     the provisions of Regulation M under the Exchange Act.

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

          a)  ORGANIZATION;   AUTHORITY.   Such  Purchaser  is  an  entity  duly
     organized,  validly  existing  and in good  standing  under the laws of the
     jurisdiction of its organization with full right,  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  thereunder.  The execution,  delivery and  performance by such
     Purchaser of the transactions contemplated by this Agreement have been duly
     authorized by all necessary corporate or similar action on the part of such
     Purchaser.  Each Transaction Documents to which it is a party has been duly
     executed  by such  Purchaser,  and  when  delivered  by such  Purchaser  in


                                       17
<PAGE>

     accordance  with the terms hereof,  will  constitute  the valid and legally
     binding obligation of such Purchaser,  enforceable against it in accordance
     with its terms,  except (i) as limited by general equitable  principles and
     applicable  bankruptcy,  insolvency,  reorganization,  moratorium and other
     laws of general  application  affecting  enforcement  of creditors'  rights
     generally, (ii) as limited by laws relating to the availability of specific
     performance,  injunctive  relief  or other  equitable  remedies  and  (iii)
     insofar as  indemnification  and contribution  provisions may be limited by
     applicable law.

          b) OWN ACCOUNT.  Such  Purchaser  understands  that the Securities are
     "restricted  securities" and have not been registered  under the Securities
     Act or any applicable  state securities law and is acquiring the Securities
     as principal for its own account and not with a view to or for distributing
     or reselling such Securities or any part thereof,  has no present intention
     of  distributing   any  of  such  Securities  and  has  no  arrangement  or
     understanding  with any other persons  regarding the  distribution  of such
     Securities (this  representation and warranty not limiting such Purchaser's
     right to sell the  Securities  pursuant to the  Registration  Statement  or
     otherwise in compliance with applicable federal and state securities laws).
     Such Purchaser is acquiring the Securities hereunder in the ordinary course
     of  its  business.   Such   Purchaser   does  not  have  any  agreement  or
     understanding,  directly or indirectly, with any Person with respect to the
     holding, distribution or voting of any of the Securities.

          c)  PURCHASER  STATUS.  At the time such  Purchaser  was  offered  the
     Securities, it was, and at the date hereof it is, and on each date on which
     it exercises any Warrants or converts any Debentures it will be either: (i)
     an  "accredited  investor" as defined in Rule  501(a)(1),  (a)(2),  (a)(3),
     (a)(7)  or  (a)(8)   under  the   Securities   Act  or  (ii)  a  "qualified
     institutional  buyer" as defined in Rule 144A(a) under the Securities  Act.
     Such  Purchaser is not required to be registered as a  broker-dealer  under
     Section 15 of the Exchange Act.

          d)  EXPERIENCE  OF SUCH  PURCHASER.  Such  Purchaser,  either alone or
     together with its representatives,  has such knowledge,  sophistication and
     experience  in  business  and  financial  matters  so as to be  capable  of
     evaluating  the  merits  and  risks of the  prospective  investment  in the
     Securities,  and has so evaluated the merits and risks of such  investment.
     Such  Purchaser is able to bear the economic  risk of an  investment in the
     Securities  and, at the present  time, is able to afford a complete loss of
     such investment.

          e)  GENERAL  SOLICITATION.   Such  Purchaser  is  not  purchasing  the
     Securities  as a result  of any  advertisement,  article,  notice  or other
     communication regarding the Securities published in any newspaper, magazine
     or similar media or broadcast over  television or radio or presented at any
     seminar or any other general solicitation or general advertisement.

          f) SHORT SALES. Such Purchaser has not directly or indirectly, nor has
     any Person acting on behalf of or pursuant to any  understanding  with such
     Purchaser,  engaged in any  disposition  of the  securities  of the Company
     (including,  without  limitations,  any Short Sales involving the Company's
     securities)  since the time that such Purchaser was first  contacted by the
     Company,  Roth  Capital  Partners,  LLC or any other  Person  regarding  an
     investment in the Company until the date hereof ("DISCUSSION  TIME"). Other


                                       18
<PAGE>

     than  to  other  Persons  party  to  this  Agreement,  such  Purchaser  has
     maintained the  confidentiality of all disclosures made to it in connection
     with  this   transaction   (including  the  existence  and  terms  of  this
     transaction).

          g) ACCESS TO  INFORMATION.  Such  Purchaser  acknowledges  that it has
     reviewed  the  SEC  Reports  and the  Transaction  Documents  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 Securities and
     the  merits  and  risks of  investing  in the  Securities;  (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   Securities.   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 SEC Reports
     and the  Transaction  Documents,  and  the  Company's  representations  and
     warranties contained in the Transaction Documents.

          h)  FEES  AND  COMMISSIONS.   Such  Purchaser  has  not  retained  any
     Intermediary  with  respect  to  the  transactions   contemplated  by  this
     Agreement  and agrees to indemnify  and hold  harmless the Company from any
     liability  for  any  compensation  to any  Intermediary  retained  by  such
     Purchaser and the fees and expenses of defending  against said liability or
     alleged liability.

          The Company  acknowledges and agrees that each Purchaser does not make
     or has not made any  representations  or  warranties  with  respect  to the
     transactions contemplated hereby other than those specifically set forth in
     this Section 3.2.


                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 TRANSFER RESTRICTIONS.

          a) Each  Purchaser  acknowledges  and  understands,  severally and not
     jointly, that (i) the Securities may only be disposed of in compliance with
     state and federal  securities laws and (ii) in connection with any transfer
     of Securities other than pursuant to an effective registration statement or
     Rule 144, to the Company or to an affiliate of a Purchaser or in connection
     with a pledge as contemplated  in Section  4.1(b),  the Company may require
     the  transferor  thereof to  provide  to the  Company an opinion of counsel
     selected by the transferor and  reasonably  acceptable to 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 of
     such  transferred  Securities  under the Securities  Act. As a condition of
     transfer,  any such  transferee  shall  agree in writing to be bound by the
     terms of this Agreement and shall have the rights of a Purchaser under this
     Agreement and the Registration Rights Agreement.



                                       19
<PAGE>

          b) The Purchasers  agree to the imprinting,  so long as is required by
     this Section 4.1(b),  of a legend on any of the Securities in the following
     form:

          [NEITHER]  THESE  SECURITIES  [NOR THE  SECURITIES  INTO  WHICH  THESE
     SECURITIES ARE [EXERCISABLE]  [CONVERTIBLE]]  HAVE 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 AS
     EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR TO SUCH EFFECT,
     THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
     SECURITIES  AND THE SECURITIES  ISSUABLE UPON EXERCISE OF THESE  SECURITIES
     MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
     SECURED BY SUCH SECURITIES.

          The Company  acknowledges and agrees that a Purchaser may from time to
     time  pledge  pursuant to a bona fide margin  agreement  with a  registered
     broker-dealer or grant a security interest in some or all of the Securities
     to a financial  institution that is an "accredited  investor" as defined in
     Rule  501(a)  under the  Securities  Act and who  agrees to be bound by the
     provisions of this Agreement and the Registration  Rights Agreement and, if
     required under the terms of such  arrangement,  such Purchaser may transfer
     pledged or secured  Securities 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 legal  counsel 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 Securities may reasonably  request in connection with a
     pledge or transfer of the  Securities,  including,  if the  Securities  are
     subject to registration pursuant to the Registration Rights Agreement,  the
     preparation  and filing of any required  prospectus  supplement  under Rule
     424(b)(3)  under the  Securities Act or other  applicable  provision of the
     Securities  Act to  appropriately  amend the list of  Selling  Stockholders
     thereunder.

          c) Certificates evidencing the Underlying Shares shall not contain any
     legend (including the legend set forth in Section 4.1(b) hereof): (i) while
     a registration  statement  (including the Registration  Statement) covering
     the resale of such security is effective  under the Securities Act, or (ii)
     following any sale of such Underlying Shares pursuant to Rule 144, or (iii)
     if such Underlying  Shares are eligible for sale under Rule 144(k), or (iv)
     if  such  legend  is not  required  under  applicable  requirements  of the
     Securities  Act  (including  judicial  interpretations  and  pronouncements


                                       20
<PAGE>

     issued by the staff of the Commission). The Company shall cause its counsel
     to issue a legal opinion to the Company's transfer agent promptly after the
     Effective  Date if required by the Company's  transfer  agent to effect the
     removal of the legend  hereunder.  If all or any portion of a Debenture  or
     Warrant is converted or exercised (as  applicable)  at a time when there is
     an effective  registration  statement to cover the resale of the Underlying
     Shares,  or if such  Underlying  Shares may be sold under Rule 144(k) or if
     such legend is not otherwise required under applicable  requirements of the
     Securities  Act  (including  judicial  interpretations  thereof)  then such
     Underlying  Shares shall be issued free of all legends.  The Company agrees
     that  following  the  Effective  Date or at such time as such  legend is no
     longer  required  under this Section  4.1(c),  it will, no later than three
     Trading  Days  following  the delivery by a Purchaser to the Company or the
     Company's transfer agent of a certificate  representing  Underlying Shares,
     as  applicable,  issued with a restrictive  legend (such third Trading Day,
     the  "LEGEND  REMOVAL  DATE"),  deliver  or cause to be  delivered  to such
     Purchaser  a  certificate  representing  such  shares 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.
     Certificates  for Securities  subject to legend removal  hereunder shall be
     transmitted  by the  transfer  agent of the  Company to the  Purchasers  by
     crediting the account of the  Purchaser's  prime broker with the Depository
     Trust Company System.

          d) In addition  to such  Purchaser's  other  available  remedies,  the
     Company shall pay to a Purchaser,  in cash, as partial  liquidated  damages
     and not as a penalty,  for each $1,000 of  Underlying  Shares (based on the
     Closing Price of the Common Stock on the date such Securities are submitted
     to the Company's  transfer agent)  delivered for removal of the restrictive
     legend and subject to this Section 4.1, $10 per Trading Day  (increasing to
     $20 per  Trading  Day 10  Trading  Days after  such  damages  have begun to
     accrue) for each  Trading Day after 2nd  Trading Day  following  the Legend
     Removal Date until such certificate is delivered without a legend.  Nothing
     herein shall limit such Purchaser's  right to pursue actual damages for the
     Company's  failure to deliver  certificates  representing any Securities as
     required by the  Transaction  Documents,  and such Purchaser shall have the
     right to pursue all remedies available to it at law or in equity including,
     without  limitation,  a decree of specific  performance  and/or  injunctive
     relief.

          e)  Each   Purchaser,   severally  and  not  jointly  with  the  other
     Purchasers,  agrees  that  the  removal  of  the  restrictive  legend  from
     certificates  representing  Securities  as set forth in this Section 4.1 is
     predicated  upon the Company's  reliance  that the Purchaser  will sell any
     Securities  pursuant  to  either  the  registration   requirements  of  the
     Securities Act, including any applicable prospectus delivery  requirements,
     or an exemption therefrom.

          f) Until the date that is 12 months from the date hereof,  the Company
     shall not undertake a reverse or forward stock split or reclassification of
     the Common  Stock  without  the prior  written  consent  of the  Purchasers
     holding a majority in principal amount outstanding of the Debentures.

     4.2 ACKNOWLEDGMENT OF DILUTION.  The Company acknowledges that the issuance
of the  Securities  may result in dilution of the  outstanding  shares of Common


                                       21
<PAGE>

Stock,  which dilution may be substantial under certain market  conditions.  The
Company  further   acknowledges  that  its  obligations  under  the  Transaction
Documents,  including without  limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not  subject  to any  right  of  set  off,  counterclaim,  delay  or  reduction,
regardless  of the effect of any such dilution or any claim the Company may have
against any Purchaser and  regardless of the dilutive  effect that such issuance
may have on the ownership of the other stockholders of the Company.

     4.3 FURNISHING OF  INFORMATION.  As long as any Purchaser owns  Securities,
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. As long as any
Purchaser owns Securities, but only until such Securities may be sold under Rule
144(k),  if the Company is not required to file reports pursuant to the Exchange
Act, it will prepare and furnish to the Purchasers  and make publicly  available
in  accordance  with  Rule  144(c)  such  information  as is  required  for  the
Purchasers to sell the Securities under Rule 144. The Company further  covenants
that it will take such further action as any holder of Securities may reasonably
request,  all to the extent  required from time to time to enable such Person to
sell such Securities  without  registration  under the Securities Act within the
limitation of the exemptions provided by Rule 144.

     4.4 INTEGRATION.  On or after the Closing Date, the Company shall not sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security  (as  defined  in  Section  2 of the  Securities  Act)  that  would  be
integrated  with the  offer or sale of the  Securities  in a manner  that  would
require the registration  under the Securities Act of the sale of the Securities
to the  Purchasers  or that  would be  integrated  with the offer or sale of the
Securities for purposes of the rules and  regulations of any Trading Market that
would violate the rules and regulations of such Trading Market.

     4.5  CONVERSION  AND  EXERCISE  PROCEDURES.  The form of Notice of Exercise
included in the  Warrants and the form of Notice of  Conversion  included in the
Debentures set forth the totality of the  procedures  required of the Purchasers
in order to exercise the Warrants or convert the Debentures. No additional legal
opinion or other information or instructions shall be required of the Purchasers
to exercise their Warrants or convert their Debentures.  The Company shall honor
exercises of the Warrants and  conversions  of the  Debentures and shall deliver
Underlying Shares in accordance with the terms,  conditions and time periods set
forth in the Transaction Documents.

     4.6 SECURITIES LAWS DISCLOSURE;  PUBLICITY. The Company shall, by 5:30 p.m.
Eastern  time on the  Trading Day  following  the date  hereof,  issue a Current
Report on Form 8-K, reasonably  acceptable to Purchaser(s)  holding at least 51%
of the aggregate principal amount of Debentures then outstanding  disclosing the
material terms of the transactions  contemplated  hereby,  and shall attach this
agreement  along  with  the  form  of  Registration  Rights  Agreement,  form of
Debenture, form of Warrant and form of Subsidiary Guarantee thereto. The Company
and  Purchaser(s)  holding  at least 51% of the  aggregate  principal  amount of
Debentures then  outstanding  shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither


                                       22
<PAGE>

the Company nor any  Purchaser  shall issue any such press  release or otherwise
make any such public  statement  without the prior consent of the Company,  with
respect to any press release of any  Purchaser,  or without the prior consent of
the  Purchaser(s)  holding  at least 51% of the  aggregate  principal  amount of
Debentures then  outstanding,  with respect to any press release of the Company,
which consent shall not  unreasonably be withheld,  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  or  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 (i) as required by federal  securities law in
connection with the  registration  statement  contemplated  by the  Registration
Rights  Agreement  and (ii) to the extent such  disclosure is required by law or
Trading  Market  regulations,  in  which  case the  Company  shall  provide  the
Purchasers with prior notice of such disclosure permitted under subclause (i) or
(ii).

     4.7  SHAREHOLDER  RIGHTS  PLAN.  No claim will be made or  enforced  by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

     4.8 NON-PUBLIC  INFORMATION.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

     4.9 USE OF PROCEEDS.  The Company  shall use the net proceeds from the sale
of the Securities hereunder for the purposes set forth on SCHEDULE 4.9 hereto.

     4.10 [RESERVED].

     4.11  INDEMNIFICATION  OF  PURCHASERS.  Subject to the  provisions  of this
Section  4.11,  the Company will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"PURCHASER PARTY") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is  based  upon a  breach  of such  Purchaser's  representation,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings


                                       23
<PAGE>

such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the Company and the  position of such  Purchaser
Party.  The  Company  will not be  liable  to any  Purchaser  Party  under  this
Agreement  (i) for any  settlement  by a Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

     4.12 RESERVATION AND LISTING OF SECURITIES.

          a) 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.

          b) If, on any  date,  the  number  of  authorized  but  unissued  (and
     otherwise  unreserved)  shares  of Common  Stock is less than the  Required
     Minimum on such date,  then the Board of Directors of the Company shall use
     commercially  reasonable  efforts  to amend the  Company's  certificate  or
     articles of incorporation to increase the number of authorized but unissued
     shares of Common  Stock to at least the Required  Minimum at such time,  as
     soon as  possible  and in any event not later  than the 75th day after such
     date.

          c) The  Company  shall,  if  applicable:  (i) in the time  and  manner
     required by the Trading  Market,  prepare and file with such Trading Market
     an additional  shares  listing  application  covering a number of shares of
     Common  Stock at least  equal to the  Required  Minimum on the date of such
     application,  (ii) take all steps  necessary to cause such shares of Common
     Stock to be approved for listing on the Trading  Market as soon as possible
     thereafter,  (iii) provide to the Purchasers evidence of such listing,  and
     (iv)  maintain  the listing of such Common Stock on any date at least equal
     to the  Required  Minimum  on such date on such  Trading  Market or another
     Trading Market.

     4.13 [RESERVED]

     4.14 SUBSEQUENT EQUITY SALES.

          a) From the date hereof until the Effective Date,  neither the Company
     nor any Subsidiary shall file a registration  statement with the Commission
     other than the Registration  Statement(s)  required to be filed pursuant to


                                       24
<PAGE>

     the Registration Rights Agreement;  provided,  however,  that nothing shall
     restrict the Company from  maintaining the  effectiveness  of and otherwise
     amending any registration statement previously declared effective.

          b) Unless Shareholder Approval has been obtained and deemed effective,
     the  Company  shall not make any  issuance  whatsoever  of Common  Stock or
     Common Stock  Equivalents or any  distribution  of  indebtedness  or assets
     (including  cash or cash  dividends)  or rights or warrants to purchase any
     security,  which would cause any adjustment of the Conversion  Price to the
     extent the holders of  Debentures  would not be  permitted,  as a result of
     Section 4(c)(i) of the Debentures,  to convert their respective outstanding
     Debentures and exercise  their  respective  Warrants in full,  ignoring for
     such purposes the conversion or exercise  limitations in Section  4(c)(ii).
     Any Purchaser  shall be entitled to obtain  injunctive  relief  against the
     Company to preclude any such issuance, which remedy shall be in addition to
     any right to collect damages.

     4.15 EQUAL TREATMENT OF PURCHASERS.  No  consideration  shall be offered or
paid to any  person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also offered to all of the parties to the Transaction  Documents.  Further,  the
Company shall not make any payment of principal or interest on the Debentures in
amounts  which  are   disproportionate  to  the  respective   principal  amounts
outstanding  on  the  Debentures  at  any  applicable  time.  For  clarification
purposes,  this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated  separately by each Purchaser,  and is intended to
treat for the Company the Debenture  holders as a class and shall not in any way
be construed as the  Purchasers  acting in concert or as a group with respect to
the purchase, disposition or voting of Securities or otherwise.

     4.16 SHORT SALES AND  CONFIDENTIALITY.  Each  Purchaser,  severally and not
jointly  with the other  Purchasers,  covenants  that  neither it nor any Person
acting on its behalf or pursuant to any understanding with it will engage in any
transactions in the securities of the Company  (including  Short Sales) prior to
the time that the  transactions  contemplated  by this  Agreement  are  publicly
disclosed by the Company as described in Section 4.6. Each Purchaser,  severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions  contemplated  by this  Agreement  are  publicly  disclosed  by the
Company  as  described  in  Section  4.6,  such  Purchaser  will  maintain,  the
confidentiality   of  all  disclosures  made  to  it  in  connection  with  this
transaction  (including  the  existence  and  terms of this  transaction).  Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser,  that the SEC  currently  takes the position  that  coverage of short
sales of shares of the Common  Stock  "against  the box" prior to the  Effective
Date of the Registration  Statement with the Underlying Shares is a violation of
Section  5 of the  Securities  Act,  as set  forth in Item 65,  Section  5 under
Section A, of the Manual of Publicly Available Telephone Interpretations,  dated
July 1997,  compiled by the Office of Chief  Counsel,  Division  of  Corporation
Finance.  Notwithstanding the foregoing,  no Purchaser makes any representation,
warranty  or  covenant  hereby  that it will not  engage  in Short  Sales in the
securities of the Company after the time that the  transactions  contemplated by
this Agreement are first publicly announced as described in Section 4.6.



                                       25
<PAGE>

                                   ARTICLE V.
                                  MISCELLANEOUS

     5.1  TERMINATION.  This  Agreement may be terminated by any  Purchaser,  by
written notice to the other parties,  if the Closing has not been consummated on
or before February ___, 2005;  provided that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

     5.2 FEES AND EXPENSES.  At the Closing, the Company has agreed to reimburse
Basso Private  Opportunity  Holding Fund Ltd.  ("Basso") up to $40,000,  for its
actual,  reasonable,  out-of-pocket  legal fees and expenses.  The Company shall
deliver,  prior to the Closing,  a completed  and  executed  copy of the Closing
Statement,  attached  hereto as ANNEX A.  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 agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities.

     5.3 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.

     5.4  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
set forth on the signature  pages  attached  hereto prior to 5:30 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 set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second  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.  Notwithstanding anything
herein to the contrary,  in the event notice is sent by facsimile  transmission,
the sending party shall also send such  notification  by e-mail if the receiving
party has  included an e-mail  address  below or on their  respective  signature
page. The address for such notices and communications shall be as follows:

If to Company, to:

                           Access Integrated Technologies, Inc.
                           55 Madison Avenue, Suite 300
                           Morristown, New Jersey 07960
                           Attention: General Counsel
                           Facsimile: 973-290-0081
                           E-mail address: gloffredo@accessitx.com



                                       26
<PAGE>

With a copy to:

                           Kelley Drye & Warren LLP
                           101 Park Avenue
                           New York, New York 10178
                           Attention: Jonathan Cooperman, Esq.
                           Facsimile: (212) 808-7897
                           E-mail address: jcooperman@kelleydrye.com

If to a Purchaser:         To the address set forth under such  Purchaser's name
                           on the signature pages hereof;

or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.

     5.5  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 Purchaser 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.

     5.6  HEADINGS  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.

     5.7 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 each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".

     5.8 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 as otherwise set forth in Section 4.11.

     5.9 GOVERNING  LAW. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and


                                       27
<PAGE>

any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or 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 waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  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 parties  hereby waive all
rights  to a trial  by jury.  If  either  party  shall  commence  an  action  or
proceeding to enforce any  provisions  of the  Transaction  Documents,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its  attorneys'  fees and other costs and expenses  incurred  with the
investigation, preparation and prosecution of such action or proceeding.

     5.10 SURVIVAL.  The representations  and warranties  contained herein shall
survive  the  Closing  and  the  delivery,  exercise  and/or  conversion  of the
Securities, as applicable for the applicable statue of limitations.

     5.11 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.

     5.12 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.

     5.13  RESCISSION  AND  WITHDRAWAL  RIGHT.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option under a  Transaction  Documents and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part  without  prejudice  to its  future  actions  and  rights;  PROVIDED,


                                       28
<PAGE>

HOWEVER,  in the case of a rescission of a conversion of a Debenture or exercise
of a Warrant,  the  Purchaser  shall be  required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.

     5.14 REPLACEMENT OF SECURITIES. If any certificate or instrument evidencing
any Securities 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 Securities.

     5.15  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.

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

     5.17 USURY.  To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner  whatsoever  claim, and will resist
any and all efforts to be compelled  to take the benefit or advantage  of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document.  Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed  and  provided  that  the  total  liability  of  the  Company  under  the
Transaction  Documents  for payments in the nature of interest  shall not exceed
the maximum lawful rate authorized  under  applicable law (the "MAXIMUM  RATE"),
and, without  limiting the foregoing,  in no event shall any rate of interest or
default  interest,  or both of them,  when aggregated with any other sums in the
nature  of  interest  that  the  Company  may  be  obligated  to pay  under  the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract  rate of  interest  allowed by law and  applicable  to the  Transaction
Documents is  increased  or  decreased  by statute or any official  governmental
action subsequent to the date hereof,  the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction  Documents
from the  effective  date  forward,  unless such  application  is  precluded  by
applicable law. If under any circumstances whatsoever, interest in excess of the


                                       29
<PAGE>

Maximum  Rate  is  paid  by  the  Company  to  any  Purchaser  with  respect  to
indebtedness  evidenced  by the  Transaction  Documents,  such  excess  shall be
applied  by  such  Purchaser  to  the  unpaid  principal  balance  of  any  such
indebtedness  or be refunded to the Company,  the manner of handling such excess
to be at such Purchaser's election.

     5.18  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.  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 Documents. 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.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the Purchasers but only Basso. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the Purchasers.

     5.19  LIQUIDATED  DAMAGES.  The  Company's  obligations  to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.

     5.20  CONSTRUCTION.  The  parties  agree  that  each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (SIGNATURE PAGES FOLLOW)




                                       30
<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.

ACCESS INTEGRATED TECHNOLOGIES, INC.                         ADDRESS FOR NOTICE:
                                                             -------------------


By:__________________________________________
Name:
Title:

With a copy to (which shall not constitute notice):




                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGE FOR PURCHASER FOLLOWS]



<PAGE>

        [PURCHASER SIGNATURE PAGES TO AIX SECURITIES PURCHASE AGREEMENT]

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


Name of Purchaser: -------------------------------------------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER:---------------------------------
Name of Authorized Signatory:---------------------------------------------------
Title of Authorized Signatory:--------------------------------------------------
Email Address of Purchaser:-----------------------------------------------------

Address for Notice of Purchaser:




Address for Delivery of Securities for Purchaser (if not same as above):





Subscription Amount:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]




                                       31



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>3
<FILENAME>exh4-20_991561.txt
<DESCRIPTION>EXHIBIT 4.20 SUBSIDIARY GUARANTEE
<TEXT>
                                                                    EXHIBIT 4.20

                              SUBSIDIARY GUARANTEE

         SUBSIDIARY  GUARANTEE,  dated as of February ___, 2005, made by each of
the signatories  hereto  (together with any other entity that may become a party
hereto  as  provided  herein)  (the  "GUARANTORS"),  in  favor  of  the  holders
(collectively,  the "HOLDERS") of those certain 7% Convertible  Debentures,  due
February ___,  2005,  2009 (the  "DEBENTURES")  issued  pursuant to that certain
Securities  Purchase  Agreement  (the "PURCHASE  AGREEMENT"),  dated February 9,
2005, between Access Integrated Technologies,  Inc., a Delaware corporation (the
"COMPANY") and the original purchasers of Debentures (the "PURCHASERS").

         NOW,  THEREFORE,  in  consideration  of the  premises and to induce the
Purchasers  to  enter  into  the  Purchase   Agreement  and  to  carry  out  the
transactions contemplated thereby, each Guarantor hereby agrees with the Holders
as follows:

     1.  DEFINITIONS.  Unless  otherwise  defined  herein,  terms defined in the
Purchase  Agreement and used herein shall have the meanings given to them in the
Purchase  Agreement.  The words "hereof," "herein," "hereto" and "hereunder" and
words  of  similar  import  when  used in this  Guarantee  shall  refer  to this
Guarantee as a whole and not to any particular provision of this Guarantee,  and
Section  and  Schedule   references  are  to  this  Guarantee  unless  otherwise
specified.  The  meanings  given  to  terms  defined  herein  shall  be  equally
applicable  to both the singular and plural forms of such terms.  The  following
terms shall have the following meanings:

          "GUARANTEE"  means  this  Subsidiary  Guarantee,  as the  same  may be
     amended, supplemented or otherwise modified from time to time.

          "OBLIGATIONS" means all monetary obligations of the Company, under the
     Debentures, together with all reasonable attorneys' fees, disbursements and
     all other costs and expenses of collection incurred by Holders in enforcing
     any of such obligations and/or this Guarantee.

          "PERMITTED DEBT" means trade payables and  indebtedness  consisting of
     capitalized lease obligations and purchase money  indebtedness  incurred in
     connection  with  acquisition  of  capital  assets  and  obligations  under
     sale-leaseback  arrangements  with  respect  to newly  acquired  or  leased
     assets;  PROVIDED,  HOWEVER,  that in each  case such  obligations  are not
     secured by liens on any assets of the applicable  Guarantor and may only be
     secured by the assets so acquired or leased thereafter.

          "PERMITTED  LIEN" mean (a) Liens with  respect to the payment of taxes
     or  governmental  charges  in all cases  which are not yet due or which are
     subject to a good faith contest;  (b) any Liens incurred in connection with
     Permitted  Debt  provided  that such liens are not secured by assets of the
     applicable  Guarantor other than the assets so acquired or leased;  and (c)
     statutory  Liens of landlords or equipment  lessors against any property of
     the  applicable  Guarantor  in favor  of  suppliers,  mechanics,  carriers,
     materialmen, warehousemen or workmen.

     2. GUARANTEE.

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<PAGE>

          (a) GUARANTEE.

               (i) The Guarantors hereby, jointly and severally, unconditionally
          and  irrevocably,  guarantee  to  the  Holders  and  their  respective
          successors,   indorsees,  transferees  and  assigns,  the  prompt  and
          complete  payment and  performance by the Company when due (whether at
          the stated maturity, by acceleration or otherwise) of the Obligations.

               (ii) Anything herein or in any other Transaction  Document to the
          contrary  notwithstanding,  the maximum  liability  of each  Guarantor
          hereunder and under the other Transaction  Documents shall in no event
          exceed the amount  which can be  guaranteed  by such  Guarantor  under
          applicable  federal and state  laws,  including  laws  relating to the
          insolvency  of  debtors,  fraudulent  conveyance  or  transfer or laws
          affecting  the rights of creditors  generally  (after giving effect to
          the right of contribution established in Section 2(b)).

               (iii) Each Guarantor  agrees that the Obligations may at any time
          and from  time to time  exceed  the  amount of the  liability  of such
          Guarantor  hereunder without impairing the guarantee contained in this
          Section  2 or  affecting  the  rights  and  remedies  of  the  Holders
          hereunder.

               (iv) The  guarantee  contained  in this Section 2 shall remain in
          full force and effect until all the Obligations and the obligations of
          each Guarantor  under the guarantee  contained in this Section 2 shall
          have been satisfied by payment in full.

               (v) No payment made by the Company,  any of the  Guarantors,  any
          other  guarantor  or any other  Person or received or collected by the
          Holders from the Company,  any of the Guarantors,  any other guarantor
          or any  other  Person by virtue  of any  action or  proceeding  or any
          set-off or  appropriation  or  application at any time or from time to
          time in reduction of or in payment of the Obligations  shall be deemed
          to modify,  reduce,  release or otherwise  affect the liability of any
          Guarantor  hereunder  which  shall,  notwithstanding  any such payment
          (other  than any  payment  made by such  Guarantor  in  respect of the
          Obligations  or any payment  received or collected from such Guarantor
          in respect of the  Obligations),  remain liable for the Obligations up
          to the  maximum  liability  of  such  Guarantor  hereunder  until  the
          Obligations are paid in full.

               (vi) Notwithstanding  anything to the contrary in this Guarantee,
          with respect to any defaulted  non-monetary  Obligations  the specific
          performance  of which by the  Guarantors  is not  reasonably  possible
          (e.g.  the issuance of the Company's  Common  Stock),  the  Guarantors
          shall only be liable for making the Holders whole on a monetary  basis
          for the Company's  failure to perform such  Obligations  in accordance
          with the Transaction Documents.

          (b) RIGHT OF  CONTRIBUTION.  Each Guarantor  hereby agrees that to the
     extent that a Guarantor shall have paid more than its  proportionate  share
     of any payment made hereunder, such Guarantor shall be entitled to seek and
     receive  contribution from and against any other Guarantor  hereunder which
     has not paid its  proportionate  share of such  payment.  Each  Guarantor's
     right of  contribution  shall be  subject  to the terms and  conditions  of
     Section 2(c). The provisions of this Section 2(b) shall in no respect limit
     the obligations and liabilities of any

                                       2
<PAGE>

     Guarantor to the Holders,  and each  Guarantor  shall remain  liable to the
     Holders for the full amount guaranteed by such Guarantor hereunder.

          (c) NO SUBROGATION.  Notwithstanding any payment made by any Guarantor
     hereunder or any set-off or  application  of funds of any  Guarantor by the
     Holders,  no  Guarantor  shall be entitled to be  subrogated  to any of the
     rights of the Holders  against the  Company or any other  Guarantor  or any
     collateral security or guarantee or right of offset held by the Holders for
     the payment of the Obligations, nor shall any Guarantor seek or be entitled
     to seek any  contribution  or  reimbursement  from the Company or any other
     Guarantor in respect of payments made by such  Guarantor  hereunder,  until
     all  amounts  owing  to  the  Holders  by the  Company  on  account  of the
     Obligations  are paid in full. If any amount shall be paid to any Guarantor
     on  account  of  such  subrogation  rights  at  any  time  when  all of the
     Obligations  shall not have been paid in full, such amount shall be held by
     such  Guarantor  in trust for the Holders,  segregated  from other funds of
     such Guarantor,  and shall,  forthwith upon receipt by such  Guarantor,  be
     turned  over to the Holders in the exact form  received  by such  Guarantor
     (duly  indorsed by such  Guarantor  to the  Holders,  if  required),  to be
     applied  against the  Obligations,  whether  matured or unmatured,  in such
     order as the Holders may determine.

          (d) AMENDMENTS,  ETC. WITH RESPECT TO THE OBLIGATIONS.  Each Guarantor
     shall  remain  obligated  hereunder   notwithstanding   that,  without  any
     reservation  of rights  against  any  Guarantor  and  without  notice to or
     further  assent by any  Guarantor,  any  demand  for  payment of any of the
     Obligations  made by the Holders may be rescinded by the Holders and any of
     the Obligations  continued,  and the  Obligations,  or the liability of any
     other Person upon or for any part thereof,  or any  collateral  security or
     guarantee therefor or right of offset with respect thereto,  may, from time
     to time,  in whole or in part,  be renewed,  extended,  amended,  modified,
     accelerated,  compromised,  waived, surrendered or released by the Holders,
     and the Purchase  Agreement  and the other  Transaction  Documents  and any
     other  documents  executed and  delivered in  connection  therewith  may be
     amended, modified,  supplemented or terminated, in whole or in part, as the
     Holders may deem advisable from time to time, and any collateral  security,
     guarantee  or  right of  offset  at any time  held by the  Holders  for the
     payment of the Obligations may be sold, exchanged,  waived,  surrendered or
     released. The Holders shall have no obligation to protect,  secure, perfect
     or insure any Lien at any time held by them as security for the Obligations
     or for the  guarantee  contained in this Section 2 or any property  subject
     thereto.

          (e) GUARANTEE  ABSOLUTE AND  UNCONDITIONAL.  Each Guarantor waives any
     and all notice of the creation, renewal, extension or accrual of any of the
     Obligations  and notice of or proof of  reliance  by the  Holders  upon the
     guarantee  contained  in this  Section  2 or  acceptance  of the  guarantee
     contained  in this  Section  2; the  Obligations,  and any of  them,  shall
     conclusively  be deemed to have been created,  contracted  or incurred,  or
     renewed,  extended,  amended  or waived,  in  reliance  upon the  guarantee
     contained in this  Section 2; and all dealings  between the Company and any
     of the  Guarantors,  on the one hand,  and the Holders,  on the other hand,
     likewise shall be conclusively  presumed to have been had or consummated in
     reliance  upon the  guarantee  contained in this Section 2. Each  Guarantor
     waives to the extent  permitted  by law  diligence,  presentment,  protest,
     demand for  payment  and notice of  default  or  nonpayment  to or upon the
     Company or any of the  Guarantors  with  respect to the  Obligations.  Each
     Guarantor  understands  and agrees  that the  guarantee  contained  in this
     Section 2 shall be construed as a  continuing,  absolute and  unconditional
     guarantee of payment without regard to (a) any other collateral

                                       3
<PAGE>

     security  therefor or guarantee or right of offset with respect  thereto at
     any time or from time to time held by the Holders, (b) any defense, set-off
     or counterclaim (other than a defense of payment or performance or fraud or
     misconduct by Holders) which may at any time be available to or be asserted
     by the Company or any other Person  against the  Holders,  or (c) any other
     circumstance  whatsoever  (with or without  notice to or  knowledge  of the
     Company or such  Guarantor)  which  constitutes,  or might be  construed to
     constitute,  an  equitable  or  legal  discharge  of the  Company  for  the
     Obligations in bankruptcy or in any other  instance,  with the exception of
     judicial  discharge of any  Guarantor by a bankruptcy  or other  federal or
     state  court to which the parties  have  submitted  themselves  pursuant to
     Section 5(k)(i). When making any demand hereunder or otherwise pursuing its
     rights and remedies  hereunder against any Guarantor,  the Holders may, but
     shall be under no  obligation  to,  make a similar  demand on or  otherwise
     pursue such rights and remedies as they may have  against the Company,  any
     other  Guarantor or any other Person or against any collateral  security or
     guarantee for the Obligations or any right of offset with respect  thereto,
     and any  failure by the  Holders to make any such  demand,  to pursue  such
     other rights or remedies or to collect any payments  from the Company,  any
     other  Guarantor or any other Person or to realize upon any such collateral
     security  or  guarantee  or to  exercise  any such right of offset,  or any
     release of the Company, any other Guarantor or any other Person or any such
     collateral  security,  guarantee or right of offset,  shall not relieve any
     Guarantor of any obligation or liability hereunder, and shall not impair or
     affect the rights and remedies,  whether express, implied or available as a
     matter of law,  of the  Holders  against any  Guarantor.  For the  purposes
     hereof,  "demand"  shall include the  commencement  and  continuance of any
     legal proceedings.

          (f)  REINSTATEMENT.  The  guarantee  contained in this Section 2 shall
     continue to be effective,  or be reinstated,  as the case may be, if at any
     time payment,  or any part thereof,  of any of the Obligations is rescinded
     or  must  otherwise  be  restored  or  returned  by the  Holders  upon  the
     insolvency, bankruptcy,  dissolution,  liquidation or reorganization of the
     Company or any  Guarantor,  or upon or as a result of the  appointment of a
     receiver,  intervenor or conservator of, or trustee or similar officer for,
     the Company or any Guarantor or any  substantial  part of its property,  or
     otherwise, all as though such payments had not been made.

          (g) PAYMENTS. Each Guarantor hereby guarantees that payments hereunder
     will be paid to the Holders without set-off or counterclaim in U.S. dollars
     at the address set forth or referred to in the Purchase Agreement.

     3.  REPRESENTATIONS  AND  WARRANTIES.   Each  Guarantor  hereby  makes  the
following representations and warranties to Holders as of the date hereof:

          (a)  ORGANIZATION AND  QUALIFICATION.  The Guarantor is a corporation,
     duly incorporated,  validly existing and in good standing under the laws of
     the  applicable  jurisdiction  set forth on Schedule 1, with the  requisite
     corporate  power and authority to own and use its properties and assets and
     to carry on its  business as  currently  conducted.  The  Guarantor  has no
     subsidiaries  other  than  those  identified  as  such  on  the  Disclosure
     Schedules to the Purchase Agreement.  The Guarantor is duly qualified to do
     business  and  is  in  good  standing  as a  foreign  corporation  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, (x) adversely

                                       4
<PAGE>

     affect the legality, validity or enforceability of any of this Guarantee in
     any material respect,  (y) have a material adverse effect on the results of
     operations,  assets,  prospects, or financial condition of the Guarantor or
     (z) adversely  impair in any material  respect the  Guarantor's  ability to
     perform  fully on a timely basis its  obligations  under this  Guarantee (a
     "MATERIAL ADVERSE EFFECT").

          (b)  AUTHORIZATION;  ENFORCEMENT.  The  Guarantor  has  the  requisite
     corporate  power  and  authority  to  enter  into  and  to  consummate  the
     transactions contemplated by this Guarantee, and otherwise to carry out its
     obligations hereunder.  The execution and delivery of this Guarantee by the
     Guarantor  and  the  consummation  by it of the  transactions  contemplated
     hereby have been duly authorized by all requisite  corporate  action on the
     part of the Guarantor.  This Guarantee has been duly executed and delivered
     by the Guarantor and  constitutes  the valid and binding  obligation of the
     Guarantor  enforceable  against the Guarantor in accordance with its terms,
     except as such  enforceability  may be  limited by  applicable  bankruptcy,
     insolvency,   reorganization,   moratorium,  liquidation  or  similar  laws
     relating to, or affecting  generally the enforcement of,  creditors' rights
     and remedies or by other equitable principles of general application.

          (c) NO CONFLICTS.  The  execution,  delivery and  performance  of this
     Guarantee by the  Guarantor  and the  consummation  by the Guarantor of the
     transactions  contemplated thereby do not and will not (i) conflict with or
     violate any provision of its  Certificate  of  Incorporation  or By-laws or
     (ii) conflict with,  constitute a default (or an event which 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  of, any
     agreement,  indenture or instrument  to which the Guarantor is a party,  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  Guarantor is subject  (including  Federal and state
     securities  laws and  regulations),  or by which any  material  property or
     asset of the Guarantor is bound or affected,  except in the case of each of
     clauses (ii) and (iii), such conflicts, defaults, terminations, amendments,
     accelerations,  cancellations and violations as could not,  individually or
     in the aggregate, have or result in a Material Adverse Effect. The business
     of the Guarantor is not being conducted in violation of any law,  ordinance
     or regulation of any governmental  authority,  except for violations which,
     individually or in the aggregate, do not have a Material Adverse Effect.

          (d) CONSENTS AND  APPROVALS.  The  Guarantor is not required to obtain
     any  consent,  waiver,  authorization  or order of,  or make any  filing or
     registration  with, any court or other federal,  state,  local,  foreign or
     other  governmental  authority  or  other  person  in  connection  with the
     execution, delivery and performance by the Guarantor of this Guarantee. (e)
     PURCHASE  AGREEMENT.  The representations and warranties of the Company set
     forth in the Purchase  Agreement as they relate to such Guarantor,  each of
     which is hereby incorporated  herein by reference,  are true and correct as
     of each time such  representations  are deemed to be made  pursuant to such
     Purchase  Agreement,  and the Holders  shall be entitled to rely on each of
     them as if they were fully set forth herein,  provided, that each reference
     in each such  representation and warranty to the Company's knowledge shall,
     for the  purposes of this  Section 3, be deemed to be a  reference  to such
     Guarantor's knowledge.

     4. COVENANTS.

                                       5
<PAGE>

          (a) Each  Guarantor  covenants and agrees with the Holders that,  from
     and after the date of this Guarantee until the Obligations  shall have been
     paid in full, such Guarantor shall take,  and/or shall refrain from taking,
     as the case may be, each  commercially  reasonable action that is necessary
     to be taken or not  taken,  as the case may be, so that no Event of Default
     (as defined in the Debentures) is caused by the failure to take such action
     or to refrain from taking such action by such Guarantor.

          (b) So long as any of the Obligations are outstanding,  each Guarantor
     will not directly or indirectly on or after the date of this Guarantee:

               (i) except for (A) Permitted Debt and (B) $1,700,000 of unsecured
          indebtedness  for  borrowed  money on the  property  and  assts of ADM
          Cinema  Corporation  ("ADM") to be  incurred  in  connection  with the
          acquisition of certain of the assets of Prichard  Square  Cinema,  LLC
          d/b/a Pavilion Theatre,  a New York limited liability  company,  enter
          into,  create,  incur,  assume or suffer to exist any indebtedness for
          borrowed money of any kind, including but not limited to, a guarantee,
          on or with  respect  to any of its  property  or  assets  now owned or
          hereafter  acquired or any  interest  therein or any income or profits
          therefrom that is senior to, or pari passu with, in any respect,  such
          Guarantor's obligations hereunder;

               (ii)  except for  Permitted  Liens,  enter into,  create,  incur,
          assume or suffer to exist any liens of any kind, on or with respect to
          any of its property or assets now owned or  hereafter  acquired or any
          interest therein or any income or profits therefrom that is senior to,
          in any respect, such Guarantor's obligations hereunder;

               (iii) amend its  certificate  of  incorporation,  bylaws or other
          charter  documents so as to adversely  affect any rights of the Holder
          hereunder;

               (iv) repay, repurchase or offer to repay, repurchase or otherwise
          acquire more than a de minimis number of shares of its Common Stock or
          other equity securities; or

               (v)  enter  into  any  agreement  with  respect  to  any  of  the
          foregoing.

     5. MISCELLANEOUS.

          (a)  AMENDMENTS  IN WRITING.  None of the terms or  provisions of this
     Guarantee may be waived, amended, supplemented or otherwise modified except
     in writing by the Holders.

          (b) NOTICES. All notices,  requests and demands to or upon the Holders
     or any Guarantor  hereunder shall be effected in the manner provided for in
     the Purchase Agreement; PROVIDED that any such notice, request or demand to
     or upon any  Guarantor  shall be addressed to such  Guarantor at its notice
     address set forth on SCHEDULE 5(B).

          (c) NO WAIVER BY COURSE OF CONDUCT;  CUMULATIVE REMEDIES.  The Holders
     shall not by any act  (except by a written  instrument  pursuant to Section
     5(a)),  delay,  indulgence,  omission or otherwise be deemed to have waived
     any right or remedy  hereunder or to have  acquiesced  in any default under
     the Transaction Documents or Event of Default. No failure to

                                       6
<PAGE>

     exercise,  nor any delay in  exercising,  on the part of the  Holders,  any
     right, power or privilege  hereunder shall operate as a waiver thereof.  No
     single or partial exercise of any right, power or privilege hereunder shall
     preclude any other or further exercise thereof or the exercise of any other
     right,  power or privilege.  A waiver by the Holders of any right or remedy
     hereunder on any one occasion  shall not be construed as a bar to any right
     or remedy which the Holders would  otherwise  have on any future  occasion.
     The rights and remedies herein  provided are  cumulative,  may be exercised
     singly  or  concurrently  and are not  exclusive  of any  other  rights  or
     remedies provided by law.

          (d) ENFORCEMENT EXPENSES; INDEMNIFICATION.

               (i) Each  Guarantor  agrees to pay, or reimburse the Holders for,
          all its  costs  and  expenses  incurred  in  collecting  against  such
          Guarantor  under the  guarantee  contained  in Section 2 or  otherwise
          enforcing or preserving  any rights under this Guarantee and the other
          Transaction  Documents to which such Guarantor is a party,  including,
          without  limitation,  the reasonable fees and disbursements of counsel
          to the Holders.

               (ii)  Each  Guarantor  agrees  to pay,  and to save  the  Holders
          harmless from, any and all  liabilities  with respect to, or resulting
          from any delay in paying,  any and all stamp,  excise,  sales or other
          taxes which may be payable or  determined  to be payable in connection
          with any of the transactions contemplated by this Guarantee.

               (iii)  Each  Guarantor  agrees  to pay,  and to save the  Holders
          harmless from, any and all liabilities,  obligations, losses, damages,
          penalties, actions, judgments, suits, costs, expenses or disbursements
          of any  kind or  nature  whatsoever  with  respect  to the  execution,
          delivery,   enforcement,   performance  and   administration  of  this
          Guarantee  to the  extent  the  Company  would  be  required  to do so
          pursuant to the Purchase Agreement.

               (iv) The  agreements in this Section  shall survive  repayment of
          the Obligations.

          (e) SUCCESSOR AND ASSIGNS.  This  Guarantee  shall be binding upon the
     successors  and assigns of each Guarantor and shall inure to the benefit of
     the Holders and their respective  successors and assigns;  provided that no
     Guarantor may assign, transfer or delegate any of its rights or obligations
     under this Guarantee without the prior written consent of the Holders.

          (f) COUNTERPARTS. This Guarantee may be executed by one or more of the
     parties to this Guarantee on any number of separate counterparts (including
     by telecopy),  and all of said counterparts  taken together shall be deemed
     to constitute one and the same instrument.

          (g) SEVERABILITY.  Any provision of this Guarantee which is prohibited
     or  unenforceable in any jurisdiction  shall, as to such  jurisdiction,  be
     ineffective to the extent of such prohibition or  unenforceability  without
     invalidating the remaining  provisions  hereof, and any such prohibition or
     unenforceability  in  any  jurisdiction  shall  not  invalidate  or  render
     unenforceable such provision in any other jurisdiction.

                                       7
<PAGE>

          (h) SECTION HEADINGS.  The Section headings used in this Guarantee are
     for  convenience of reference  only and are not to affect the  construction
     hereof or be taken into consideration in the interpretation hereof.

          (i)  INTEGRATION.  This  Guarantee  represents  the  agreement  of the
     Guarantors  and the Holders with respect to the subject  matter  hereof and
     thereof,  and  there  are no  promises,  undertakings,  representations  or
     warranties by the Holders relative to subject matter hereof and thereof not
     expressly  set forth or  referred  to  herein  or in the other  Transaction
     Documents.

          (j) GOVERNING LAW. THIS GUARANTEE  SHALL BE GOVERNED BY, AND CONSTRUED
     AND  INTERPRETED  IN  ACCORDANCE  WITH,  THE LAW OF THE  STATE  OF NEW YORK
     WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS.

          (k)  SUBMISSION  TO  JURISDICTIONAL;  WAIVER.  Each  Guarantor  hereby
     irrevocably and unconditionally:

               (i)  submits for itself and its  property in any legal  action or
          proceeding  relating  to  this  Guarantee  and the  other  Transaction
          Documents to which it is a party,  or for  recognition and enforcement
          of any  judgment  in respect  thereof,  to the  non-exclusive  general
          jurisdiction  of the  Courts of the State of New York,  located in New
          York County,  New York, the courts of the United States of America for
          the  Southern  District  of New York,  and  appellate  courts from any
          thereof;

               (ii) consents  that any such action or proceeding  may be brought
          in such courts and waives any  objection  that it may now or hereafter
          have to the venue of any such action or  proceeding  in any such court
          or that such action or proceeding was brought in an inconvenient court
          and agrees not to plead or claim the same;

               (iii)  agrees  that  service  of  process  in any such  action or
          proceeding  may be effected by mailing a copy thereof by registered or
          certified mail (or any  substantially  similar form of mail),  postage
          prepaid,  to such Guarantor at its address referred to in the Purchase
          Agreement  or at such other  address of which the  Holders  shall have
          been notified pursuant thereto;

               (iv) agrees that nothing  herein shall affect the right to effect
          service of process in any other manner permitted by law or shall limit
          the right to sue in any other jurisdiction; and

               (v) waives,  to the maximum  extent not  prohibited  by law,  any
          right  it may  have  to  claim  or  recover  in any  legal  action  or
          proceeding  referred  to  in  this  Section  any  special,  exemplary,
          punitive or consequential damages.

          (l) ACKNOWLEDGEMENTS. Each Guarantor hereby acknowledges that:

               (i) it has been advised by counsel in the negotiation,  execution
          and delivery of this Guarantee and the other Transaction  Documents to
          which it is a party;

                                       8
<PAGE>

               (ii) the Holders have no fiduciary  relationship  with or duty to
          any Guarantor  arising out of or in connection  with this Guarantee or
          any of the other Transaction  Documents,  and the relationship between
          the Guarantors,  on the one hand, and the Holders,  on the other hand,
          in  connection  herewith  or  therewith  is solely  that of debtor and
          creditor; and

               (iii)  no  joint  venture  is  created  hereby  or by  the  other
          Transaction   Documents   or   otherwise   exists  by  virtue  of  the
          transactions contemplated hereby among the Guarantors and the Holders.

          (m) [Reserved].

          (n) RELEASE OF GUARANTORS. Subject to Section 2.6, each Guarantor will
     be released from all liability hereunder concurrently with the repayment in
     full of all amounts owed under the Purchase  Agreement,  the Debentures and
     the other Transaction Documents.

          (o)  SENIORITY.  Subject  to the other  terms and  conditions  of this
     Guarantee,  the Obligations of each of the Guarantors hereunder rank senior
     in priority to any other  unsecured Debt (as defined in the  Debentures) of
     such Guarantor.

          (p) WAIVER OF JURY TRIAL.  EACH  GUARANTOR  AND, BY  ACCEPTANCE OF THE
     BENEFITS HEREOF,  THE PURCHASERS,  HEREBY  IRREVOCABLY AND  UNCONDITIONALLY
     WAIVE  TRIAL BY JURY IN ANY LEGAL  ACTION OR  PROCEEDING  RELATING  TO THIS
     GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

                               *****************

                                       9
<PAGE>

     IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be
duly executed and delivered as of the date first above written.

     [SUBSIDIARY]

     By:_________________________________
         Name:
         Title:

                                       10
<PAGE>

                                   SCHEDULE 1

                                   GUARANTORS

     The  following  are  the  names,   notice  addresses  and  jurisdiction  of
organization of each Guarantor.

                                                               COMPANY
                                   JURISDICTION OF             OWNED BY
                                   INCORPORATION               PERCENTAGE
                                   -----------------           -----------------

------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>4
<FILENAME>exha_991612.txt
<DESCRIPTION>EXHIBIT 4.21
<TEXT>
                                                                    EXHIBIT 4.21

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE  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 APPLICABLE  STATE  SECURITIES  LAWS,  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 AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE  TRANSFEROR  TO SUCH EFFECT,  THE  SUBSTANCE OF WHICH SHALL BE
REASONABLY  ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON  CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

THIS  DEBENTURE IS  SUBORDINATED  TO THE PAYMENT IN  LIQUIDATION  OF SENIOR DEBT
(HEREINAFTER DEFINED) TO THE EXTENT SET FORTH HEREIN.

ORIGINAL ISSUE DATE:  FEBRUARY ___, 2005
ORIGINAL CONVERSION PRICE (SUBJECT TO ADJUSTMENT HEREIN): $4.07

                                                                $_______________


                            7% CONVERTIBLE DEBENTURE
                             DUE FEBRUARY ___, 2009

     THIS  DEBENTURE  is one of a  series  of  duly  authorized  and  issued  7%
Convertible  Debentures  of Access  Integrated  Technologies,  Inc.,  a Delaware
corporation,  having a principal place of business at 55 Madison  Avenue,  Suite
300,  Morristown,  New  Jersey  07960  (the  "COMPANY"),  designated  as  its 7%
Convertible Debenture, due February ___, 2009 (the "DEBENTURE(S)").

     FOR VALUE RECEIVED, the Company promises to pay to ________________________
or its  registered  assigns (the  "HOLDER"),  or shall have paid pursuant to the
terms hereunder, the principal sum of $_______________ by February __, 2009 , or
such  earlier date as the  Debentures  are required or permitted to be repaid as
provided  hereunder (the "MATURITY DATE"),  and to pay interest to the Holder on
the  aggregate  unconverted  and  then  outstanding  principal  amount  of  this
Debenture in accordance  with the provisions  hereof.  This  Debenture  shall be
subordinate  and junior in right of payment in  liquidation to the Company's two
outstanding secured promissory notes, each in the principal amount of $1,500,000


                                       1
<PAGE>

and each dated  November  14,  2003  (collectively,  the  "SENIOR  Debt").  This
Debenture is subject to the following additional provisions:

     SECTION 1.  DEFINITIONS.  For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement,  and (b)
the following terms shall have the following meanings:

          "ACQUISITION  REDEMPTION"  shall have the meaning set forth in Section
     6(c).

          "ACQUISITION  REDEMPTION AMOUNT" shall mean the sum of (i) 115% of the
     principal amount of the Debenture to be redeemed pursuant to an Acquisition
     Redemption,  (ii) accrued but unpaid  interest on such amount and (iii) all
     liquidated  damages and other  amounts due in respect of the  Debenture  on
     such amount.

          "ACQUISITION  REDEMPTION  NOTICE"  shall have the meaning set forth in
     Section 6(c).

          "ACQUISITION  REDEMPTION NOTICE DATE" shall have the meaning set forth
     in Section 6(c).

          "ACQUISITION  REDEMPTION WARRANTS" means warrants to purchase a number
     of shares  of  Common  Stock  equal to 50% of the  shares  of Common  Stock
     issuable  upon  the  conversion  of  all  of the  principal  amount  of the
     Debenture then subject to an Acquisition Redemption,  exercisable beginning
     immediately  following the date of issuance thereof, with an exercise price
     equal to the average of the five  consecutive  Closing  Prices  immediately
     preceding the  Acquisition  Redemption Date and a term of exercise equal to
     five years from such initial  exercise  date,  otherwise in the form of the
     Warrants.

          "ALTERNATE  CONSIDERATION" shall have the meaning set forth in Section
     5(d).

          "BASE  CONVERSION  PRICE"  shall have the meaning set forth in Section
     5(b).

          "BUSINESS DAY" means any day except Saturday, Sunday and any day which
     shall be a federal  legal  holiday in the  United  States or a day on which
     banking  institutions in the State of New York or New Jersey are authorized
     or required by law or other government action to close.

          "BUY-IN" shall have the meaning set forth in Section 4(d)(v).

          "CHANGE OF CONTROL  TRANSACTION"  means the occurrence  after the date
     hereof of any of (i) an acquisition  after the date hereof by an individual
     or legal entity or "group" (as  described in Rule  13d-5(b)(1)  promulgated
     under the Exchange  Act) of effective  control  (whether  through  legal or
     beneficial  ownership  of capital  stock of the  Company,  by  contract  or
     otherwise) of in excess of 40% of the voting power of the Company,  or (ii)
     the  Company  merges into or  consolidates  with any other  Person,  or any
     Person  merges into or  consolidates  with the Company  and,  after  giving
     effect to such  transaction,  the  stockholders of the Company  immediately
     prior to such  transaction own less than 60% of the aggregate  voting power


                                       2
<PAGE>

     of the  Company or the  successor  entity of such  transaction,  or (iii) a
     replacement at one time or within a three year period of more than one-half
     of the members of the Company's board of directors which is not approved by
     a majority of those  individuals  who are members of the board of directors
     on the date hereof (or by those  individuals  who are serving as members of
     the  board  of  directors  on any date  whose  nomination  to the  board of
     directors  was  approved  by a  majority  of the  members  of the  board of
     directors who are members on the date hereof), or (iv) the execution by the
     Company of an  agreement  to which the Company is a party or by which it is
     bound, providing for any of the events set forth above in (i) or (iv).

          "COMMON  STOCK" means the Class A Common  Stock,  par value $0.001 per
     share, of the Company and stock of any other class of securities into which
     such securities may hereafter have been reclassified or changed into.

          "CONVERSION DATE" shall have the meaning set forth in Section 4(a).

          "CONVERSION PRICE" shall have the meaning set forth in Section 4(b).

          "CONVERSION  SHARES"  means the shares of Common Stock  issuable  upon
     conversion of  Debentures or as payment of interest in accordance  with the
     terms hereof.

          "DEBENTURE REGISTER" shall have the meaning set forth in Section 2(c).

          "DILUTIVE ISSUANCE" shall have the meaning set forth in Section 5(b).

          "DILUTIVE ISSUANCE NOTICE" shall have the meaning set forth in Section
     5(b).

          "EFFECTIVENESS  PERIOD"  shall have the meaning  given to such term in
     the Registration Rights Agreement.

          "EQUITY CONDITIONS" shall mean, during the period in question, (i) the
     Company shall have duly honored all conversions  and redemptions  occurring
     by virtue of one or more Notice of Conversions, if any, (ii) all liquidated
     damages and other  amounts  owing in respect of the  Debentures  shall have
     been paid; (iii) there is an effective  Registration  Statement pursuant to
     which the Holder is  permitted  to utilize  the  prospectus  thereunder  to
     resell all of the shares  issuable  pursuant to the  Transaction  Documents
     (and the Company  believes,  in good faith,  that such  effectiveness  will


                                       3
<PAGE>

     continue  uninterrupted for the foreseeable  future), or the Holder is able
     to sell all of the shares issuable  pursuant to the outstanding  Securities
     held by it pursuant  to Rule  144(k)  under the  Securities  Act,  (iv) the
     Common  Stock  is  trading  on the  Trading  Market  and all of the  shares
     issuable pursuant to the Transaction  Documents are listed for trading on a
     Trading Market (and the Company  believes,  in good faith,  that trading of
     the Common Stock on a Trading  Market will continue  uninterrupted  for the
     foreseeable  future),  (v) there is a sufficient  number of authorized  but
     unissued and otherwise  unreserved  shares of Common Stock for the issuance
     of all of the shares issuable pursuant to the Transaction  Documents,  (vi)
     there is then existing no Event of Default or event which, with the passage
     of time or the  giving of notice,  would  constitute  an Event of  Default,
     (vii) the issuance of all of the shares issued or issuable  pursuant to the
     Transaction  Documents  would  not  violate  the  limitations  set forth in
     Sections  4(c)(i)  and  4(c)(ii)  and (viii)  other than with  respect to a
     transaction  which  is  the  subject  or  trigger  of  the  exercise  of an
     Acquisition  Redemption,  no public  announcement  of a pending or proposed
     Fundamental  Transaction,  Change of  Control  Transaction  or  acquisition
     transaction has occurred that has not been consummated.

          "EVENT OF DEFAULT" shall have the meaning set forth in Section 8.

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

          "FUNDAMENTAL  TRANSACTION" shall have the meaning set forth in Section
     5(d).

          "FORCED CONVERSION NOTICE" shall have the meaning set forth in Section
     6(e).

          "FORCED  CONVERSION  NOTICE  DATE" shall have the meaning set forth in
     Section 6(e).

          "INTEREST  CONVERSION  RATE"  means  93% of the  average  of the  five
     Closing Prices immediately prior to the applicable Interest Payment Date.

          "INTEREST  PAYMENT  DATE"  shall have the meaning set forth in Section
     2(a).

          "LATE FEES" shall have the meaning set forth in Section 2(d).

          "MANDATORY  PREPAYMENT  AMOUNT" for any Debentures shall equal the sum
     of (i) the greater of: (A) 130% of the principal amount of Debentures to be
     prepaid, plus all accrued and unpaid interest thereon (provided that if the
     applicable  Event of  Default  is solely  the result of a Change of Control
     Transaction,  such amount shall equal 100% of the principal  amount subject
     to  acceleration,  plus all  accrued  and unpaid  interest  thereon and all
     interest that otherwise would have accrued and been paid had this Debenture
     been  outstanding  until the Maturity Date), or (B) other than with respect
     to an Event of  Default  that is solely  the  result of a Change of Control
     Transaction,  the principal  amount of  Debentures to be prepaid,  plus all
     other accrued and unpaid interest  hereon,  divided by the Conversion Price
     on (x) the date the  Mandatory  Prepayment  Amount is demanded or otherwise
     due or (y) the  date  the  Mandatory  Prepayment  Amount  is paid in  full,
     whichever  is less,  multiplied  by the  Closing  Price on (x) the date the
     Mandatory  Prepayment  Amount is demanded or otherwise  due or (y) the date
     the Mandatory  Prepayment Amount is paid in full, whichever is greater, and
     (ii) all other  amounts,  costs,  expenses  and  liquidated  damages due in
     respect of such Debentures.

          "MONTHLY  REDEMPTION"  shall  mean  the  redemption  of the  Debenture
     pursuant to Section 6(b) hereof.

                                       4
<PAGE>

          "MONTHLY REDEMPTION AMOUNT" shall mean, as to a Monthly Redemption, an
     amount  equal  to one  third  of the  principal  amount  of this  Debenture
     outstanding  on the 1st Business Day of the 36th complete  month  following
     the Original Issue Date divided by 12, or such lesser amount as may then be
     outstanding.

          "MONTHLY  REDEMPTION  DATE" means the 1st  Business Day of each month,
     commencing on the 37th complete month following the Original Issue Date and
     ending 12 months thereafter.

          "NEW YORK COURTS" shall have the meaning set forth in Section 9(d).

          "NOTICE OF  CONVERSION"  shall have the  meaning  set forth in Section
     4(a).

          "OPTIONAL  REDEMPTION"  shall  have the  meaning  set forth in Section
     6(a).

          "OPTIONAL  REDEMPTION  AMOUNT"  shall  mean the sum of (i) 110% of the
     principal  amount of the  Debenture to be redeemed  pursuant to an Optional
     Redemption,  (ii) accrued but unpaid  interest on such amount and (iii) all
     liquidated  damages and other  amounts due in respect of the  Debenture  on
     such amount.

          "OPTIONAL  REDEMPTION  NOTICE"  shall  have the  meaning  set forth in
     Section 6(a).

          "OPTIONAL  REDEMPTION NOTICE DATE" shall have the meaning set forth in
     Section 6(a).

          "ORIGINAL ISSUE DATE" shall mean the date of the first issuance of the
     Debentures  regardless  of the number of  transfers  of any  Debenture  and
     regardless  of the number of  instruments  which may be issued to  evidence
     such Debenture.

          "PERMITTED DEBT" means trade payables and  indebtedness  consisting of
     capitalized lease obligations and purchase money  indebtedness  incurred in
     connection  with  acquisition  of  capital  assets  and  obligations  under
     sale-leaseback  arrangements  with  respect  to newly  acquired  or  leased
     assets;  PROVIDED,  HOWEVER,  that in each  case such  obligations  are not
     secured by liens on any assets of the Company or its Subsidiaries  existing
     as of the date of the  Purchase  Agreement  and may only be  secured by the
     assets so acquired or leased thereafter.

          "PERMITTED  LIEN" mean (a) Liens with  respect to the payment of taxes
     or  governmental  charges  in all cases  which are not yet due or which are
     subject to a good faith contest;  (b) any Liens incurred in connection with
     Permitted  Debt  provided  that such liens are not secured by assets of the
     Company or its  Subsidiaries  other than the assets so  acquired or leased;
     and (c)  statutory  Liens of  landlords or  equipment  lessors  against any
     property of the Company or its Subsidiaries  existing as of the date of the
     Purchase Agreement in favor of suppliers, mechanics, carriers, materialmen,
     warehousemen or workmen.

                                       5
<PAGE>

          "PERSON"  means  a  corporation,   an   association,   a  partnership,
     organization,   a  business,  an  individual,  a  government  or  political
     subdivision thereof or a governmental agency.

          "PRIME RATE" means the rate of interest publicly announced by The Bank
     of New York,  New York, as its prime rate, on the Business Day  immediately
     preceding the date that the Late Fee shall begin to accrue.

          "PURCHASE AGREEMENT" means the Securities Purchase Agreement, dated as
     of  February  9, 2005 to which the  Company  and the  original  Holder  are
     parties,  as  amended,  modified  or  supplemented  from  time  to  time in
     accordance with its terms.

          "REDEMPTION WARRANTS" means warrants to purchase a number of shares of
     Common Stock equal to 35% of the shares of Common Stock  issuable  upon the
     conversion of all of the principal  amount of the Debenture then subject to
     an Optional Redemption,  exercisable  beginning  immediately  following the
     date of issuance  thereof,  with an exercise  price equal to the average of
     the five  consecutive  Closing  Prices  immediately  preceding the Optional
     Redemption  Date and a term of  exercise  equal  to five  years  from  such
     initial exercise date, otherwise in the form of the Warrants.

          "REGISTRATION   RIGHTS   AGREEMENT"  means  the  Registration   Rights
     Agreement,  dated as of the date of the  Purchase  Agreement,  to which the
     Company  and the  original  Holder are  parties,  as  amended,  modified or
     supplemented from time to time in accordance with its terms.

          "REGISTRATION  STATEMENT" means a registration  statement  meeting the
     requirements set forth in the Registration Rights Agreement, covering among
     other things the resale of the Conversion Shares and naming the Holder as a
     "selling stockholder" thereunder.

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

          "SHAREHOLDER  APPROVAL"  shall have the meaning  given to such term in
     the Purchase Agreement.

          "SUBSIDIARY" shall have the meaning given to such term in the Purchase
     Agreement.

          "THRESHOLD  PERIOD"  shall  have the  meaning  given  to such  term in
     Section 6(e).

          "TRADING  DAY"  means a day on which the  Common  Stock is traded on a
     Trading Market.

          "TRADING  MARKET"  means the primary one of the  following  markets or
     exchanges  on which the Common Stock is listed or quoted for trading on the
     date in question:  the Nasdaq SmallCap Market, the American Stock Exchange,
     the New York Stock Exchange or the Nasdaq National Market.

                                       6
<PAGE>

          "TRANSACTION  DOCUMENTS"  shall  have  the  meaning  set  forth in the
     Purchase Agreement.

          "VWAP" means,  for any date, the price  determined by the first of the
     following  clauses that applies:  (a) if the Common Stock is then listed or
     quoted on a Trading Market,  the daily volume weighted average price of the
     Common Stock for such date (or the nearest  preceding  date) on the Trading
     Market on which the Common  Stock is then  listed or quoted as  reported by
     Bloomberg  Financial  L.P.  (based on a Trading Day from 9:30 a.m.  Eastern
     Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed
     or quoted on a Trading  Market and if prices for the Common  Stock are then
     quoted on the OTC Bulletin Board,  the volume weighted average price of the
     Common  Stock  for such  date (or the  nearest  preceding  date) on the OTC
     Bulletin Board; (c) if the Common Stock is not then listed or quoted on the
     OTC Bulletin  Board and if prices for the Common Stock are then reported in
     the  "Pink  Sheets"  published  by  the  Pink  Sheets,  LLC  (or a  similar
     organization  or agency  succeeding to its functions of reporting  prices),
     the most recent bid price per share of the Common Stock so reported; or (c)
     in all other  cases,  the fair market  value of a share of Common  Stock as
     determined  by an  independent  appraiser  selected  in good  faith  by the
     holders of the Debentures and reasonably acceptable to the Company.

     SECTION 2. INTEREST.

             a) PAYMENT  OF  INTEREST  IN CASH OR KIND.  The  Company  shall pay
interest  to the  Holder  on the  aggregate  unconverted  and  then  outstanding
principal amount of this Debenture at the rate of 7% per annum,  payable monthly
on the first Business Day of each month,  beginning on the first such date after
the  Original  Issue  Date,  as  well  as on each  Conversion  Date  (as to that
principal amount then being converted),  each Forced Conversion Date (as to that
principal  amount then being forced to convert),  each Optional  Redemption Date
(as to that principal  amount being  redeemed) and each  Acquisition  Redemption
Date, if any or all of such shall occur,  and on the Maturity Date (except that,
if any such date is not a Business  Day,  then such payment  shall be due on the
next succeeding  Business Day and in each such case,  through and including such
Trading Day) (each such date, an "INTEREST  PAYMENT  DATE"),  in (x) cash or (y)
shares of Common Stock (all, not in part as to any Interest  Payment Date) in an
amount  equal to the total  amount of  interest  then  payable,  divided  by the
Interest Conversion Rate; PROVIDED,  HOWEVER,  payment in shares of Common Stock
may only  occur if (i)  during  the 20  Trading  Days  immediately  prior to the
applicable  Interest  Payment Date all of the Equity  Conditions  have been met,
(ii) the  Company  shall  have given the Holder  notice in  accordance  with the
notice  requirements  set forth  below  and (iii)  during  the 10  Trading  Days
immediately prior to the applicable Interest Payment Date the value of shares of
Common  Stock  traded on the Trading  Market for each such day exceeds  $15,000,


                                       7
<PAGE>

which value shall be calculated by  multiplying  the trading volume (as reported
by Bloomberg  Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time
to 4:02 p.m. Eastern Time)) on such day by the VWAP on such day.

             b) COMPANY'S ELECTION TO PAY INTEREST IN KIND. Subject to the terms
and conditions  herein, the decision whether to pay interest hereunder in shares
of Common Stock or cash shall be at the sole discretion of the Company. Not less
than 6 Trading  Days prior to each  Interest  Payment  Date,  the Company  shall
provide the Holder with written notice of its election to pay interest hereunder
either in cash or shares of Common  Stock  (the  Company  may  indicate  in such
notice that the  election  contained  in such notice  shall  continue  for later
periods until revised). Within 6 Trading Days prior to an Interest Payment Date,
the  Company's  election  (whether  specific  to an  Interest  Payment  Date  or
continuous)  shall be irrevocable as to such Interest  Payment Date.  Subject to
the  aforementioned  conditions,  failure to timely  provide such written notice
shall be deemed an election by the Company to pay the interest on such  Interest
Payment Date in cash.

             c) INTEREST CALCULATIONS. Interest shall be calculated on the basis
of a 360-day year and shall accrue daily  commencing on the Original  Issue Date
until payment in full of the principal sum, together with all accrued and unpaid
interest  and other  amounts  which may  become  due  hereunder,  has been made.
Payment of interest in shares of Common Stock shall  otherwise occur pursuant to
Section 4(d)(ii) and only for purposes of the payment of interest in shares, the
Interest Payment Date shall be deemed the Conversion Date.  Interest shall cease
to accrue with respect to any principal  amount  converted  upon the  applicable
Interest Payment Date, provided that the Company in fact delivers the Conversion
Shares within the time period required by Section 4(d)(ii).  Interest  hereunder
will be paid to the Person in whose name this  Debenture  is  registered  on the
records of the Company  regarding  registration and transfers of Debentures (the
"DEBENTURE  REGISTER").  Except as otherwise provided herein, if at any time the
Company pays  interest in cash or in shares of Common  Stock,  then such payment
shall be distributed similarly among all Holders.

             d) LATE FEE.  All overdue  accrued  and unpaid  interest to be paid
hereunder  shall entail a late fee at the rate per annum equal to the Prime Rate
plus ten percent (10%) (or such lower maximum amount of interest permitted to be
charged under  applicable  law) ("LATE FEES") which will accrue daily,  from the
date such interest is due  hereunder  through and including the date of payment.
Notwithstanding  anything to the contrary  contained  herein, if on any Interest
Payment  Date the Company has elected to pay interest in Common Stock and is not
able to pay  accrued  interest in the form of Common  Stock  because it does not
then  satisfy the  conditions  for payment in the form of Common Stock set forth
above,  then, the Company,  in lieu of delivering  either shares of Common Stock
pursuant  to this  Section 2 or paying the  regularly  scheduled  cash  interest
payment,  shall deliver,  within five Trading Days of each  applicable  Interest
Payment  Date, an amount in cash equal to the product of the number of shares of
Common Stock otherwise  deliverable to the Holder in connection with the payment
of interest  due on such  Interest  Payment Date and the average  Closing  Price
during the period  commencing  on the  Interest  Payment  Date and ending on the
Trading Day prior to the date such payment is made.

                                       8
<PAGE>

             e) PREPAYMENT. Except as otherwise set forth in this Debenture, the
Company may not prepay any  portion of the  principal  amount of this  Debenture
without the prior written consent of the Holder.

     SECTION 3. REGISTRATION OF TRANSFERS AND EXCHANGES.


             a) DIFFERENT  DENOMINATIONS.  This Debenture is exchangeable for an
equal  aggregate   principal  amount  of  Debentures  of  different   authorized
denominations,  as requested  by the Holder  surrendering  the same.  No service
charge will be made for such registration of transfer or exchange.

             b)  INVESTMENT  REPRESENTATIONS.  This  Debenture  has been  issued
subject to certain  investment  representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance
with the Purchase Agreement and applicable federal and state securities laws and
regulations.

             c) RELIANCE ON DEBENTURE REGISTER.  Prior to due presentment to the
Company for transfer of this Debenture, the Company and any agent of the Company
may treat the  Person in whose name this  Debenture  is duly  registered  on the
Debenture  Register as the owner hereof for the purpose of receiving  payment as
herein  provided and for all other  purposes,  whether or not this  Debenture is
overdue,  and neither the Company nor any such agent shall be affected by notice
to the contrary.

     SECTION 4. CONVERSION.

             a) VOLUNTARY CONVERSION.  At any time after the Original Issue Date
until  this  Debenture  is  no  longer  outstanding,  this  Debenture  shall  be
convertible into shares of Common Stock at the option of the Holder, in whole or
in part at any  time  and  from  time to time  (subject  to the  limitations  on
conversion  set  forth  in  Section  4(c)  hereof).   The  Holder  shall  effect
conversions  by  delivering  to the  Company  the form of Notice  of  Conversion
attached hereto as ANNEX A (a "NOTICE OF  CONVERSION"),  specifying  therein the
principal  amount  of  Debentures  to be  converted  and the date on which  such
conversion is to be effected (a  "CONVERSION  DATE").  If no Conversion  Date is
specified in a Notice of Conversion,  the Conversion Date shall be the date that
such  Notice  of  Conversion  is  provided  hereunder.   To  effect  conversions
hereunder,  the Holder shall not be required to physically  surrender Debentures
to the Company  unless the entire  principal  amount of this  Debenture plus all
accrued and unpaid interest thereon has been so converted. Conversions hereunder
shall have the  effect of  lowering  the  outstanding  principal  amount of this
Debenture in an amount equal to the  applicable  conversion.  The Holder and the
Company shall maintain  records showing the principal  amount  converted and the
date of such conversions.  The Company shall deliver any objection to any Notice
of  Conversion  within 1 Business Day of receipt of such notice.  The Holder and


                                       9
<PAGE>

any assignee,  by acceptance of this  Debenture,  acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of a portion of
this Debenture,  the unpaid and unconverted  principal  amount of this Debenture
may be less than the amount stated on the face hereof.

             b)  CONVERSION  PRICE.  The  conversion  price  in  effect  on  any
Conversion  Date  shall be equal to $4.07  (subject  to  adjustment  herein)(the
"CONVERSION PRICE").

             c) CONVERSION LIMITATIONS.

             i. TRADING MARKET LIMITATIONS.  Notwithstanding  anything herein or
in any other  Transaction  Document  to the  contrary,  if the  Company  has not
obtained  Shareholder   Approval,  if  required  by  the  applicable  rules  and
regulations  of the Trading Market (or any successor  entity),  then the Company
may not and shall not  issue  upon  conversion  of this  Debenture  in excess of
1,871,083 shares of Common Stock, less the number of shares issued prior to such
Conversion Date pursuant to any Debentures (such number of shares, the "ISSUABLE
MAXIMUM").  The Holder  shall be entitled to a portion of the  Issuable  Maximum
equal to the quotient obtained by dividing (x) the aggregate principal amount of
the  Debenture(s)  issued and sold to such Holder on the Original  Issue Date by
(y) the  aggregate  principal  amount of all  Debentures  issued and sold by the
Company on the  Original  Issue  Date.  If any Holder  shall no longer  hold the
Debenture(s), then such Holder's remaining portion of the Issuable Maximum shall
be allocated  pro-rata among the remaining  Holders.  If on any Conversion Date:
(1) the  applicable  Conversion  Price  then in effect  is such that the  shares
issuable under this Debenture on any Conversion Date together with the aggregate
number of shares of Common Stock that would then be issuable upon  conversion in
full of all other then outstanding Debentures would exceed the Issuable Maximum,
and (2) the  Company has not  obtained  Shareholder  Approval,  then the Company
shall  issue to the Holder,  upon its request to convert  this Note (or any part
hereof),  such number of shares of Common  Stock equal to its  pro-rata  portion
(which shall be calculated pursuant to the terms hereof) of the Issuable Maximum
and,  with respect to the  remainder of the  aggregate  principal  amount of the
Debentures  (including  any  accrued  interest)  then  held  by it for  which  a
conversion in accordance with the applicable conversion price would result in an
issuance  of shares of Common  Stock in excess of its  pro-rata  portion  (which
shall be calculated  pursuant to the terms hereof) of the Issuable  Maximum (the
"EXCESS PRINCIPAL"), the Company shall be prohibited from converting such Excess
Principal,  and shall notify the Holder of the reason  therefor.  This Debenture
shall thereafter be  unconvertible  to such extent until and unless  Shareholder
Approval  is  subsequently  obtained  or is  otherwise  not  required,  but this
Debenture shall otherwise remain in full force and effect. The Company shall not
have any  liability to the Holder,  any other holder of  Debentures or any other
Person, for refusing or otherwise failing to issue any shares of Common Stock if
prohibited by this Section 4(c)(i).

             ii.  HOLDER'S  RESTRICTION  ON  CONVERSION.  The Company  shall not
effect any conversion of this Debenture, and the Holder shall not have the right


                                       10
<PAGE>

to convert any portion of this Debenture, pursuant to Section 4(a) or otherwise,
to the extent that after giving effect to such conversion,  the Holder (together
with  the  Holder's  affiliates),  as set  forth  on the  applicable  Notice  of
Conversion, would beneficially own in excess of 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to such conversion.
For  purposes of the  foregoing  sentence,  the number of shares of Common Stock
beneficially  owned by the Holder and its affiliates shall include the number of
shares of Common Stock  issuable upon  conversion of this Debenture with respect
to which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A)  conversion of
the remaining,  nonconverted portion of this Debenture beneficially owned by the
Holder  or  any  of  its  affiliates  and  (B)  exercise  or  conversion  of the
unexercised  or  nonconverted  portion of any other  securities  of the  Company
(including, without limitation, any other Debentures or the Warrants) subject to
a limitation  on conversion or exercise  analogous to the  limitation  contained
herein beneficially owned by the Holder or any of its affiliates.  Except as set
forth  in the  preceding  sentence,  for  purposes  of  this  Section  4(c)(ii),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange  Act.  To the extent  that the  limitation  contained  in this  section
applies, the determination of whether this Debenture is convertible (in relation
to  other  securities  owned  by the  Holder)  and of  which a  portion  of this
Debenture is  convertible  shall be in the sole  discretion  of such Holder.  To
ensure compliance with this restriction,  the Holder will be deemed to represent
to the Company each time it delivers a Notice of Conversion  that such Notice of
Conversion has not violated the restrictions set forth in this paragraph and the
Company  shall have no  obligation  to verify or confirm  the  accuracy  of such
determination.  For purposes of this Section 4(c)(ii), in determining the number
of  outstanding  shares of Common  Stock,  the  Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company's most recent
Form  10-QSB  or Form  10-KSB,  as the case  may be,  (y) a more  recent  public
announcement  by the  Company  or (z) any  other  notice by the  Company  or the
Company's  Transfer  Agent  setting  forth the number of shares of Common  Stock
outstanding.  Upon the written or oral request of the Holder,  the Company shall
within two Trading Days  confirm  orally and in writing to the Holder the number
of  shares  of  Common  Stock  then  outstanding.  In any  case,  the  number of
outstanding  shares of Common Stock shall be  determined  after giving effect to
the  conversion  or  exercise  of  securities  of the  Company,  including  this
Debenture,  by the  Holder or its  affiliates  since  the date as of which  such
number of  outstanding  shares of Common Stock was reported.  The  provisions of
this  Section  4(c) may be waived by the Holder  upon,  at the  election  of the
Holder,  upon not less  than 61  days'  prior  notice  to the  Company,  and the
provisions of this Section 4(c) shall  continue to apply until such 61st day (or
such later date, as determined by the Holder, as may be specified in such notice
of waiver).

             d) MECHANICS OF CONVERSION

                                       11
<PAGE>

             i. CONVERSION  SHARES ISSUABLE UPON CONVERSION OF PRINCIPAL AMOUNT.
Subject to the  provisions of Section 4(c), the number of shares of Common Stock
issuable  upon a  conversion  hereunder  shall  be  determined  by the  quotient
obtained by dividing (x) the outstanding  principal  amount of this Debenture to
be converted by (y) the Conversion Price.

             ii. DELIVERY OF CERTIFICATE UPON  CONVERSION.  Not later than three
Trading Days after any Conversion  Date, the Company will deliver or cause to be
delivered  to the Holder (A) a  certificate  or  certificates  representing  the
Conversion  Shares  which  shall  be free of  restrictive  legends  and  trading
restrictions (other than those required by the Purchase Agreement)  representing
the number of shares of Common  Stock  being  acquired  upon the  conversion  of
Debentures  (including,  if so timely  elected by the Company,  shares of Common
Stock  representing the payment of accrued interest) and (B) a bank check in the
amount of accrued and unpaid interest (if the Company is required to pay accrued
interest  in cash).  The  Company  shall,  if  available  and if  allowed  under
applicable  securities laws, use its commercially  reasonable efforts to deliver
any  certificate or  certificates  required to be delivered by the Company under
this Section  electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions.

             iii. FAILURE TO DELIVER CERTIFICATES.  If in the case of any Notice
of Conversion such certificate or certificates  representing  Conversion  Shares
are not  delivered  to or as  directed  by the  applicable  Holder  by the fifth
Trading Day after a  Conversion  Date,  the Holder  shall be entitled by written
notice to the Company at any time on or before its  receipt of such  certificate
or  certificates  thereafter,  to rescind  such  conversion,  in which event the
Company shall  immediately  return the  certificates  representing the principal
amount of Debentures tendered for conversion.

             iv. OBLIGATION ABSOLUTE; PARTIAL LIQUIDATED DAMAGES. If the Company
fails for any reason to deliver to the Holder such  certificate or  certificates
pursuant to Section 4(d)(ii) by the fifth Trading Day after the Conversion Date,
the Company shall pay to such Holder, in cash, as liquidated  damages and not as
a penalty,  for each $1000 of principal amount being converted,  $10 per Trading
Day  (increasing to $20 per Trading Day after 10 Trading Days after such damages
begin to accrue) for each  Trading  Day after such fifth  Trading Day until such
certificates are delivered.  The Company's  obligations to issue and deliver the
Conversion Shares upon conversion of this Debenture in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the  Holder to enforce  the same,  any  waiver or  consent  with  respect to any
provision hereof,  the recovery of any judgment against any Person or any action
to enforce the same,  or any setoff,  counterclaim,  recoupment,  limitation  or
termination,  or any breach or alleged  breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares;  PROVIDED,  HOWEVER,  such delivery


                                       12
<PAGE>

shall not  operate as a waiver by the Company of any such action the Company may
have against the Holder.  In the event a Holder of this Debenture shall elect to
convert any or all of the outstanding  principal amount hereof,  the Company may
not refuse  conversion  based on any claim that the Holder or any one associated
or  affiliated  with the  Holder of has been  engaged in any  violation  of law,
agreement  or for any other  reason,  unless,  an  injunction  from a court,  on
notice, restraining and or enjoining conversion of all or part of this Debenture
shall have been sought and obtained and the Company  posts a surety bond for the
benefit  of the  Holder in the  amount of 150% of the  principal  amount of this
Debenture  outstanding,  which is  subject to the  injunction,  which bond shall
remain in effect until the completion of  arbitration/litigation  of the dispute
and the  proceeds  of which  shall be  payable  to such  Holder to the extent it
obtains  judgment.  In the absence of an  injunction  precluding  the same,  the
Company  shall  issue  Conversion  Shares  upon a properly  noticed  conversion.
Nothing  herein shall limit a Holder's right to pursue actual damages or declare
an Event of Default  pursuant to Section 8 herein for the  Company's  failure to
deliver  Conversion  Shares within the period  specified  herein and such Holder
shall have the right to pursue all remedies  available to it at law or in equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce  damages  pursuant to any other Section  hereof or under
applicable law.

             v.   COMPENSATION   FOR  BUY-IN  ON   FAILURE  TO  TIMELY   DELIVER
CERTIFICATES  UPON CONVERSION.  In addition to any other rights available to the
Holder,  if the  Company  fails for any reason to  deliver  to the  Holder  such
certificate or  certificates  pursuant to Section  4(d)(ii) by the fifth Trading
Day after the Conversion Date, and if after such fifth Trading Day the Holder is
required  by its  brokerage  firm  to  purchase  in a  bona  fide  arm's  length
transaction  for fair market value (in an open market  transaction or otherwise)
Common  Stock  to  deliver  in  satisfaction  of a sale  by such  Holder  of the
Conversion Shares which the Holder anticipated receiving upon such conversion (a
"BUY-IN"),  then the Company shall (A) pay in cash to the Holder (in addition to
any remedies  available to or elected by the Holder) the amount by which (x) the
Holder's total purchase price (including brokerage commissions,  if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares  of  Common  Stock  that  such  Holder  anticipated  receiving  from  the
conversion at issue  multiplied by (2) the actual sale price of the Common Stock
at the time of the sale (including brokerage commissions, if any) giving rise to
such  purchase  obligation  and (B) at the option of the Holder  given  within 3
Trading Days of the Buy-In,  either reissue Debentures in principal amount equal
to the principal amount of the attempted conversion or deliver to the Holder the
number of shares of Common  Stock that would  have been  issued had the  Company
timely  complied  with its delivery  requirements  under Section  4(d)(ii).  For
example,  if the Holder  purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted  conversion of Debentures


                                       13
<PAGE>

with respect to which the actual sale price of the Conversion Shares at the time
of the  sale  (including  brokerage  commissions,  if any)  giving  rise to such
purchase  obligation was a total of $10,000 under clause (A) of the  immediately
preceding sentence,  the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company  written notice  indicating the amounts payable
to the Holder in  respect  of the  Buy-In.  Notwithstanding  anything  contained
herein to the  contrary,  if a Holder  requires  the Company to make  payment in
respect of a Buy-In for the failure to timely deliver certificates hereunder and
the Company timely pays in full such payment,  the Company shall not be required
to pay such Holder  liquidated  damages under Section 4(d)(iv) in respect of the
certificates resulting in such Buy-In.

             vi.  RESERVATION  OF SHARES  ISSUABLE UPON  CONVERSION.  Subject to
limitations set forth in Section 4(c), the Company covenants that it will at all
times reserve and keep available out of its  authorized  and unissued  shares of
Common  Stock  solely  for  the  purpose  of  issuance  upon  conversion  of the
Debentures  and payment of interest on the Debenture,  each as herein  provided,
free from preemptive  rights or any other actual  contingent  purchase rights of
persons  other than the Holder (and the other  holders of the  Debentures),  not
less than such  number of shares of the Common  Stock as shall  (subject  to any
additional  requirements  of the  Company as to  reservation  of such shares set
forth  in  the  Purchase   Agreement)  be  issuable  (taking  into  account  the
adjustments  and   restrictions  of  Section  5)  upon  the  conversion  of  the
outstanding   principal  amount  of  the  Debentures  and  payment  of  interest
hereunder.  The Company  covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized,  issued and fully
paid, nonassessable.

             vii.  FRACTIONAL  SHARES.  Upon a conversion  hereunder the Company
shall not be required  to issue stock  certificates  representing  fractions  of
shares of the Common Stock, but may if otherwise permitted,  make a cash payment
in respect of any final  fraction of a share based on the Closing  Price at such
time. If the Company elects not, or is unable, to make such a cash payment,  the
Holder shall be entitled to receive,  in lieu of the final  fraction of a share,
one whole share of Common Stock.

             viii.  TRANSFER TAXES.  The issuance of certificates  for shares of
the Common Stock on conversion of this Debenture shall be made without charge to
the Holder hereof for any documentary stamp or similar taxes that may be payable
in respect  of the issue or  delivery  of such  certificate,  provided  that the
Company  shall not be  required to pay any tax that may be payable in respect of
any transfer  involved in the issuance and delivery of any such certificate upon
conversion  in a name  other  than  that of the  Holder  of such  Debentures  so
converted  and the  Company  shall  not be  required  to issue or  deliver  such
certificates  unless or until the  person or  persons  requesting  the  issuance
thereof  shall  have paid to the  Company  the  amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

                                       14
<PAGE>

     SECTION 5. CERTAIN ADJUSTMENTS.

             a) STOCK  DIVIDENDS AND STOCK SPLITS.  If the Company,  at any time
while this Debenture is outstanding: (i) pays a stock dividend or otherwise make
a distribution  or  distributions  on shares of its Common Stock,  the Company's
Class B Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which,  for avoidance of doubt, shall not include any
shares of  Common  Stock  issued  by the  Company  pursuant  to this  Debenture,
including as interest  hereon),  (ii)  subdivides  outstanding  shares of Common
Stock  into a larger  number of  shares,  (iii)  combines  (including  by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares,  or (iv) issues by  reclassification  of shares of the Common  Stock any
shares of capital  stock of the  Company,  then the  Conversion  Price  shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding  immediately before
such event and of which the denominator  shall be the number of shares of Common
Stock  outstanding  immediately  after  such  event.   Simultaneously  with  any
adjustment to the Conversion  Price pursuant to this Section 5(a), the number of
Conversion  Shares which may be issued upon  conversion of this  Debenture or as
payment interest hereon shall be increased or decreased proportionately, so that
after such  adjustment,  the aggregate  amount of the adjusted  Conversion Price
multiplied by the aggregate adjusted amount of Conversion Shares shall equal the
aggregate amount of the unadjusted  Conversion Price multiplied by the aggregate
unadjusted  amount of Conversion  Shares.  Any adjustment  made pursuant to this
Section  shall  become  effective  immediately  after  the  record  date for the
determination of stockholders  entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

             b)  SUBSEQUENT  EQUITY  SALES.  If the  Company  or any  Subsidiary
thereof, as applicable,  at any time while this Debenture is outstanding,  shall
offer,  sell, grant any option to purchase or offer,  sell or grant any right to
reprice its securities, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other disposition) any Common Stock, or
Common  Stock  Equivalents,  entitling  any Person to  acquire  shares of Common
Stock, at an effective price per share less than the then Conversion Price (such
lower price,  the "BASE  CONVERSION  PRICE" and such issuances  collectively,  a
"DILUTIVE  ISSUANCE"),  as adjusted hereunder (if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions,  floating conversion,  exercise or
exchange  prices or otherwise,  or due to warrants,  options or rights per share
which is issued in connection with such issuance,  be entitled to receive shares
of  Common  Stock  at an  effective  price  per  share  which  is less  than the
Conversion  Price,  such issuance shall be deemed to have occurred for less than


                                       15
<PAGE>

the Conversion Price), then the Conversion Price shall be reduced by multiplying
the  Conversion  Price by a fraction,  the  numerator  of which is the number of
shares of Common Stock issued and outstanding  immediately prior to the Dilutive
Issuance plus the number of shares of Common Stock, and Common Stock issuable in
connection  with Common Stock  Equivalents,  which the  aggregate  consideration
received or receivable by the Company in connection with such Dilutive  Issuance
would purchase at the then effective  Conversion  Price,  and the denominator of
which  shall be the sum of the  number  of shares of  Common  Stock  issued  and
outstanding immediately prior to the Dilutive Issuance plus the number of shares
of Common Stock, or Common Stock Equivalents so issued or issuable in connection
with the Dilutive Issuance.  The Company shall notify the Holder in writing,  no
later than the Business Day following the issuance of any Common Stock or Common
Stock  Equivalents  subject to this section,  indicating  therein the applicable
issuance price, or of applicable reset price,  exchange price,  conversion price
and other  pricing  terms (such  notice the  "DILUTIVE  ISSUANCE  NOTICE").  For
purposes  of  clarification,  whether  or not the  Company  provides  a Dilutive
Issuance  Notice  pursuant to this  Section  5(b),  upon the  occurrence  of any
Dilutive  Issuance,  after  the date of such  Dilutive  Issuance  the  Holder is
entitled to receive a number of Conversion Shares based upon the Base Conversion
Price regardless of whether the Holder  accurately refers to the Base Conversion
Price in the Notice of Conversion.

             c) PRO RATA  DISTRIBUTIONS.  If the Company, at any time while this
Debenture is outstanding, shall distribute to all holders (and not to Holders on
a pro-rata basis) of Common Stock, including the holders of Class B Common Stock
evidences of its  indebtedness  or assets  (including cash or cash dividends) or
rights or warrants to subscribe for or purchase any security,  then in each such
case the Conversion Price shall be adjusted by multiplying such Conversion Price
in effect  immediately  prior to the  record  date  fixed for  determination  of
stockholders  entitled to receive such  distribution  by a fraction of which the
denominator  shall  be  the  Closing  Price  determined  as of the  record  date
mentioned  above, and of which the numerator shall be such Closing Price on such
record date less the then the per share fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of the Common Stock or Common Stock equivalent share of
Class B Common Stock (determined by dividing the amount  distributed by the then
issued  and  outstanding  shares  of  Common  Stock),  as the  case  may be,  as
determined  by the  Board  of  Directors  in good  faith.  In  either  case  the
adjustments  shall be  described  in a  statement  provided to the Holder of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable  to  one  share  of  Common  Stock  (or  for an
equivalent  measure  of Class B Common  Stock).  Such  adjustment  shall be made
whenever any such  distribution is made and shall become  effective  immediately
after the record date mentioned above.

             d) FUNDAMENTAL TRANSACTION. If, at any time while this Debenture is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)


                                       16
<PAGE>

any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged for other securities  (other than capital stock of the Company),  cash
or  property  (in any such case,  a  "FUNDAMENTAL  TRANSACTION"),  then upon any
subsequent  conversion  of this  Debenture,  the Holder  shall have the right to
receive,  for each  Conversion  Share that would  have been  issuable  upon such
conversion immediately prior to the occurrence of such Fundamental  Transaction,
the same kind and amount of  securities,  cash or property as it would have been
entitled to receive upon the  occurrence of such  Fundamental  Transaction if it
had been, immediately prior to such Fundamental  Transaction,  the holder of one
share of Common Stock (the "ALTERNATE CONSIDERATION").  For purposes of any such
conversion,  the  determination  of the Conversion  Price shall be appropriately
adjusted  to apply  to such  Alternate  Consideration  based  on the  amount  of
Alternate  Consideration  issuable  in respect  of one share of Common  Stock in
connection with such  Fundamental  Transaction,  and the Company shall apportion
the Conversion Price among the Alternate  Consideration  in a reasonable  manner
reflecting  the relative  value of any  different  components  of the  Alternate
Consideration.  If  holders  of Common  Stock  are  given  any  choice as to the
securities,  cash or property to be received in a Fundamental Transaction,  then
the Holder shall be given the same choice as to the Alternate  Consideration  it
receives  upon any  conversion  of this  Debenture  following  such  Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or  surviving  entity in such  Fundamental  Transaction
shall  issue  to the  Holder  a new  debenture  consistent  with  the  foregoing
provisions  and  evidencing  the Holder's  right to convert such  debenture into
Alternate  Consideration.  The  terms  of any  agreement  pursuant  to  which  a
Fundamental  Transaction  is effected  shall  include  terms  requiring any such
successor or surviving  entity to comply with the  provisions of this  paragraph
(d) and insuring that this Debenture (or any such replacement  security) will be
similarly  adjusted upon any subsequent  transaction  analogous to a Fundamental
Transaction.

             e)  CALCULATIONS.  All  calculations  under this Section 5 shall be
made to the nearest cent or the nearest  1/100th of a share, as the case may be.
For  purposes of this  Section 5, the number of shares of Common Stock deemed to
be issued and  outstanding  as of a given date shall be the sum of the number of
shares  of  Common  Stock  (excluding   treasury  shares,  if  any)  issued  and
outstanding  at the  close of the  Trading  Day on or, if not  applicable,  most
recently preceding such given date.

             f) EXEMPT ISSUANCE.  Notwithstanding  anything in this Section 5 to
the contrary,  no adjustment  will be made under this Section 5 in respect of an
Exempt Issuance.

             g) NOTICE TO HOLDERS.

                                       17
<PAGE>

             i. ADJUSTMENT TO CONVERSION PRICE. Whenever the Conversion Price is
adjusted  pursuant to this Section 5, the Company shall promptly  provide notice
to each Holder  setting forth the  Conversion  Price after such  adjustment  and
setting forth a brief statement of the facts requiring such adjustment.

             ii. NOTICE TO ALLOW CONVERSION BY HOLDER.  If (A) the Company shall
declare a dividend  (or any other  distribution)  on the Common  Stock;  (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock; (C) the Company shall authorize the granting to all holders of
the Common Stock  rights or warrants to subscribe  for or purchase any shares of
capital  stock  of  any  class  or of  any  rights;  (D)  the  approval  of  any
stockholders   of  the  Company  shall  be  required  in  connection   with  any
reclassification  of the Common Stock, any  consolidation or merger to which the
Company is a party,  any sale or  transfer  of all or  substantially  all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted  into other  securities,  cash or property;  (E) the Company  shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company;  then,  in each case,  the Company shall cause to be
filed at each office or agency  maintained for the purpose of conversion of this
Debenture,  and shall cause to be mailed to the Holder at its last address as it
shall appear upon the books of the Company,  at least 20 calendar  days prior to
the applicable record or effective date hereinafter  specified, a notice stating
(x) the record date established for the purpose of such dividend,  distribution,
redemption,  rights or warrants,  or if a record is not to be taken, the date as
of which the  holders  of the  Common  Stock of record  to be  entitled  to such
dividend, distributions,  redemption, rights or warrants are to be determined or
(y) the  record  date  established  for  such  reclassification,  consolidation,
merger,  sale,  transfer or share  exchange is expected to become  effective  or
close,  and the date as of which it is expected that holders of the Common Stock
of record  shall be entitled to exchange  their  shares of the Common  Stock for
securities,  cash or other  property  deliverable  upon  such  reclassification,
consolidation,  merger,  sale,  transfer or share exchange;  PROVIDED,  that the
failure to mail such  notice or any defect  therein  or in the  mailing  thereof
shall not affect the validity of the corporate  action  required to be specified
in such notice.  The Holder is entitled to convert this  Debenture  (or any part
hereof)  during  the 20-day  period  commencing  the date of such  notice to the
effective  date  of  the  event  triggering  such  notice.  Notwithstanding  the
foregoing,  the  delivery of the notice  described  in this  Section 5(g) is not
intended  to and shall not bestow upon the Holder any voting  rights  whatsoever
with respect to outstanding unconverted Debentures.

     SECTION 6. REDEMPTION AND FORCED CONVERSION.

             a) OPTIONAL  REDEMPTION  AT  ELECTION  OF  COMPANY.  Subject to the
provisions of this Section 6, at any time after the 24-month  anniversary of the
Original  Issue  Date,  the  Company  may  deliver  a notice to the  Holder  (an


                                       18
<PAGE>

"OPTIONAL  REDEMPTION  NOTICE"  and the date such  notice  is  deemed  delivered
hereunder, the "OPTIONAL REDEMPTION NOTICE DATE") of its irrevocable election to
redeem some or all of the then outstanding  Debentures,  for an amount, in cash,
equal to the  Optional  Redemption  Amount  plus,  the  issuance  of  Redemption
Warrants  issuable  as a result of the  Optional  Redemption  of such  principal
amount,  on the 20th Trading Day following the Optional  Redemption  Notice Date
(such date, the "OPTIONAL  REDEMPTION DATE" and such  redemption,  the "OPTIONAL
REDEMPTION").  The Optional Redemption Amount and Redemption Warrants are due in
full on the Optional  Redemption  Date.  The Company may only effect an Optional
Redemption  if during the period  commencing on the Optional  Redemption  Notice
Date  through to the Optional  Redemption  Date,  each of the Equity  Conditions
shall have been met. If any of the Equity Conditions shall cease to be satisfied
at any time during the required period, then the Holder may elect to nullify the
Optional  Redemption Notice by notice to the Company within 3 Trading Days after
the first day on which any such Equity Condition has not been met (provided that
if, by a provision  of the  Transaction  Documents  the Company is  obligated to
notify the  Holder of the  non-existence  of an Equity  Condition,  such  notice
period shall be extended to the third  Trading Day after proper  notice from the
Company) in which case the Optional Redemption Notice shall be null and void, AB
INITIO.  The  Company  covenants  and  agrees  that it will  honor all Notice of
Conversions tendered from the time of delivery of the Optional Redemption Notice
through  the date  all  amounts  owing  thereon  are due and  paid in full.  The
Company's  election to exercise an Optional  Redemption shall be applied ratably
to all of the  holders  of  Debentures  based  on  their  initial  purchases  of
Debenture pursuant to the Purchase Agreement.

             b) MONTHLY REDEMPTION. On each Monthly Redemption Date, the Company
shall redeem the Monthly Redemption Amount plus accrued but unpaid interest, the
sum of all liquidated damages and any other amounts then owing to such Holder in
respect of the  Debenture.  The Monthly  Redemption  Amount due on each  Monthly
Redemption Date shall be paid in cash only. The Holder may convert,  pursuant to
Section  4(a),  any  principal  amount of this  Debenture  subject  to a Monthly
Redemption at any time prior to the date that the Monthly  Redemption Amount and
all amounts owing thereon are due and paid in full.  Unless otherwise  indicated
by the Holder in the applicable  Notice of Conversion,  any principal  amount of
Debenture  converted  during  any 20 day  period  until  the  date  the  Monthly
Redemption Amount is paid shall be first applied to the principal amount subject
to the  Monthly  Redemption  and  such  Holder's  cash  payment  of the  Monthly
Redemption Amount on such Monthly Redemption Date shall be reduced  accordingly,
and any remaining  principal  amount so converted  shall be applied  against the
last  principal  scheduled  to be repaid,  in reverse  time  order.  The Company
covenants  and agrees that it will honor all Notice of  Conversions  tendered up
until such amounts are paid in full.

             c)  ACQUISITION  REDEMPTION.  Subject  to the  provisions  of  this
Section 6, upon one occasion after the 6-month anniversary of the Original Issue
Date and prior to the  24-month  anniversary  of the  Original  Issue  Date,  in


                                       19
<PAGE>

connection  with the  acquisition of a business or assets by the Company or by a
subsidiary  of  the  Company,  which  financing  requires  the  Company  or  its
Subsidiaries to incur  additional  senior  indebtedness or liens as part of such
financing,  the  Company  may  deliver a notice to the Holder  (an  "ACQUISITION
REDEMPTION NOTICE" and the date such notice is deemed delivered  hereunder,  the
"ACQUISITION  REDEMPTION NOTICE DATE") of its irrevocable election to redeem all
of the  then  outstanding  Debentures,  for an  amount,  in  cash,  equal to the
Acquisition  Redemption  Amount  plus,  the issuance of  Acquisition  Redemption
Warrants  issuable as a result of the  Acquisition  Redemption of such principal
amount, on the 20th Trading Day following the Acquisition Redemption Notice Date
(such  date,  the  "ACQUISITION  REDEMPTION  DATE"  and  such  redemption,   the
"ACQUISITION  REDEMPTION").  The  Acquisition  Redemption  Amount and Redemption
Warrants are due in full on the  Acquisition  Redemption  Date.  The Company may
only effect an  Acquisition  Redemption  if during the period  commencing on the
Acquisition  Redemption Notice Date through to the Acquisition  Redemption Date,
each  of the  Equity  Conditions  shall  have  been  met.  If any of the  Equity
Conditions  shall cease to be satisfied at any time during the required  period,
then the Holder may elect to nullify the Acquisition Redemption Notice by notice
to the  Company  within 3  Trading  Days  after  the first day on which any such
Equity  Condition  has not been met  (provided  that if, by a  provision  of the
Transaction  Documents  the  Company  is  obligated  to notify the Holder of the
non-existence  of an Equity  Condition,  such notice period shall be extended to
the third  Trading Day after  proper  notice from the Company) in which case the
Acquisition  Redemption  Notice shall be null and void,  AB INITIO.  The Company
covenants and agrees that it will honor all Notices of Conversion  tendered from
the time of delivery of the Acquisition  Redemption  Notice through the date all
amounts owing thereon are due and paid in full.  Notwithstanding anything herein
to the  contrary,  at any time prior to the  Acquisition  Redemption  Date,  the
Holder may elect in writing to the Company,  in its sole discretion,  to nullify
and void, all or part of, the Acquisition  Redemption,  AB INITIO, provided that
if such election is made by the Holder,  from such date thereafter Sections 7(a)
and 7(b) of this Debenture shall  thereafter and forever be deemed waived by the
Holder and of no further force or effect.  If the Company elects to exercise its
right to an Acquisition Redemption hereunder, such election shall be made to all
Holders of outstanding Debentures.

             d)  REDEMPTION  PROCEDURE.  The  payment  of cash  pursuant  to the
Monthly Redemption,  an Optional  Redemption or Acquisition  Redemption shall be
made on the Monthly Redemption Date, the Optional Redemption Date or Acquisition
Redemption Date, as applicable. If any portion of the cash payment for a Monthly
Redemption,   an  Optional   Redemption  or  Acquisition   Redemption  Date,  as
applicable,  shall  not be paid  by the  Company  by the  respective  due  date,
interest  shall accrue  thereon at the rate per annum equal to the Late Fee rate
(or the maximum rate permitted by applicable  law,  whichever is less) until the
payment of the Monthly  Redemption  Amount,  the Optional  Redemption  Amount or


                                       20
<PAGE>

Acquisition Redemption Amount, as applicable,  plus all amounts owing thereon is
paid in full.  Alternatively,  if any portion of the Monthly  Redemption Amount,
the  Optional  Redemption  Amount  or  the  Acquisition  Redemption  Amount,  as
applicable,  remains  unpaid  after  such  date,  the  Holder  subject  to  such
redemption  may  elect,  by  written  notice  to the  Company  given at any time
thereafter,  to invalidate AB INITIO such redemption.  Notwithstanding  anything
herein contained to the contrary,  and, with respect to the Company's failure to
honor the Optional  Redemption or Acquisition  Redemption,  as  applicable,  the
Company  shall have no further  right to exercise  such  Optional  Redemption or
Acquisition  Redemption.  The  Holder  may  elect  to  convert  the  outstanding
principal amount of the Debenture  pursuant to Section 4 prior to actual payment
in cash for any  redemption  under this Section 6 by fax delivery of a Notice of
Conversion to the Company.

             e)  FORCED  CONVERSION.  Notwithstanding  anything  herein  to  the
contrary,  if after the 24 month anniversary of the Original Issue Date (A) each
of the  Closing  Prices  for  any  20  consecutive  Trading  Days  (such  period
commencing  only after such  anniversary,  such period the "THRESHOLD  PERIOD"))
exceeds  200% of $3.95  (subject to  adjustment  for  reverse and forward  stock
splits,  stock dividends,  stock combinations and other similar  transactions of
the Common Stock that occur after the  Original  Issue Date) and (B) the trading
volume of the Common Stock (as reported by Bloomberg  Financial L.P. (based on a
Trading Day from 9:30 a.m.  Eastern  Time to 4:02 p.m.  Eastern  Time)) for each
Trading  Day during  the  Threshold  Period is greater  than or equal to 100,000
shares  (subject to  adjustment  for reverse and  forward  stock  splits,  stock
dividends, stock combinations and other similar transactions of the Common Stock
that occur after the Original Issue Date), the Company may, within 1 Trading Day
of the end of any  such  period,  deliver  a notice  to the  Holder  (a  "FORCED
CONVERSION  NOTICE" and the date such  notice is  received  by the  Holder,  the
"FORCED CONVERSION NOTICE DATE") to cause the Holder to immediately  convert all
or part of the then  outstanding  principal  amount of  Debentures  pursuant  to
Section 4(a). The Company may only effect a Forced  Conversion  Notice if all of
the Equity Conditions are met through the applicable  Threshold Period until the
date of the applicable Forced Conversion. Any Forced Conversion shall be applied
ratably to all Holders based on their initial  purchases of Debentures  pursuant
to the Purchase Agreement.

     SECTION 7. NEGATIVE COVENANTS.  So long as any portion of this Debenture is
outstanding, the Company will not, directly or indirectly:

             a)  except  for (A)  Permitted  Debt and (B) a  one-time  unsecured
parent  guarantee of $1,700,000 of unsecured  indebtedness for borrowed money on
the  property  and assets of ADM Cinema Corporation  ("ADM") to be  incurred  in
connection  with the  acquisition  of certain of the assets of  Prichard  Square
Cinema, LLC d/b/a Pavilion Theatre, a New York limited liability company,  enter
into,  create,  incur,  assume or suffer to exist any  indebtedness of any kind,
including but not limited to, a guarantee,  on or with respect to any of its (as
of the Original Issue Date)  property or assets now owned or hereafter  acquired
or any interest therein or any income or profits therefrom that is senior to, or
pari passu with, in any respect, the Company's obligations under the Debentures;

                                       21
<PAGE>

             b) except for permitted liens, enter into, create, incur, assume or
suffer to exist any liens of any kind,  on or with  respect to any of its or its
existing  Subsidiaries' (as of Original Issue Date) property or assets now owned
or hereafter acquired or any interest therein or any income or profits therefrom
that  is  senior  to,  in any  respect,  the  Company's  obligations  under  the
Debentures;

             c) amend its certificate of incorporation,  bylaws or other charter
documents so as to materially adversely affect any rights of the Holder;

             d) other  than with  respect to and under (i) the  Company's  stock
repurchase  program, as further described in that certain Current Report on Form
8-K,  filed with the  Commission on August 12, 2004 (provided any such issuances
shall  not  exceed  $500,000  in any 12 month  period)  and  (ii) the  Company's
existing  obligation,  during the period  beginning from March 30, 2005 until 90
days  thereafter,  to purchase 53,534 shares of the Company's  Common Stock from
The  Boeing  Company  for  an  aggregate  purchase  price  of  $250,000,  repay,
repurchase  or offer to repay,  repurchase  or otherwise  acquire more than a de
minimis  number of shares of its Common Stock or other equity  securities  other
than as to the Conversion  Shares to the extent  permitted or required under the
Transaction Documents or as otherwise permitted by the Transaction Documents; or

             e) enter into any agreement with respect to any of the foregoing.

     SECTION 8. EVENTS OF DEFAULT.

             a) "EVENT OF DEFAULT",  wherever used herein,  means any one of the
following  events  (whatever  the reason and  whether it shall be  voluntary  or
involuntary or effected by operation of law or pursuant to any judgment,  decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

             i. any  default in the payment of (A) the  principal  amount of any
Debenture,  or (B) interest  (including Late Fees) on, or liquidated  damages in
respect of, any Debenture,  in each case free of any claim of subordination,  as
and when the same shall become due and payable  (whether on a Conversion Date or
the Maturity Date or by acceleration or otherwise) which default,  solely in the
case of an interest  payment or other  default  under  clause (B) above,  is not
cured, within 5 Trading Days after notice of such default sent by Holder;

             ii. the Company shall fail to observe or perform any other covenant
or agreement  contained in this Debenture (other than a breach by the Company of
its  obligations to deliver shares of Common Stock to the Holder upon conversion
which breach is addressed in clause (xii) below) which failure is not cured,  if
possible to cure, within the earlier to occur of (A) 5 Trading Days after notice
of such default sent by the Holder or by any other Holder and (B)10 Trading Days
after the Company shall become or should have become aware of such failure;

                                       22
<PAGE>

             iii. a default or event of  default  (subject  to any grace or cure
period provided for in the applicable  agreement,  document or instrument) shall
occur under (A) any of the Transaction  Documents other than the Debentures,  or
(B) any other  material  agreement,  lease,  document or instrument to which the
Company or any Subsidiary is bound,  which default or event of default in Clause
(B) only would have a Material Adverse Effect on the business of the Company and
its Subsidiaries, taken as a whole;

             iv. any  representation  or warranty  made herein,  or in any other
Transaction  Document,  the  breach or  falsity  of which  would have a Material
Adverse Effect;

             v. (i) the Company or any of its  Subsidiaries  shall commence,  or
there shall be  commenced  against the  Company or any such  Subsidiary,  a case
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto,  or the Company or any Subsidiary  commences any other
proceeding under any reorganization,  arrangement, adjustment of debt, relief of
debtors,   dissolution,   insolvency  or  liquidation  or  similar  law  of  any
jurisdiction  whether now or hereafter in effect  relating to the Company or any
Subsidiary  thereof  or (ii)  there is  commenced  against  the  Company  or any
Subsidiary  thereof any such  bankruptcy,  insolvency or other  proceeding which
remains  undismissed  for a period  of 60  days;  or (iii)  the  Company  or any
Subsidiary thereof is adjudicated by a court of competent jurisdiction insolvent
or bankrupt;  or any order of relief or other order  approving  any such case or
proceeding is entered; or (iv) the Company or any Subsidiary thereof suffers any
appointment of any custodian or the like for it or any  substantial  part of its
property which  continues  undischarged  or unstayed for a period of 60 days; or
(v) the Company or any  Subsidiary  thereof makes a general  assignment  for the
benefit of creditors; or (vi) the Company shall fail to pay, or shall state that
it is unable to pay,  or shall be unable  to pay,  its debts  generally  as they
become due; or (vii) the Company or any Subsidiary  thereof shall call a meeting
of  its  creditors  with  a view  to  arranging  a  composition,  adjustment  or
restructuring  of its debts;  or (viii) the  Company or any  Subsidiary  thereof
shall by any act or failure to act expressly  indicate its consent to,  approval
of or  acquiescence  in any of the  foregoing;  or (ix) any  corporate  or other
action is taken by the  Company or any  Subsidiary  thereof  for the  purpose of
effecting any of the foregoing;

             vi.  the  Company  or any  Subsidiary  shall  default in any of its
obligations  under any mortgage,  credit agreement or other facility,  indenture
agreement,  factoring  agreement  or other  instrument  under which there may be
issued,  or by which  there may be secured or  evidenced  any  indebtedness  for


                                       23
<PAGE>

borrowed money or money due under any long term leasing or factoring arrangement
of the Company in an amount exceeding  $250,000,  whether such  indebtedness now
exists or shall  hereafter  be created  and such  default  shall  result in such
indebtedness  becoming or being  declared  due and payable  prior to the date on
which it would otherwise become due and payable;

             vii.  the Common  Stock shall not be eligible  for  quotation on or
quoted for trading on a Trading  Market and shall not again be eligible  for and
quoted or listed for trading thereon within five Trading Days;

             viii.  the  Company  shall  be a party  to any  Change  of  Control
Transaction or Fundamental Transaction, shall agree to sell or dispose of all or
in excess of 40% of its assets in one or more related  transactions  (whether or
not such sale  would  constitute  a Change of  Control  Transaction)  other than
inventory in the ordinary course of business, or shall redeem or repurchase more
than a de  minimis  number of its  outstanding  shares of Common  Stock or other
equity  securities of the Company (other than  redemptions of Conversion  Shares
and  repurchases  of  shares  of  Common  Stock or other  equity  securities  of
departing officers and directors of the Company; provided such repurchases shall
not exceed $100,000, in the aggregate, for all officers and directors during the
term of this Debenture);

             ix. a Registration Statement shall not have been declared effective
by the Commission on or prior to the 240th calendar day after the Closing Date;

             x.  if,  during  the  Effectiveness   Period  (as  defined  in  the
Registration Rights Agreement),  the effectiveness of the Registration Statement
lapses for any reason or the Holder shall not be permitted to resell Registrable
Securities  (as  defined  in  the  Registration   Rights  Agreement)  under  the
Registration  Statement,  in  either  case,  for  more  than 60  consecutive  or
non-consecutive Trading Days during any 12 month period; PROVIDED, HOWEVER, that
in  the  event  that  the  Company  is  negotiating  a  merger,   consolidation,
acquisition  or sale of all or  substantially  all of its  assets  or a  similar
transaction  and  in  the  written  opinion  of  counsel  to  the  Company,  the
Registration  Statement,  would be required to be amended to include information
concerning such transactions or the parties thereto that is not available or may
not be  publicly  disclosed  at the time,  the  Company  shall be  permitted  an
additional 10  consecutive  Trading Days during any 12 month period  relating to
such an event;

             xi. the Company  shall fail for any reason to deliver  certificates
to a Holder prior to the seventh Trading Day after a Conversion Date pursuant to
and in accordance  with Section 4(d) or the Company shall provide  notice to the
Holder,  including by way of public announcement,  at any time, of its intention
not to comply with requests for conversions of any Debentures in accordance with
the terms hereof; or

             xii.  any Person  shall  breach  the  agreements  delivered  to the
initial Holders pursuant to Section 2.2(a)(iv) of the Purchase Agreement and the
Company does not obtain Shareholder Approval.

                                       24
<PAGE>

             b) REMEDIES UPON EVENT OF DEFAULT.  If any Event of Default occurs,
the full principal  amount of this  Debenture,  together with interest and other
amounts owing in respect thereof,  to the date of acceleration  shall become, at
the Holder's election,  immediately due and payable in cash, provided such Event
of Default has not been cured at the time of Holder's  election.  The  aggregate
amount  payable  upon an Event  of  Default  shall  be  equal  to the  Mandatory
Prepayment  Amount.  Commencing  5 days  after  the  occurrence  of any Event of
Default  that  results  in the  eventual  acceleration  of this  Debenture,  the
interest rate on this Debenture shall accrue at the Late Fee rate, or such lower
maximum  amount of interest  permitted to be charged under  applicable  law. All
Debentures for which the full Mandatory  Prepayment  Amount hereunder shall have
been paid in accordance herewith shall promptly be surrendered to or as directed
by the Company.  The Holder need not provide and the Company  hereby  waives any
presentment,  demand,  protest or other  notice of any kind,  and the Holder may
immediately  and without  expiration of any grace period  enforce any and all of
its rights and remedies  hereunder and all other remedies  available to it under
applicable law. Such  declaration may be rescinded and annulled by Holder at any
time  prior to  payment  hereunder  and the  Holder  shall  have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
shall have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.

     SECTION 9. MISCELLANEOUS.

             a)  NOTICES.  Any  and  all  notices  or  other  communications  or
deliveries  to  be  provided  by  the  Holder  hereunder,   including,   without
limitation,  any  Notice  of  Conversion,  shall  be in  writing  and  delivered
personally,  by facsimile,  sent by a nationally  recognized  overnight  courier
service,  addressed  to the Company,  at the address set forth above,  facsimile
number (973) 290-0081, ATTN: GENERAL COUNSEL, or such other address or facsimile
number as the  Company  may  specify  for such  purposes by notice to the Holder
delivered  in  accordance  with  this  Section.  Any and all  notices  or  other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally,  by facsimile, sent by a nationally recognized
overnight  courier service  addressed to each Holder at the facsimile  telephone
number or address of such Holder  appearing  on the books of the  Company  which
shall,  on the Original  Issue Date, be such  information  as is provided on the
original  Holder  signature  pages  to the  Purchase  Agreement,  or if no  such
facsimile  telephone  number  or  address  appears,  at the  principal  place of
business  of the  Holder.  Any  notice  or  other  communication  or  deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified in this Section  prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication  is delivered  via  facsimile at the  facsimile  telephone  number
specified in this Section  later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date,  (iii) the second


                                       25
<PAGE>

Business Day  following the date of mailing,  if sent by  nationally  recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. Notwithstanding anything herein to the contrary,
in the event notice is sent by facsimile  transmission,  the sending party shall
also send such  notification  by e-mail if the  receiving  party has included an
e-mail address below or on their respective signature page.

             b) ABSOLUTE  OBLIGATION.  Except as expressly  provided herein,  no
provision of this Debenture shall alter or impair the obligation of the Company,
which is absolute  and  unconditional,  to pay the  principal  of,  interest and
liquidated damages (if any) on, this Debenture at the time, place, and rate, and
in the coin or  currency,  herein  prescribed.  This  Debenture is a direct debt
obligation  of the  Company.  This  Debenture  ranks  PARI  PASSU with all other
Debentures now or hereafter issued under the terms set forth herein.

             c)  LOST  OR  MUTILATED  DEBENTURE.  If  this  Debenture  shall  be
mutilated,  lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Debenture, or
in lieu of or in substitution for a lost, stolen or destroyed  Debenture,  a new
Debenture for the principal amount of this Debenture so mutilated,  lost, stolen
or  destroyed  but  only  upon  receipt  of  evidence  of such  loss,  theft  or
destruction of such Debenture,  and of the ownership hereof,  and indemnity,  if
requested, all reasonably satisfactory to the Company.

             d)  GOVERNING  LAW.  All  questions  concerning  the  construction,
validity,  enforcement and interpretation of this Debenture shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement  and  defense  of  the  transactions  contemplated  by  any  of  the
Transaction  Documents (whether brought against a party hereto or its respective
affiliates,  directors,  officers,  shareholders,  employees or agents) shall be
commenced  in the  state and  federal  courts  sitting  in the City of New York,
Borough  of  Manhattan  (the  "NEW  YORK  COURTS").  Each  party  hereto  hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication  of any dispute  hereunder  or 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
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally subject to the jurisdiction of any such court, or such


                                       26
<PAGE>

New York Courts are improper or  inconvenient  venue for such  proceeding.  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
Debenture  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.
Each party hereto hereby irrevocably  waives, to the fullest extent permitted by
applicable  law,  any and all  right to trial  by jury in any  legal  proceeding
arising out of or relating to this  Debenture or the  transactions  contemplated
hereby.  If either party shall  commence an action or  proceeding to enforce any
provisions  of this  Debenture,  then the  prevailing  party in such  action  or
proceeding  shall be reimbursed  by the other party for its  attorneys  fees and
other  costs and  expenses  incurred  with the  investigation,  preparation  and
prosecution of such action or proceeding.

             e) WAIVER.  Any waiver by the  Company or the Holder of a breach of
any  provision  of this  Debenture  shall not operate as or be construed to be a
waiver  of any  other  breach of such  provision  or of any  breach of any other
provision of this Debenture.  The failure of the Company or the Holder to insist
upon strict  adherence to any term of this  Debenture  on one or more  occasions
shall not be  considered a waiver or deprive that party of the right  thereafter
to  insist  upon  strict  adherence  to  that  term  or any  other  term of this
Debenture. Any waiver must be in writing.

             f)  SEVERABILITY.  If any  provision of this  Debenture is invalid,
illegal or unenforceable,  the balance of this Debenture shall remain in effect,
and if any provision is  inapplicable  to any person or  circumstance,  it shall
nevertheless  remain  applicable to all other persons and  circumstances.  If it
shall be found that any interest or other amount  deemed  interest due hereunder
violates  applicable laws governing  usury,  the applicable rate of interest due
hereunder shall  automatically be lowered to equal the maximum permitted rate of
interest.  The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon,  plead, or in any manner  whatsoever claim
or take the benefit or advantage  of, any stay,  extension or usury law or other
law which would  prohibit or forgive the Company  from paying all or any portion
of the  principal  of or  interest on this  Debenture  as  contemplated  herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this  indenture,  and the Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

             g) NEXT  BUSINESS  DAY.  Whenever  any payment or other  obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

             h) HEADINGS.  The  headings  contained  herein are for  convenience
only,  do not  constitute  a part of this  Debenture  and shall not be deemed to
limit or affect any of the provisions hereof.

                            *********************

                                       27
<PAGE>

      IN WITNESS  WHEREOF,  the Company has caused this  Debenture  to be duly
executed by a duly authorized officer as of the date first above indicated.

                                    ACCESS INTEGRATED TECHNOLOGIES, INC.

                                    By:_______________________________________
                                       Name:
                                       Title:


                                       28
<PAGE>

                                   ANNEX A

                             NOTICE OF CONVERSION

      The  undersigned  hereby  elects  to  convert  principal  under  the  7%
Convertible   Debenture   due  February   ___,   2009  of  Access   Integrated
Technologies,  Inc., a Delaware  corporation (the  "COMPANY"),  into shares of
common stock, par value $0.001 per share (the "COMMON STOCK"),  of the Company
according to the conditions  hereof,  as of the date written below.  If shares
are to be  issued  in the name of a person  other  than the  undersigned,  the
undersigned  will pay all transfer  taxes payable with respect  thereto and is
delivering herewith such certificates and opinions as reasonably  requested by
the  Company  in  accordance  therewith.  No fee will be charged to the holder
for any conversion, except for such transfer taxes, if any.

      By the delivery of this Notice of Conversion the undersigned  represents
and  warrants to the Company  that its  ownership of the Common Stock does not
exceed  the  amounts  determined  in  accordance  with  Section  13(d)  of the
Exchange Act, specified under Section 4 of the Debenture.

      The   undersigned   agrees  to  comply  with  the  prospectus   delivery
requirements  under the  applicable  securities  laws in  connection  with any
transfer of the aforesaid shares of Common Stock.

Conversion calculations:

                            Date to Effect Conversion:

                            Principal Amount of Debentures to be Converted:

                            Payment of Interest in Common Stock __ yes __ no
                                  If yes, $_____ of Interest Accrued on
                                  Account of Conversion at Issue.

                            Number of shares of Common Stock to be issued:

                            Signature:

                            Name:

                            Address:


                                       29
<PAGE>

                                  SCHEDULE 1

                             CONVERSION SCHEDULE

      The 7%  Convertible  Debentures due February ___, 2009, in the aggregate
principal amount of $____________  issued by Access  Integrated  Technologies,
Inc. This Conversion  Schedule  reflects  conversions  made under Section 4 of
the above referenced Debenture.

                                    Dated:

                                           Aggregate
                                           Principal
                                             Amount
 Date of Conversion                        Remaining
    (or for first                        Subsequent to
   entry, Original                         Conversion
     Issue Date)          Amount of       (or original      Company Attest
                         Conversion        Principal
                                            Amount)



                                       30
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>5
<FILENAME>ex4-22_991578.txt
<DESCRIPTION>EXHIBIT 4.22 COMMON STOCK PURCHASE WARRANT
<TEXT>
                                                                    Exhibit 4.22



NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  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 APPLICABLE  STATE  SECURITIES  LAWS,  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 AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE  TRANSFEROR  TO SUCH EFFECT,  THE  SUBSTANCE OF WHICH SHALL BE
REASONABLY  ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON  EXERCISE OF THIS  SECURITY MAY BE PLEDGED IN  CONNECTION  WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

            To Purchase __________ Shares of Class A Common Stock of

                      ACCESS INTEGRATED TECHNOLOGIES, INC.

            THIS COMMON STOCK PURCHASE WARRANT (this "WARRANT")  certifies that,
for value received,  _____________ (the "HOLDER"),  is entitled,  upon the terms
and subject to the  limitations on exercise and the conditions  hereinafter  set
forth,  at any time on or after [the seven month  anniversary of the date of the
Purchase  Agreement]1 [the date hereof]2 (the "INITIAL EXERCISE DATE") and on or
prior to the close of business on the fifth  anniversary of the Initial Exercise
Date (the "TERMINATION DATE") but not thereafter,  to subscribe for and purchase
from  Access  Integrated   Technologies,   Inc.,  a  Delaware  corporation  (the
"COMPANY"),  up to ______ shares (the "WARRANT SHARES") of Class A Common Stock,
par value $0.001 per share,  of the Company (the "COMMON  STOCK").  The purchase
price of one share of Common  Stock  under  this  Warrant  shall be equal to the
Exercise Price, as defined in Section 2(b).

      SECTION 1.  DEFINITIONS.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "PURCHASE AGREEMENT"),  dated February 9, 2005, among the Company
and the purchasers signatory thereto.




-------------------
1     Only include for Warrants issued at Closing.
2     Only include for Redemption Warrants.


<PAGE>

      SECTION 2.  EXERCISE.

     a) EXERCISE OF WARRANT. Exercise of the purchase rights represented by this
Warrant may be made,  in whole or in part,  at any time or times on or after the
Initial  Exercise Date and on or before the Termination  Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other  office or agency of the  Company as it may  designate  by
notice in  writing  to the  registered  Holder  at the  address  of such  Holder
appearing on the books of the Company); PROVIDED, HOWEVER, within 5 Trading Days
of the date said Notice of  Exercise is  delivered  to the  Company,  the Holder
shall have  surrendered  this Warrant to the Company and the Company  shall have
received payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier's check drawn on a United States bank.

     b)  EXERCISE  PRICE.  The  exercise  price of the Common  Stock  under this
Warrant shall be $___,3 subject to adjustment hereunder (the "EXERCISE PRICE").

     c)  CASHLESS  EXERCISE.  If at any time  after  one  year  from the date of
issuance  of  this  Warrant  there  is  no  effective   Registration   Statement
registering,  or no current prospectus  available for, the resale of the Warrant
Shares by the Holder,  then this  Warrant may also be  exercised at such time by
means of a "cashless  exercise" in which the Holder shall be entitled to receive
a certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

            (A)   = the Closing Price on the Trading Day  immediately  preceding
                  the date of such election;

            (B)   = the Exercise Price of this Warrant, as adjusted; and

            (X)   = the number of Warrant Shares  issuable upon exercise of this
                  Warrant in accordance  with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

            Notwithstanding  anything herein to the contrary, on the Termination
Date,  this Warrant  shall be  automatically  exercised  via  cashless  exercise
pursuant to this Section 2(c).

            d) Exercise Limitations.

                        i. HOLDER'S RESTRICTIONS.  The Holder shall not have the
                  right to  exercise  any portion of this  Warrant,  pursuant to
                  Section  2(c) or  otherwise,  to the extent that after  giving
                  effect to such issuance after exercise,  the Holder  (together


---------------------
3     With respect to the Warrants to be issued at Closing,  the Exercise  Price
      shall be $4.44.  With respect to the Redemption  Warrants and  Acquisition
      Redemption  Warrants,  the  Exercise  Price  shall be the  average  of the
      Closing Prices of the five Trading Days preceding the Optional  Redemption
      Date or Acquisition  Redemption Warrants, as applicable (as defined in the
      Debentures).


                                       2
<PAGE>

                  with the Holder's Affiliates),  as set forth on the applicable
                  Notice of Exercise,  would beneficially own in excess of 9.99%
                  of the  number  of  shares  of the  Common  Stock  outstanding
                  immediately after giving effect to such issuance. For purposes
                  of the  foregoing  sentence,  the  number  of shares of Common
                  Stock  beneficially  owned by the  Holder  and its  Affiliates
                  shall  include the number of shares of Common  Stock  issuable
                  upon  exercise  of this  Warrant  with  respect  to which  the
                  determination  of such  sentence  is  being  made,  but  shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable  upon (A)  exercise  of the  remaining,  nonexercised
                  portion of this  Warrant  beneficially  owned by the Holder or
                  any of its  Affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the  Company  (including,   without   limitation,   any  other
                  Debentures or Warrants)  subject to a limitation on conversion
                  or  exercise  analogous  to the  limitation  contained  herein
                  beneficially  owned by the  Holder  or any of its  Affiliates.
                  Except as set forth in the preceding sentence, for purposes of
                  this Section 2(d), beneficial ownership shall be calculated in
                  accordance  with Section  13(d) of the Exchange  Act, it being
                  acknowledged by Holder that the Company is not representing to
                  Holder that such  calculation  is in  compliance  with Section
                  13(d) of the Exchange Act and Holder is solely responsible for
                  any  calculations  and any schedules or other reports required
                  to be filed with the  Commission in accordance  therewith.  To
                  the extent that the limitation  contained in this Section 2(d)
                  applies,   the   determination  of  whether  this  Warrant  is
                  exercisable  (in  relation  to other  securities  owned by the
                  Holder) and of which a portion of this Warrant is  exercisable
                  shall  be in the  sole  discretion  of  such  Holder,  and the
                  submission of a Notice of Exercise  shall be deemed to be such
                  Holder's  determination of whether this Warrant is exercisable
                  (in relation to other  securities owned by such Holder) and of
                  which  portion of this  Warrant is  exercisable,  in each case
                  subject  to  such  aggregate  percentage  limitation,  and the
                  Company  shall have no  obligation  to verify or  confirm  the
                  accuracy of such  determination.  For purposes of this Section
                  2(d),  in  determining  the  number of  outstanding  shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's  most
                  recent  Form 10-Q or 10-QSB,  or Form 10-K or  10-KSB,  as the
                  case may be,  (y) a more  recent  public  announcement  by the
                  Company  or  (z)  any  other  notice  by  the  Company  or the
                  Company's transfer agent setting forth the number of shares of
                  Common  Stock  outstanding.  Upon the  written  request of the
                  Holder,  the Company  shall  within two Trading  Days  confirm
                  orally (and in writing, if requested) to the Holder the number
                  of shares of Common Stock then  outstanding.  In any case, the
                  number  of  outstanding   shares  of  Common  Stock  shall  be
                  determined  after giving effect to the  conversion or exercise
                  of securities of the Company,  including this Warrant,  by the
                  Holder  or its  Affiliates  since  the date as of  which  such
                  number of outstanding shares of Common Stock was reported. The
                  provisions  of this  Section  2(d) may be waived by the Holder
                  upon,  at the  election of the Holder,  not less than 61 days'


                                       3
<PAGE>

                  prior  notice  to the  Company,  and  the  provisions  of this
                  Section  2(d) shall  continue to apply until such 61st day (or
                  such  later  date,  as  determined  by the  Holder,  as may be
                  specified in such notice of waiver).

            e) MECHANICS OF EXERCISE.

                        i.   AUTHORIZATION   OF  WARRANT  SHARES.   The  Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase  rights  represented  by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant,  be duly authorized,  validly issued,  fully paid and
                  nonassessable  and free from all taxes,  liens and  charges in
                  respect of the issue  thereof  (other than taxes in respect of
                  any transfer occurring contemporaneously with such issue).

                        ii. DELIVERY OF CERTIFICATES UPON EXERCISE.  The Company
                  shall  cause   certificates   for  Warrant  Shares   purchased
                  hereunder  to be  transmitted  by the  transfer  agent  of the
                  Company to the Holder by crediting the account of the Holder's
                  prime broker with the  Depository  Trust  Company  through its
                  Deposit  Withdrawal  Agent  Commission  ("DWAC") system if the
                  Company is a  participant  in such  system,  and  otherwise by
                  physical  delivery to the address  specified  by the Holder in
                  the Notice of  Exercise,  within  three  Trading Days from the
                  receipt  by  the  Company  of the  Notice  of  Exercise  Form,
                  surrender  of  this  Warrant  and  payment  of  the  aggregate
                  Exercise  Price as set forth above  ("WARRANT  SHARE  DELIVERY
                  Date"). This Warrant shall be deemed to have been exercised on
                  the date the  Exercise  Price is received by the  Company,  if
                  such  date is  after  the  Notice  of  Exercise  Form and this
                  Warrant are received by the Company.  The Warrant Shares shall
                  be deemed to have been issued,  and Holder or any other Person
                  so  designated  to be named  therein  shall be  deemed to have
                  become a holder  of  record  of such  Warrant  Shares  for all
                  purposes,  as of the date the  Warrant has been  exercised  by
                  payment  to the  Company of the  Exercise  Price and all taxes
                  required to be paid by the Holder, if any, pursuant to Section
                  2(e)(vii)  prior to the  issuance  of such  shares,  have been
                  paid.

                        iii.  DELIVERY OF NEW WARRANTS  UPON  EXERCISE.  If this
                  Warrant shall have been  exercised in part, the Company shall,
                  within  five  Trading  Days after the time of  delivery of the
                  certificate  or  certificates   representing  Warrant  Shares,
                  deliver  to  Holder a new  Warrant  evidencing  the  rights of
                  Holder to purchase the  unpurchased  Warrant Shares called for
                  by this Warrant, which new Warrant shall in all other respects
                  be  identical  (including,  not unless  required  pursuant  to
                  Section 4.1(c) of the Purchase Agreement, the placement of any
                  restrictive legends) with this Warrant.

                        iv. RESCISSION RIGHTS. If the Company fails to cause its
                  transfer  agent to  transmit  to the Holder a  certificate  or


                                       4
<PAGE>

                  certificates  representing the Warrant Shares pursuant to this
                  Section 2(e)(iv) by the 2nd Trading Day immediately  following
                  the Warrant Share Delivery Date, then the Holder will have the
                  right to rescind such exercise.

                        v.  COMPENSATION FOR BUY-IN ON FAILURE TO TIMELY DELIVER
                  CERTIFICATES  UPON  EXERCISE.  In addition to any other rights
                  available  to the Holder,  if the  Company  fails to cause its
                  transfer  agent to  transmit  to the Holder a  certificate  or
                  certificates  representing  the Warrant  Shares  pursuant to a
                  proper and  conforming  exercise  on or before the 2nd Trading
                  Day immediately following the Warrant Share Delivery Date, and
                  if after  such date the  Holder is  required  by its broker to
                  purchase  in a bona fide  arm's  length  transaction  for fair
                  market  value (in an open  market  transaction  or  otherwise)
                  shares of Common Stock to deliver in satisfaction of a sale by
                  the Holder of the Warrant Shares which the Holder  anticipated
                  receiving  upon such exercise (a  "BUY-IN"),  then the Company
                  shall (1) pay in cash to the  Holder  the  amount by which (x)
                  the  Holder's  total  purchase  price   (including   brokerage
                  commissions,  if any)  for  the  shares  of  Common  Stock  so
                  purchased  exceeds  (y) the amount  equal to (A) the number of
                  Warrant  Shares  that the Company  was  otherwise  required to
                  deliver  to the  Holder in  connection  with the  exercise  at
                  issue, multiplied by (B) the price per share at which the sell
                  order giving rise to such  purchase  obligation  was executed,
                  and (2) at the option of the Holder given within three Trading
                  Days of the failure to deliver,  either  reinstate the portion
                  of the Warrant  and  equivalent  number of Warrant  Shares for
                  which such  exercise  was not honored or deliver to the Holder
                  the  number of shares of Common  Stock  that  would  have been
                  issued had the Company  timely  complied with its exercise and
                  delivery  obligations  hereunder.  For example,  if the Holder
                  purchases  Common  Stock  having  a total  purchase  price  of
                  $11,000  to  cover  a  Buy-In  with  respect  to an  attempted
                  exercise  of shares of Common  Stock  with an  aggregate  sale
                  price  giving  rise to such  purchase  obligation  of $10,000,
                  under clause (1) of the immediately  preceding  sentence,  the
                  Company shall be required to pay the Holder $1,000. The Holder
                  shall provide the Company a detailed written notice indicating
                  the  amounts  payable to the Holder in respect of the  Buy-In,
                  together  with  applicable  confirmations  and other  evidence
                  reasonably  requested  by the  Company.  Nothing  herein shall
                  limit a Holder's right to pursue any other remedies  available
                  to it  hereunder,  at  law  or in  equity  including,  without
                  limitation, a decree of specific performance and/or injunctive
                  relief with respect to the Company's failure to timely deliver
                  certificates representing shares of Common Stock upon exercise
                  of the Warrant as required pursuant to the terms hereof.

                        vi. NO FRACTIONAL  SHARES OR SCRIP. No fractional shares
                  or scrip representing  fractional shares of Common Stock shall


                                       5
<PAGE>

                  be  issued  upon  the  exercise  of  this  Warrant.  As to any
                  fraction  of a  share  of  Common  Stock  which  Holder  would
                  otherwise  be  entitled to purchase  upon such  exercise,  the
                  Company  shall pay a cash  adjustment in respect of such final
                  fraction in an amount equal to such fraction multiplied by the
                  Exercise Price.

                        vii.   CHARGES,   TAXES  AND   EXPENSES.   Issuance   of
                  certificates  for Warrant  Shares shall be made without charge
                  to  the  Holder  for  any  issue  or  transfer  tax  or  other
                  incidental   expense  in  respect  of  the  issuance  of  such
                  certificate,  all of which taxes and expenses shall be paid by
                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be  directed  by
                  the  Holder;  PROVIDED,   HOWEVER,  that  in  the  event  that
                  certificates representing Warrant Shares are to be issued in a
                  name  other than the name of the  Holder,  this  Warrant  when
                  surrendered   for  exercise   shall  be   accompanied  by  the
                  Assignment Form attached hereto duly completed and executed by
                  the  Holder;  and the  Company  may  require,  as a  condition
                  thereto,  the payment of a sum  sufficient to reimburse it for
                  any  expenses   incidental   thereto.   The  Holder  shall  be
                  responsible  for all other tax  liability  that may arise as a
                  result of holding or  transferring  this  Warrant or receiving
                  Warrant Shares upon exercise thereof.

                        viii.  CLOSING OF BOOKS.  Subject to applicable law, the
                  Company will not close its stockholder books or records in any
                  manner  which  prevents the timely  exercise of this  Warrant,
                  pursuant to the terms hereof.

            SECTION 3.  CERTAIN ADJUSTMENTS.

            a) STOCK  DIVIDENDS  AND SPLITS.  If the Company,  at any time while
this  Warrant is  outstanding:  (A) pays a stock  dividend or  otherwise  make a
distribution or distributions on shares of its Common Stock, the Company's Class
B Common Stock or any other equity or equity  equivalent  securities  payable in
shares of Common Stock  (which,  for  avoidance of doubt,  shall not include any
shares of Common  Stock  issued by the Company  pursuant to this  Warrant),  (B)
subdivides  outstanding  shares of Common Stock into a larger  number of shares,
(C) combines  (including  by way of reverse stock split)  outstanding  shares of
Common Stock into a smaller number of shares, or (D) issues by  reclassification
of shares of the Common Stock any shares of capital  stock of the Company,  then
in each case the Exercise  Price shall be  multiplied by a fraction of which the
numerator  shall be the  number of shares of Common  Stock  (excluding  treasury
shares,  if any)  outstanding  immediately  before  such  event and of which the
denominator   shall  be  the  number  of  shares  of  Common  Stock  outstanding
immediately after such event. Simultaneously with any adjustment to the Exercise
Price  pursuant to this Section 3(a),  the number of Warrant Shares which may be
purchased  upon  exercise  of this  Warrant  shall  be  increased  or  decreased
proportionately,  so that after such  adjustment,  the  aggregate  amount of the
adjusted  Exercise Price multiplied by the aggregate  adjusted amount of Warrant
Shares  shall  equal the  aggregate  amount  of the  unadjusted  Exercise  Price
multiplied by the aggregate  unadjusted amount of Warrant Shares. Any adjustment
made  pursuant to this  Section 3(a) shall (x) with respect to clause (A) of the
first  sentence of this Section 3(a),  become  effective  immediately  after the
record date for the  determination  of  stockholders  entitled  to receive  such
dividend or distribution  and (y) with respect to clauses (B) - (D) of the first
sentence of this Section 3(a), become effective  immediately after the effective
date in the case of a subdivision, combination or re-classification.

                                       6
<PAGE>

            b) PRO RATA DISTRIBUTIONS.  If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common Stock, including all
holders  of the  Company's  Class B  Common  Stock  (and not to  Holders  of the
Warrants)  evidences  of its  indebtedness  or assets  (including  cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common  Stock (which  shall be subject to Section  3(b)),  then in each
such case the Exercise Price shall be adjusted by multiplying the Exercise Price
in effect  immediately  prior to the  record  date  fixed for  determination  of
stockholders  entitled to receive such  distribution  by a fraction of which the
denominator  shall be the  Closing  Price  determined  as of the record  date or
effective date, as the case may be,  mentioned in Section 3(a), and of which the
numerator  shall be such Closing Price on such date less the then per share fair
market  value  at such  date  of the  portion  of such  assets  or  evidence  of
indebtedness so distributed  applicable to one  outstanding  share of the Common
Stock or Common Stock  equivalent  share of Class B Common Stock  (determined by
dividing the amount  distributed  by the then issued and  outstanding  shares of
Common Stock) as  determined by the Board of Directors in good faith.  In either
case the adjustments  shall be described in a statement  provided to the Holders
of the portion of assets or evidences of  indebtedness  so  distributed  or such
subscription  rights  applicable  to one share of  Common  Stock (or for Class B
Common Stock,  equivalent  measure).  Such adjustment shall be made whenever any
such  distribution  is made and shall  become  effective  immediately  after the
record date mentioned above.

            c)  FUNDAMENTAL  TRANSACTION.  If, at any time while this Warrant is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged for other securities  (other than capital stock of the Company),  cash
or property  (in any such case, a  "FUNDAMENTAL  TRANSACTION"),  then,  upon any
subsequent  conversion  of this  Warrant,  the  Holder  shall  have the right to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately  prior  to the  occurrence  of such  Fundamental  Transaction,  upon
exercise of this Warrant,  the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving  corporation,
and any additional consideration ("ALTERNATE CONSIDERATION") receivable upon, or
as a result of , such Fundamental  Transaction by a Holder holding the number of
Warrant Shares  underlying  this Warrant  immediately  prior to the occurence of
such event. For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately  adjusted to apply to such Alternate  Consideration
based on the amount of Alternate  Consideration issuable in respect of one share
of Common Stock in connection with such Fundamental Transaction, and the Company
shall  apportion  the  Exercise  Price among the  Alternate  Consideration  in a
reasonable manner  reflecting the relative value of any different  components of
the Alternate Consideration.  If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder  shall be given the same choice as to such  securities,  cash or
property  that it receives  upon any  exercise of this  Warrant  following  such
Fundamental  Transaction.  To the extent  necessary to effectuate  the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction  shall  issue  to the  Holder  a new  warrant  consistent  with  the
foregoing  provisions and evidencing the Holder's right to exercise such warrant


                                       7
<PAGE>

into  Alternate  Consideration.  The terms of any agreement  pursuant to which a
Fundamental  Transaction  is effected  shall  include  terms  requiring any such
successor or surviving entity to comply with the provisions of this Section 3(d)
and  insuring  that this  Warrant  (or any such  replacement  security)  will be
similarly  adjusted upon any subsequent  transaction  analogous to a Fundamental
Transaction.

            d) CALCULATIONS. All calculations under this Section 3 shall be made
to the nearest cent or the nearest  1/100th of a share,  as the case may be. For
purposes of this  Section 3, the number of shares of Common  Stock  deemed to be
issued  and  outstanding  as of a given  date  shall be the sum of the number of
shares  of  Common  Stock  (excluding   treasury  shares,  if  any)  issued  and
outstanding  at the  close of the  Trading  Day on or, if not  applicable,  most
recently preceding, such given date.

            e)  VOLUNTARY  ADJUSTMENT  BY  COMPANY.  The Company may at any time
during the term of this Warrant  reduce the then current  Exercise  Price to any
amount and for any period of time deemed  appropriate  by the Board of Directors
of the Company.

            f) NOTICE TO HOLDERS.

                        i. ADJUSTMENT TO EXERCISE  PRICE.  Whenever the Exercise
                  Price is  adjusted  pursuant  to this  Section 3, the  Company
                  shall  promptly mail to the Holder a notice  setting forth the
                  Exercise Price after such adjustment and setting forth a brief
                  statement of the facts requiring such adjustment.

                        ii.  NOTICE  TO ALLOW  EXERCISE  BY  HOLDER.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  address  as it shall  appear
                  upon the Warrant Register  (defined below) of the Company,  at
                  least 20  calendar  days  prior to the  applicable  record  or
                  effective date hereinafter specified, a notice stating (x) the
                  record  date  established  for the  purpose of such  dividend,
                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or  (y)  the  record  date  established  for  such
                  reclassification,  consolidation,  merger,  sale,  transfer or
                  share exchange is expected to become  effective or close,  and
                  the date as of which it is expected that holders of the Common


                                       8
<PAGE>

                  Stock of record shall be entitled to exchange  their shares of
                  the  Common  Stock  for  securities,  cash or  other  property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  PROVIDED,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required to be specified in such notice. Subject to applicable
                  law, the Holder is entitled to exercise  this  Warrant  during
                  the 20-day period commencing on the date of such notice to the
                  effective   date  of  the  event   triggering   such   notice.
                  Notwithstanding  the  foregoing,  the  delivery  of the notice
                  described  in this  Section  3(f) is not intended to and shall
                  not bestow upon the Holder any voting rights  whatsoever  with
                  respect to outstanding unexercised Warrants.

            SECTION 4.  TRANSFER OF WARRANT.

            a)  TRANSFERABILITY.  Subject  to  compliance  with  any  applicable
securities  laws and the  conditions  set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and
all rights  hereunder are  transferable,  in whole or in part, upon surrender of
this Warrant at the  principal  office of the Company,  together  with a written
assignment  of this  Warrant  substantially  in the form  attached  hereto  duly
executed by the Holder or its agent or attorney and funds  sufficient to pay any
transfer  taxes payable upon the making of such  transfer.  Upon such  surrender
and, if required,  such  payment,  the Company  shall  execute and deliver a new
Warrant  or  Warrants  in the  name  of the  assignee  or  assignees  and in the
denomination or  denominations  specified in such instrument of assignment,  and
shall issue to the assignor a new Warrant  evidencing  the  portion,  if any, of
this Warrant not so assigned,  and this Warrant shall  promptly be cancelled.  A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued.

            b) NEW WARRANTS.  This Warrant may be divided or combined with other
Warrants  upon  presentation  hereof at the  aforesaid  office  of the  Company,
together with a written notice  specifying the names and  denominations in which
new  Warrants  are to be issued,  signed by the Holder or its agent or attorney.
Subject  to  compliance  with  Section  4(a),  as to any  transfer  which may be
involved in such division or combination,  the Company shall execute and deliver
a new Warrant or Warrants in exchange  for the Warrant or Warrants to be divided
or combined in accordance with such notice.

            c) WARRANT REGISTER.  The Company shall register this Warrant,  upon
records  to be  maintained  by  the  Company  for  that  purpose  (the  "WARRANT
REGISTER"),  in the name of the  record  Holder  hereof  from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise  hereof or any  distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

            d) TRANSFER  RESTRICTIONS.  If, at the time of the surrender of this
Warrant in connection  with any transfer of this  Warrant,  the transfer of this
Warrant shall not be registered pursuant to an effective  registration statement
under the Securities Act and under applicable state securities or blue sky laws,


                                       9
<PAGE>

the Company may require,  as a condition of allowing  such transfer (i) that the
transferor or transferee  of this  Warrant,  as the case may be,  furnish to the
Company a written opinion of counsel (which opinion shall be in form,  substance
and scope customary for opinions of counsel in comparable  transactions)  to the
effect that such transfer may be made without  registration under the Securities
Act and  under  applicable  state  securities  or blue sky  laws,  (ii) that the
transferor or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7),
or (a)(8)  promulgated  under the  Securities  Act or a qualified  institutional
buyer as defined in Rule 144A(a) under the Securities Act.

            SECTION 5.  MISCELLANEOUS.

            a) TITLE TO WARRANT.  Prior to the  Termination  Date and subject to
compliance with applicable laws and Section 4 of this Warrant,  this Warrant and
all rights  hereunder  are  transferable,  in whole or in part, at the office or
agency of the  Company by the Holder in person or by duly  authorized  attorney,
upon surrender of this Warrant  together with the Assignment Form annexed hereto
properly  endorsed  and the legal  opinion  required  under  Section  4(d).  The
transferee  shall sign an  investment  letter in form and  substance  reasonably
satisfactory to the Company.

            b) NO RIGHTS AS SHAREHOLDER  UNTIL  EXERCISE.  This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise  Price (or by means of a cashless  exercise),
the  Warrant  Shares  so  purchased  shall be and be deemed to be issued to such
Holder as the record  owner of such  shares as of the close of  business  on the
later of the date of such surrender and payment.

            c) LOSS,  THEFT,  DESTRUCTION OR MUTILATION OF WARRANT.  The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

            d) SATURDAYS,  SUNDAYS,  HOLIDAYS, ETC. If the last or appointed day
for the taking of any action or the  expiration of any right required or granted
herein shall be a Saturday,  Sunday or a legal holiday,  then such action may be
taken or such right may be exercised on the next  succeeding day not a Saturday,
Sunday or legal holiday.

            e) AUTHORIZED SHARES.

                  The  Company  covenants  that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common


                                       10
<PAGE>

            Stock a  sufficient  number of shares to provide for the issuance of
            the Warrant  Shares upon the exercise of any  purchase  rights under
            this Warrant.  The Company  further  covenants  that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the  necessary  certificates  for the Warrant  Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such  reasonable  action as may be necessary to assure that
            such  Warrant  Shares  may be  issued  as  provided  herein  without
            violation  of  any  applicable   law  or   regulation,   or  of  any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this  Warrant,  but will at all times in good  faith
            assist in the  carrying  out of all such  terms and in the taking of
            all such actions as may be necessary or  appropriate  to protect the
            rights of Holder as set forth in this  Warrant  against  impairment.
            Without  limiting the generality of the foregoing,  the Company will
            (a) not  increase  the par  value of any  Warrant  Shares  above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value,  (b) take all such action as may be necessary
            or  appropriate  in order that the  Company  may validly and legally
            issue fully paid and nonassessable  Warrant Shares upon the exercise
            of this  Warrant,  and (c) use  commercially  reasonable  efforts to
            obtain all such  authorizations,  exemptions  or  consents  from any
            public  regulatory  body  having  jurisdiction  thereof  as  may  be
            necessary  to enable the  Company to perform its  obligations  under
            this Warrant.

                  Before  taking any action which would result in an  adjustment
            in  the  number  of  Warrant   Shares  for  which  this  Warrant  is
            exercisable or in the Exercise  Price,  the Company shall obtain all
            such  authorizations or exemptions  thereof, or consents thereto, as
            may be necessary  from any public  regulatory  body or bodies having
            jurisdiction thereof.

            f)  JURISDICTION.   All  questions   concerning  the   construction,
validity,  enforcement and interpretation of this Warrant shall be determined in
accordance  with  the  governing  law  provisions  set  forth  in  the  Purchase
Agreement.

            g)  RESTRICTIONS.  The Holder  acknowledges  that the Warrant Shares
acquired  upon the  exercise  of this  Warrant,  if not  registered,  will  have
restrictions  upon resale imposed by state and federal  securities laws and will
contain a restrictive legend substantially in the following form:



                                       11
<PAGE>

            THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
            UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
            SECURITIES LAW,

            AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
            TO AN EFFECTIVE REGISTRATION THEREOF OR A VALID EXEMPTION THEREFROM

            h)  NONWAIVER  AND  EXPENSES.  No course of  dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

            i) NOTICES.  Unless  otherwise  specifically  set forth herein,  any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company  shall be delivered in  accordance  with the notice
provisions of the Purchase Agreement.

            j) LIMITATION OF LIABILITY.  No provision  hereof, in the absence of
any  affirmative  action by Holder to exercise this Warrant or purchase  Warrant
Shares, and no enumeration  herein of the rights or privileges of Holder,  shall
give rise to any liability of Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

            k) REMEDIES.  Holder,  in addition to being entitled to exercise all
rights  granted by law,  including  recovery  of  damages,  will be  entitled to
specific  performance of its rights under this Warrant.  The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this Warrant and hereby agrees to
waive the defense in any action for  specific  performance  that a remedy at law
would be adequate.

            l) SUCCESSORS AND ASSIGNS.  Subject to applicable  securities  laws,
this Warrant and the rights and obligations  evidenced hereby shall inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder.

            m)  AMENDMENT.  This  Warrant may only be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.



                                       12
<PAGE>

            n) SEVERABILITY.  Wherever possible,  each provision of this Warrant
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

            o)  HEADINGS.  The  headings  used  in  this  Warrant  are  for  the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                                    ********************




                                       13
<PAGE>




            IN  WITNESS  WHEREOF,  the  Company  has caused  this  Warrant to be
executed by its officer thereunto duly authorized.

Dated:  February __, 2005

                                    ACCESS INTEGRATED TECHNOLOGIES, INC.



                                    By:
                                       --------------------------------------
                                       Name:
                                       Title:



                                       14
<PAGE>



                               NOTICE OF EXERCISE

To:   ACCESS INTEGRATED TECHNOLOGIES, INC.

            (1) The  undersigned  hereby  elects to  purchase            Warrant
Shares of the Company  pursuant to the terms of the  attached  Warrant  (only if
exercised in full),  and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

            (2) Payment shall take the form of (check applicable box):

                  [ ] in lawful money of the United States; or

                  [ ] the  cancellation  of such number of Warrant  Shares as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

            (3) Please issue a certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

            (4) ACCREDITED INVESTOR. The undersigned is an "accredited investor"
as defined in  Regulation D  promulgated  under the  Securities  Act of 1933, as
amended.

            (5)  By  delivery  of  this  Notice  of  Exercise,  the  undersigned
represents  and warrants to the Company that after giving effect to the exercise
evidenced  hereby,  the Holder will  beneficially  own no more than 4.99% of the
shares of Common Stock of the Company (as determined in accordance  with Section
2(d) hereof.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
                         -------------------------------------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY:
                                                      --------------------------
Social Security or Tax ID#, if applicable:
                                          --------------------------------------
Name of Authorized Signatory:
                             ---------------------------------------------------
Title of Authorized Signatory:
                             ---------------------------------------------------
Date:
     ---------------------------------------------------------------------------




                                       15
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)


     FOR VALUE RECEIVED,  the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

                                                 whose address is
------------------------------------------------


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


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

                                          Dated:
                                                -------------, -------


                  Holder's Signature: ---------------------------

                  Holder's Address:   ---------------------------

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



Signature Guaranteed:
                      -------------------------------------------------


NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.



                                       16
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>6
<FILENAME>a991577v2.txt
<DESCRIPTION>EXHIBIT 4.23 REGISTRATION RIGHTS AGREEMENT
<TEXT>
                                                                    Exhibit 4.23

                          REGISTRATION RIGHTS AGREEMENT

      This Registration  Rights Agreement (this "AGREEMENT") is made and entered
into as of February 9, 2005,  among  Access  Integrated  Technologies,  Inc.,  a
Delaware corporation (the "COMPANY"),  and the purchasers signatory hereto (each
such purchaser is a "PURCHASER" and collectively, the "PURCHASERS").

      This  Agreement is made  pursuant to the  Securities  Purchase  Agreement,
dated as February 9, 2005 among the Company and the  Purchasers  (the  "PURCHASE
AGREEMENT").

      The Company and the Purchasers hereby agree as follows:

1.    DEFINITIONS

      CAPITALIZED  TERMS USED AND NOT OTHERWISE  DEFINED HEREIN THAT ARE DEFINED
IN THE PURCHASE  AGREEMENT  SHALL HAVE THE  MEANINGS  GIVEN TO SUCH TERMS IN THE
PURCHASE  AGREEMENT.  As used in this Agreement,  the following terms shall have
the following meanings:

            "ACQUISITION  REDEMPTION  WARRANTS" has the meaning ascribed to such
      term in the Debentures.

            "ADVICE" shall have the meaning set forth in Section 6(d).

            "EFFECTIVENESS   DATE"  means,  (a)  with  respect  to  the  initial
      Registration  Statement required to be filed hereunder,  the 90th calendar
      day following  the date hereof  (120th  calendar day in the event that the
      Commission  reviews and  provides  written  comments  to the  Registration
      Statement),  (b) with respect to any Registrable  Securities issuable upon
      exercise  of  the  Redemption   Warrants  and/or  Acquisition   Redemption
      Warrants,  the  90th  calendar  day  following  the  date  on  which  such
      Redemption Warrants and/or Acquisition Redemption Warrants, as applicable,
      are required to be issued  pursuant to the terms of the Debentures  (120th
      calendar day in the event that the Commission reviews and provides written
      comments  to the  Registration  Statement)  and (c)  with  respect  to any
      additional  Registration  Statements  which may be  required  pursuant  to
      Section  3(c),  the 90th  calendar  day  following  the date on which  the
      Company first knows, or reasonably should have known, that such additional
      Registration  Statement is required hereunder;  PROVIDED,  HOWEVER, in the
      event the  Company is  notified  by the  Commission  that one of the above
      Registration  Statements  will not be reviewed or is no longer  subject to
      further  review  and  comments,   the   Effectiveness   Date  as  to  such
      Registration  Statement  shall be the fifth Trading Day following the date
      on which the Company is so notified if such fifth  Trading  Date  precedes
      the applicable date required above.  Notwithstanding the foregoing, if any
      day  otherwise  designated  as an  "Effectiveness  Date"  pursuant to this
      definition falls on a day other than a Trading Day, the Effectiveness Date
      shall be deemed to be the next Trading Day.

            "EFFECTIVENESS  PERIOD"  shall have the meaning set forth in Section
      2(a).

            "EVENT" shall have the meaning set forth in Section 2(b).

                                       1
<PAGE>

            "EVENT DATE" shall have the meaning set forth in Section 2(b).

            "FILING DATE" means, as the context requires, any of (a) the Initial
      Filing Date, (b) with respect to any Future Registrable  Securities (other
      than Interest Payment Shares), the 30th calendar day following the date on
      which the Redemption  Warrants and/or Acquisition  Redemption Warrants are
      required to be issued  pursuant to the  Debentures and (c) with respect to
      any additional  Registration  Statements which may be required pursuant to
      Section  3(c),  the 30th day following the date on which the Company first
      knows, or reasonably  should have known that such additional  Registration
      Statement is required hereunder. Notwithstanding the foregoing, if any day
      otherwise  designated as a "Filing Date" pursuant to this definition falls
      on a day other than a Trading  Day,  the Filing Date shall be deemed to be
      the next Trading Day.

            "FUTURE REGISTRABLE SECURITIES" means (i) all shares of Common Stock
      issuable upon the exercise of any Redemption  Warrants and any Acquisition
      Redemption  Warrants and (ii) Interest  Payment Shares,  together with any
      securities  issued or  issuable  upon any stock  split,  dividend or other
      distribution,  recapitalization  or  similar  event  with  respect  to the
      foregoing;  PROVIDED HOWEVER that Future Registrable  Securities shall not
      include those securities that (a) have been  effectively  registered under
      Section 5 of the Securities Act and disposed of pursuant to a registration
      statement or (b) have been  transferred  pursuant to Rule 144  promulgated
      under the  Securities Act or any successor rule or (c) have been issued to
      the Holder pursuant to an effective registration statement. As the context
      requires,  upon the issuance of any Redemption Warrants and/or Acquisition
      Redemption  Warrants  and/or  any  Interest  Payment  Shares,  the  Future
      Registrable  Securities  issued in  connection  with the  issuance of such
      Redemption Warrants and/or Acquisition Redemption Warrants and/or Interest
      Payment  Shares  shall  be  considered  "Registrable  Securities"  for the
      purposes of this Agreement.

            "HOLDER" or "HOLDERS"  means the holder or holders,  as the case may
      be, from time to time of Registrable Securities.

            "INDEMNIFIED  PARTY"  shall  have the  meaning  set forth in Section
      5(c).

            "INDEMNIFYING  PARTY"  shall have the  meaning  set forth in Section
      5(c).

            "INITIAL FILING DATE" means the 30th calendar day following the date
      hereof.  Notwithstanding the foregoing, if the day otherwise designated as
      the "Initial Filing Date" pursuant to this definition falls on a day other
      than a Trading Day, the Initial Filing Date shall be deemed to be the next
      Trading Day.

            "INTEREST PAYMENT SHARES" means all shares of Common Stock issued as
      payment of interest on the Debenture  (assuming all  permissible  interest
      payments  are made in shares of Common Stock and the  Debentures  are held
      until maturity).

            "LOSSES" shall have the meaning set forth in Section 5(a).

            "PLAN OF  DISTRIBUTION"  shall have the meaning set forth in Section
      2(a).

                                       2
<PAGE>

            "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.

            "PROSPECTUS"  means  the  prospectus   included  in  a  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 a 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.

            "REDEMPTION  WARRANTS" has the meaning  ascribed to such term in the
      Debentures.

            "REGISTRABLE  SECURITIES"  means (i) (A) all of the shares of Common
      Stock  issuable  upon  conversion  in full of the  Debentures  and (B) all
      shares of Common Stock issuable upon exercise of the Warrants  (other than
      Future  Registrable  Securities,  except  as  otherwise  provided  in  the
      definition of Future Registrable  Securities),  (ii) any securities issued
      or  issuable  upon  any  stock  split,  dividend  or  other  distribution,
      recapitalization  or similar event with respect to the foregoing and (iii)
      any  additional  shares of Common Stock  issuable in  connection  with any
      anti-dilution  provisions in the Debentures (in each case,  without giving
      effect to any  limitations  on  conversion  set forth in the  Debentures);
      PROVIDED,  HOWEVER,  that  Registrable  Securities shall not include those
      securities that (a) have been  effectively  registered  under Section 5 of
      the Securities Act and disposed of pursuant to a registration statement or
      (b) have  been  transferred  pursuant  to Rule 144  promulgated  under the
      Securities Act or any successor rule.

            "REGISTRATION  STATEMENT" means any registration  statement required
      to  be  filed  hereunder  and  any  additional   registration   statements
      contemplated  by Section 3(c),  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.

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

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

            "SELLING SHAREHOLDER QUESTIONNAIRE" shall have the meaning set forth
      in Section 3(a).

2. SHELF REGISTRATION

                                       3
<PAGE>

     (a) On or prior to the Initial  Filing Date,  the Company shall prepare and
file with the Commission a shelf  Registration  Statement covering the resale of
125% of the Registrable  Securities (and any Future Registrable  Securities that
may be included in such Registration  Statement) for an offering to be made on a
continuous basis pursuant to Rule 415. Each such Registration Statement shall be
on Form S-3 (except if the Company is not then  eligible to register  for resale
the Registrable Securities on Form S-3, in which case such registration shall be
on another  appropriate  form in accordance  herewith) and shall contain (unless
otherwise  directed  by the  Holders  holding  a  majority  of  the  Registrable
Securities to be registered under the applicable Registration Statement) a "PLAN
OF DISTRIBUTION"  section  substantially in the form attached hereto as ANNEX A,
with such changes as are reasonably  required to respond to the  then-applicable
plan of distribution and to comply with then-applicable securities laws. Subject
to the  terms  of  this  Agreement,  the  Company  shall  use  its  commercially
reasonable efforts to cause each Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing  thereof,  but
in any  event  prior to the  applicable  Effectiveness  Date,  and shall use its
commercially reasonable efforts to keep such Registration Statement continuously
effective  under  the  Securities  Act  until  the  date  on  which  all  of the
Registrable Securities or Future Registrable Securities, as applicable,  covered
by such  Registration  Statement  have been sold or may be sold  without  volume
restrictions pursuant to Rule 144(k) or any rule of similar effect as determined
by the  counsel to the  Company  pursuant  to a written  opinion  letter to such
effect,  addressed  and  acceptable  to the  Company's  transfer  agent  and the
affected Holders (the  "EFFECTIVENESS  PERIOD").  The Company shall  immediately
notify the Holders  (which may be via  facsimile)  of the  effectiveness  of the
Registration  Statement  within the next Trading Day  following the day that the
Company receives notification of the effectiveness from the Commission.  Failure
to so notify the Holders  within one Trading Day of such  notification  shall be
deemed an "Event" under Section 2(b).

     (b) If: (i) a Registration Statement is not filed on or prior to its Filing
Date (if the  Company  files a  Registration  Statement  without  affording  the
Holders the opportunity to review and comment on the same as required by Section
3(a),  the Company  shall not be deemed to have  satisfied  this clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration in
accordance  with Rule 461  promulgated  under the  Securities  Act,  within five
Trading  Days of the date that the  Company is  notified  (orally or in writing,
whichever is earlier) by the Commission  that a Registration  Statement will not
be  "reviewed,"  or not  subject  to  further  review,  or  (iii)  prior  to its
Effectiveness  Date,  the Company  fails to file a  pre-effective  amendment and
otherwise  respond in writing to comments  made by the  Commission in respect of
such Registration  Statement within 10 Trading Days after the receipt of written
comments by or notice from the  Commission  that such  amendment  is required in
order  for a  Registration  Statement  to  be  declared  effective,  or  (iv)  a
Registration  Statement  filed or required to be filed hereunder is not declared
effective  by the  Commission  by its  Effectiveness  Date,  or  (v)  after  the
Effectiveness Date and during the Effectiveness Period, a Registration Statement
ceases for any reason to remain  continuously  effective  as to all  Registrable
Securities  for which it is  required  to be  effective  and the Holders are not
permitted  to  utilize  the  Prospectus   therein  to  resell  such  Registrable
Securities for 15  consecutive  Trading Days but no more than an aggregate of 25
Trading Days during any 12-month  period (which need not be consecutive  Trading
Days) (any such  failure or breach  being  referred  to as an  "EVENT",  and for
purposes  of clause  (i) or (iv) the date on which  such  Event  occurs,  or for
purposes  of clause  (ii) the date on which  such  five  Trading  Day  period is
exceeded,  or for  purposes  of clause  (iii) the date which such 10 Trading Day
period is  exceeded,  or for purposes of clause (v) the date on which such 15 or
25 Trading Day period,  as  applicable,  is exceeded being referred to as "EVENT
DATE"),

                                       4
<PAGE>

then,  as long  as such  Holder  shall  have  complied  with  their  obligations
hereunder,  in addition to any other  rights the Holders may have  hereunder  or
under applicable law, on each such Event Date and on each monthly anniversary of
each such  Event  Date  beginning  with the  first  monthly  anniversary  of the
applicable Event Date (if the applicable Event shall not have been cured by such
date) until the applicable  Event is cured (each a "LIQUIDATED  DAMAGES  PAYMENT
DATE"),  the  Company  shall pay to each  Holder an amount in cash,  as  partial
liquidated damages and not as a penalty, with respect to each Liquidated Damages
Payment  Date,  equal to (x) 1% of the  aggregate  purchase  price  paid by such
Holder pursuant to the Purchase  Agreement for any  Registrable  Securities then
held by such Holder  multiplied by (y) a fraction,  the numerator of which shall
be the number of total  calendar  days which have passed  since the  immediately
preceding  Liquidated Damages Payment Date and the denominator of which shall be
30 calendar  days.  If the Company fails to pay any partial  liquidated  damages
pursuant  to this  Section in full  within  seven  calendar  days after the date
payable,  the Company will pay interest thereon at a rate per annum equal to the
Late Fee rate (as defined in the  Debenture) (or such lesser maximum amount that
is permitted to be paid by applicable  law) to the Holder,  accruing  daily from
the date such partial  liquidated  damages are due until such amounts,  plus all
such interest thereon, are paid in full. The partial liquidated damages pursuant
to the terms hereof shall apply on a daily  pro-rata  basis for any portion of a
month prior to the cure of an Event.

3. REGISTRATION PROCEDURES

      In connection with the Company's registration  obligations hereunder,  the
Company shall:

     (a)  Not  less  than  five  Trading  Days  prior  to  the  filing  of  each
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
Holder  copies  (which may be delivered via e-mail or facsimile) of the "Selling
Stockholders" and "Plan of Distribution"  sections of the Registration Statement
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 Holders,
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 respective  counsel to conduct a reasonable  investigation
within  the  meaning  of the  Securities  Act.  The  Company  shall not file the
Registration  Statement or any such  Prospectus or any amendments or supplements
thereto to which the Holders  holding a majority of the  Registrable  Securities
proposed to be registered  under such  Registration  Statement shall  reasonably
object in good faith,  provided  that, the Company is notified of such objection
in writing no later than 3 Trading Days after the Holders have been so furnished
copies (which may be delivered via email or facsimile) of such  documents.  Each
Holder  agrees to furnish to the Company a completed  Questionnaire  in the form
attached to this  Agreement as Annex B (a "SELLING  SHAREHOLDER  QUESTIONNAIRE")
not less than two  Trading  Days prior to the  Filing  Date or by the end of the
third  Trading  Day  following  the date on which  such  Holder  receives  draft
materials in accordance with this Section.

     (b) (i) Prepare and file with the  Commission  such  amendments,  including
post-effective  amendments,  to a Registration Statement and the Prospectus used
in  connection  therewith as may be necessary to keep a  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

                                       5
<PAGE>

Securities;  (ii) cause the related  Prospectus to be amended or supplemented by
any required Prospectus supplement (subject to the terms of this Agreement), and
as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably  possible to any comments  received  from the  Commission
with  respect  to a  Registration  Statement  or any  amendment  thereto  and as
promptly as  reasonably  possible  provide the Holders true and complete  copies
(which  may be  delivered  via  email  or  facsimile)  of all  material  written
correspondence from and to the Commission relating to a 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 a Registration  Statement during the applicable period in
accordance  with  (subject  to the terms of this  Agreement)  with the  intended
methods of  disposition  by the Holders  thereof set forth in such  Registration
Statement as so amended or in such Prospectus as so supplemented.

     (c)  If  during  the  Effectiveness   Period,  the  number  of  Registrable
Securities at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration  Statement,  then the Company shall file as soon as
reasonably  practicable but in any case prior to the applicable  Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than  125%  of  the  number  of  such  Registrable  Securities.  If  during  the
Effectiveness  Period, there are additional Future Registrable  Securities,  the
Company  shall file by the  applicable  Filing Date an  additional  Registration
Statement covering the resale by the Holders of not less than 100% of the number
of such additional  Future  Registrable  Securities and cause such  Registration
Statement to be effective prior to the applicable Effectiveness Date.

     (d) Notify the Holders of  Registrable  Securities to be sold (which notice
shall,  pursuant to clauses  (ii)  through (vi)  hereof,  be  accompanied  by an
instruction  to suspend the use of the  Prospectus  until the requisite  changes
have been made) as promptly as reasonably  possible  (and, in the case of (i)(A)
below,  not less than five Trading Days prior to such filing) and (if  requested
by any such Person) confirm such notice in writing no later than one Trading Day
following  the day (i)(A) when a  Prospectus  or any  Prospectus  supplement  or
post-effective  amendment to a  Registration  Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration  Statement and whenever the Commission  comments in writing on
such Registration  Statement (the Company shall provide true and complete copies
(which  may be  delivered  via  e-mail or  facsimile)  thereof  and all  written
responses  thereto  to  each  of  the  Holders);  and  (C)  with  respect  to  a
Registration Statement or any post-effective amendment, when the same has become
effective;  (ii) of any request by the  Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or  Prospectus  or for  additional  information;  (iii) of the  issuance  by the
Commission  or any other  federal or state  governmental  authority  of any stop
order suspending the effectiveness of a Registration  Statement  covering any or
all of the Registrable  Securities or the initiation of any Proceedings for that
purpose;  (iv) 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;  (v) of the occurrence of any
event or passage  of time that  makes the  financial  statements  included  in a
Registration Statement ineligible for inclusion therein or any statement made in
a 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  a  Registration  Statement,  Prospectus  or  other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue  statement of a material fact or
omit to

                                       6
<PAGE>

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;  and (vi) the occurrence or existence of any pending  corporate
development  with  respect  to the  Company  that the  Company  believes  may be
material and that,  in the  determination  of the Company  (which  determination
shall be conclusive  if made by the Company in good faith),  makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement or  Prospectus;  provided that any and all of such  information  shall
remain  confidential  to each Holder until such  information  otherwise  becomes
public,  unless  disclosure by a Holder is required by law;  PROVIDED,  FURTHER,
notwithstanding  each Holder's agreement to keep such information  confidential,
the Holders  make no  acknowledgement  that any such  information  is  material,
non-public information.

     (e) Use its commercially  reasonable  efforts to avoid the issuance of, or,
if issued,  obtain the withdrawal of (i) any order suspending the  effectiveness
of a 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.

     (f)  Furnish  to each  Holder  (upon the  request of such  Holder,  without
charge,  which may be delivered via email or facsimile),  at least one conformed
copy of each such Registration  Statement and each amendment thereto,  including
financial statements and schedules,  all documents  incorporated or deemed to be
incorporated  therein by reference to the extent  requested by such Person,  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.

     (g)  Promptly  deliver to each  Holder  (upon the  request of such  Holder,
without charge,  which may be delivered via email or facsimile),  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 in
connection with resales by the Holder of Registrable Securities.  Subject to the
terms  of  this  Agreement,  the  Company  hereby  consents  to the  use of such
Prospectus  and each  amendment  or  supplement  thereto by each of the  selling
Holders in connection with the offering and sale of the  Registrable  Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving on any notice pursuant to Section 3(d).

     (h) If NASDR Rule 2710 requires any broker-dealer to make a filing prior to
executing  a sale by a  Holder,  make an  Issuer  Filing  with the  NASDR,  Inc.
Corporate  Financing  Department  pursuant to NASDR Rule  2710(b)(10)(A)(i)  and
respond  within  five  Trading  Days to any  comments  received  from  NASDR  in
connection therewith, and pay the filing fee required in connection therewith.

     (i) Prior to any  resale of  Registrable  Securities  by a Holder,  use its
commercially  reasonable  efforts to register or qualify or  cooperate  with the
selling  Holders  in  connection  with the  registration  or  qualification  (or
exemption  from  such   registration  or   qualification)  of  such  Registrable
Securities for the resale by the Holder under the securities or Blue Sky laws of
such jurisdictions within the United States as any Holder reasonably requests in
writing,  to keep each  registration or qualification  (or exemption  therefrom)
effective  during the  Effectiveness  Period and to do any and all other acts or
things reasonably  necessary to enable the disposition in such  jurisdictions of
the Registrable  Securities  covered by each Registration  Statement;  provided,
that the Company  shall not be required to qualify  generally  to do business in
any jurisdiction where it is not

                                       7
<PAGE>

then  so  qualified,  subject  the  Company  to any  material  tax  in any  such
jurisdiction  where it is not  then so  subject  or file a  general  consent  to
service of process in any such jurisdiction.

     (j) If requested by the Holders,  cooperate  with the Holders 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 the  Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holders may
request.

     (k) Upon the occurrence of any event contemplated by Section 3(d)(ii)-(vi),
as promptly as reasonably  possible under the circumstances  taking into account
the Company's good faith  assessment of any adverse  consequences to the Company
and its  stockholders  of the  premature  disclosure  of such  event,  prepare a
supplement or amendment, including a post-effective amendment, to a 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 a 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 light of the circumstances  under which they were made,
not misleading.  If the Company  notifies the Holders in accordance with clauses
(ii)  through  (vi) of Section  3(d) above to suspend the use of any  Prospectus
until the requisite  changes to such Prospectus have been made, then the Holders
shall  suspend use of such  Prospectus.  The Company  will use its  commercially
reasonable  efforts to ensure that the use of the  Prospectus  may be resumed as
promptly as is practicable.  The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of a Registration  Statement
and Prospectus, subject to the payment of partial liquidated damages pursuant to
Section 2(b),  for a period not to exceed 60 days (which need not be consecutive
days) in any 12 month period.

     (l) Comply with all  applicable  rules and  regulations  of the  Commission
until the end of the Effectiveness Period.

     (m) The Company may require each  selling  Holder,  and each Holder  hereby
agrees,  to furnish to the  Company a  certified  statement  as to the number of
Registrable Securities beneficially owned by such Holder and, if required by the
Commission,  the  Person  who has  voting  and  dispositive  control  over  such
Registrable  Securities.  During any periods  that the Company is unable to meet
its  obligations  hereunder with respect to the  registration of the Registrable
Securities  solely because any Holder fails to furnish such  information  within
three Trading Days of the Company's  request,  any  liquidated  damages that are
accruing  at such time as to such Holder only shall be tolled and any Event that
may otherwise  occur solely  because of such delay shall be suspended as to such
Holder only,  until such information is delivered to the Company and such Holder
shall be responsible  for any  additional  reasonable  expenses  incurred by the
Company of said failure or delay.

4. REGISTRATION  EXPENSES.  All fees and expenses incident to the performance of
or compliance  with this  Agreement by the Company shall be borne by the Company
whether or not any Registrable  Securities are sold pursuant to the Registration
Statement.  The fees and expenses  referred to in the foregoing  sentence  shall
include,  without  limitation,  (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the

                                       8
<PAGE>

Trading  Market on which the Common  Stock is then  listed for  trading,  (B) in
compliance with applicable state  securities or Blue Sky laws reasonably  agreed
to  by  the  Company  in  writing  (including,   without  limitation,  fees  and
disbursements   of  counsel  for  the  Company  in  connection   with  Blue  Sky
qualifications or exemptions of the Registrable  Securities and determination of
the eligibility of the Registrable  Securities for investment  under the laws of
such  jurisdictions  as requested by the Holders) and (C) if not previously paid
by the Company in connection  with an Issuer Filing,  with respect to any filing
that may be required to be made by any broker  through which a Holder intends to
make sales of Registrable Securities with NASD Regulation,  Inc. pursuant to the
NASD Rule 2710,  so long as the  broker is  receiving  no more than a  customary
brokerage  commission  in  connection  with such sale,  (ii)  printing  expenses
(including,   without   limitation,   expenses  of  printing   certificates  for
Registrable   Securities  and  of  printing  prospectuses  if  the  printing  of
prospectuses  is  reasonably  requested  by the  Holders  of a  majority  of the
Registrable Securities included in a Registration  Statement),  (iii) messenger,
telephone and delivery expenses,  (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance,  if the Company so desires such
insurance,  and (vi) fees and  expenses  of all other  Persons  retained  by the
Company in connection with the consummation of the transactions  contemplated by
this  Agreement.  In addition,  the Company shall be responsible  for all of its
internal   expenses   incurred  in  connection  with  the  consummation  of  the
transactions contemplated by this Agreement (including,  without limitation, all
salaries  and  expenses  of its  officers  and  employees  performing  legal  or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
provided for in the Transaction Documents,  any legal fees or other costs of the
Holders.

5. INDEMNIFICATION

     (a) INDEMNIFICATION BY THE COMPANY. The Company shall,  notwithstanding any
termination  of this  Agreement,  indemnify and hold  harmless each Holder,  the
officers,  directors, agents, investment advisors and employees of each of them,
each Person who  controls  any such Holder  (within the meaning of Section 15 of
the  Securities  Act or  Section  20 of the  Exchange  Act)  and  the  officers,
directors,  agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages,   liabilities,   costs  (including,   without  limitation,   reasonable
attorneys' fees) and expenses (collectively, "LOSSES"), as incurred, arising out
of or  relating to any untrue or alleged  untrue  statement  of a material  fact
contained in a 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
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 or omissions
are based solely upon information  regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent that such
information  relates  to  such  Holder  or  such  Holder's  proposed  method  of
distribution of Registrable  Securities and was reviewed and expressly  approved
in writing by such Holder  expressly for use in a Registration  Statement,  such
Prospectus or such form of Prospectus or in any amendment or supplement  thereto
(it being  understood  that the  Holder  has  approved  Annex A hereto  for this
purpose) or (ii) in the case of an occurrence of an event of the type  specified
in Section  3(d)(ii)-(vi),  the use by such Holder of an  outdated or  defective
Prospectus

                                       9
<PAGE>

after the Company has  notified  such Holder in writing that the  Prospectus  is
outdated  or  defective  and prior to the  receipt by such  Holder of the Advice
contemplated  in Section 6(d). The Company shall notify the Holders  promptly of
the  institution,  threat or  assertion  of any  Proceeding  arising  from or in
connection  with the  transactions  contemplated  by this Agreement of which the
Company is aware.

     (b)  INDEMNIFICATION  BY HOLDERS.  Each  Holder  shall,  severally  and not
jointly,  indemnify  and hold  harmless  each other  Holder,  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 incurred,  to the extent  arising out of or based solely
upon:  (x)  such  Holder's  failure  to  comply  with  the  prospectus  delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any 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 not misleading (i) 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 Holder to the Company specifically for inclusion in
such  Registration  Statement or such  Prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information  regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein,  or to the extent that such information  relates to such Holder or such
Holder's  proposed  method of  distribution  of  Registrable  Securities and was
reviewed and expressly  approved in writing by such Holder  expressly for use in
the  Registration  Statement (it being  understood  that the Holder has approved
Annex A hereto for this purpose),  such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (2) in the case of an occurrence of an
event of the type specified in Section 3(d)(ii)-(vi),  the use by such Holder of
an outdated or defective  Prospectus  after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d). In no event shall the
liability of any selling  Holder  hereunder be greater in amount than the dollar
amount  of the  net  proceeds  received  by such  Holder  upon  the  sale of the
Registrable Securities giving rise to such indemnification obligation.

     (c) 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 have the right to 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 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

                                       10
<PAGE>

expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses;  (2) 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 (3) the named  parties  to any such  Proceeding  (including  any
impleaded  parties)  include both such  Indemnified  Party and the  Indemnifying
Party, and such Indemnified  Party reasonably  believes that a material 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 the reasonable
fees  and  expenses  of one  separate  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
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.

      Subject to the terms of this  Agreement,  all reasonable 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 Trading Days of written  notice  thereof to the
Indemnifying  Party;  provided,   that  the  Indemnified  Party  shall  promptly
reimburse  the  Indemnifying  Party for that  portion of such fees and  expenses
applicable to such actions for which such  Indemnified  Party is not entitled to
indemnification  hereunder,  determined  based upon the  relative  faults of the
parties.

     (d)  CONTRIBUTION.  If the  indemnification  under  Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses,  then each  Indemnifying  Party shall contribute to the
amount  paid or payable by such  Indemnified  Party,  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 this  Agreement,  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  5(d)  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 5(d), no Holder shall be required
to

                                       11
<PAGE>

contribute,  in the  aggregate,  any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.

      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. Miscellaneous

     (a)  REMEDIES.  In the event of a breach by the Company or by a Holder,  of
any of their  obligations under this Agreement,  each Holder or the Company,  as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific  performance of its rights under this  Agreement.  The Company and each
Holder agree that monetary damages would not provide  adequate  compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement  and  hereby  further  agrees  that,  in the event of any  action  for
specific  performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     (b) NO  PIGGYBACK  ON  REGISTRATIONS.  Except  as set  forth on  Disclosure
Schedule  3.1(v) of the Purchase  Agreement,  neither the Company nor any of its
security  holders (other than the Holders in such capacity  pursuant hereto) may
include  securities of the Company in any Registration  Statement other than the
Registrable Securities.

     (c) COMPLIANCE.  Each Holder  covenants and 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.

     (d) DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of such
Registrable  Securities  that,  upon receipt of a notice from the Company of the
occurrence  of any event of the kind  described in Section  3(d)(ii)-(vi),  such
Holder will forthwith  discontinue  disposition of such  Registrable  Securities
under a Registration  Statement until such Holder's receipt of the copies of the
supplemented  Prospectus and/or amended Registration  Statement,  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 will use its commercially  reasonable  efforts to ensure that the use of
the Prospectus may be resumed as promptly as it practicable.  The Company agrees
and  acknowledges  that any  periods  during  which the  Holder is  required  to
discontinue  the disposition of the  Registrable  Securities  hereunder shall be
subject to the provisions of Section 2(b).

     (e)  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

                                       12
<PAGE>

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 the stock  option or other  employee  benefit  plans,  then the
Company shall send to each Holder a written notice of such determination and, if
within  fifteen  days after the date of such  notice,  any such Holder  shall so
request in writing, the Company shall include in such registration statement all
or  any  part  of  such  Registrable  Securities  such  Holder  requests  to  be
registered,  subject to customary underwriter cutbacks applicable to all holders
of  registration  rights;  provided,  that, the Company shall not be required to
register  any  Registrable  Securities  pursuant to this  Section  6(e) that are
eligible for resale pursuant to Rule 144(k) promulgated under the Securities Act
or that are the subject of a then effective registration statement.

     (f) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended,  modified or supplemented,  and
waivers or consents to departures  from the provisions  hereof may not be given,
unless the same shall be in writing  and signed by the  Company  and the Holders
holding 60% of Registrable  Securities.  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 a Holders  and that does not  directly or
indirectly  affect the rights of other  Holders may be given by the Holder(s) of
all of the  Registrable  Securities  to which such  waiver or  consent  relates;
PROVIDED,  HOWEVER,  that the  provisions  of this  sentence may not be amended,
modified,  or  supplemented  except in  accordance  with the  provisions  of the
immediately preceding sentence.

     (g)  NOTICES.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder  shall be delivered as set forth
in the Purchase Agreement.

     (h)  SUCCESSORS AND ASSIGNS.  This Agreement  shall inure to the benefit of
and be binding upon the successors and permitted  assigns of each of the parties
and shall  inure to the benefit of each  Holder.  The Company may not assign its
rights or obligations  hereunder without the prior written consent of all of the
Holders of the then-outstanding  Registrable Securities.  Each Holder may assign
their respective  rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

     (i)  NO  INCONSISTENT  AGREEMENTS.  Neither  the  Company  nor  any  of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its subsidiaries,  during the period beginning on the date of this Agreement and
ending at the end of the  Effectiveness  Period,  enter into any agreement  with
respect to its  securities,  that would have the effect of impairing  the rights
granted to the Holders in this  Agreement or that  otherwise  conflicts with the
provisions hereof. Except as set forth on SCHEDULE 6(I), 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
have not been satisfied in full.

     (j)  EXECUTION  AND  COUNTERPARTS.  This  Agreement  may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

                                       13
<PAGE>

     (k) GOVERNING  LAW. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of  this  Agreement  shall  be  determined  in
accordance  with  the  governing  law  provisions  set  forth  in  the  Purchase
Agreement.

     (l) CUMULATIVE  REMEDIES.  The remedies  provided herein are cumulative and
not exclusive of any remedies provided by law.

     (m) SEVERABILITY.  If any term, provision,  covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

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

     (o) INDEPENDENT NATURE OF HOLDERS'  OBLIGATIONS AND RIGHTS. The obligations
of each Holder  hereunder are several and not joint with the  obligations of any
other Holder  hereunder,  and no Holder shall be  responsible in any way for the
performance of the obligations of any other Holder hereunder.  Nothing contained
herein or in any other  agreement or document  delivered at any closing,  and no
action  taken by any  Holder  pursuant  hereto  or  thereto,  shall be deemed to
constitute the Holders as a partnership,  an association, a joint venture or any
other kind of entity,  or create a  presumption  that the Holders are in any way
acting  in  concert  with  respect  to  such  obligations  or  the  transactions
contemplated  by this  Agreement.  Each Holder  shall be entitled to protect and
enforce its rights,  including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any Proceeding for such purpose.

                               ********************

                                       14
<PAGE>

      IN WITNESS  WHEREOF,  the parties have executed this  Registration  Rights
Agreement as of the date first written above.

                      ACCESS INTEGRATED TECHNOLOGIES, INC.



                              By:
                                 -----------------------------------
                                  Name:
                                  Title:



                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]









                                       15
<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO AIX RRA]

Name of Holder: __________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
Facsimile Number: __________________________
Email Address: __________________________

                           [SIGNATURE PAGES CONTINUE]









                                       16
<PAGE>
                              PLAN OF DISTRIBUTION

      Each Selling Stockholder (collectively, the "SELLING STOCKHOLDERS") of the
Class A Common Stock ("COMMON STOCK") of Access Integrated Technologies, Inc., a
Delaware  corporation  (the "COMPANY") and any of their pledgees,  assignees and
successors-in-interest  may, from time to time,  sell any or all of its or their
shares of Common Stock on the Trading Market or any other stock exchange, market
or trading  facility on which the shares are traded or in private  transactions.
These sales may be at fixed or negotiated prices. A Selling  Stockholder may use
any one or more of the following methods when selling shares:

          o    ordinary  brokerage  transactions  and  transactions in which the
               broker-dealer solicits purchasers;

          o    block trades in which the broker-dealer  will attempt to sell the
               shares  as agent but may  position  and  resell a portion  of the
               block as principal to facilitate the transaction;

          o    purchases  by a  broker-dealer  as  principal  and  resale by the
               broker- dealer for its account;

          o    an  exchange  distribution  in  accordance  with the rules of the
               applicable exchange;

          o    privately negotiated transactions;

          o    settlement  of short  sales  entered  into after the date of this
               prospectus;

          o    broker-dealers may agree with the Selling  Stockholders to sell a
               specified number of such shares at a stipulated price per share;

          o    a combination of any such methods of sale;

          o    through the  writing or  settlement  of options or other  hedging
               transactions,  whether through an options  exchange or otherwise;
               or

          o    any other method permitted pursuant to applicable law.

      The Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), if available,  rather
than under this prospectus.

      Broker-dealers  engaged by the Selling  Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated,  but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage  commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

                                       17
<PAGE>

      In connection with the sale of the Common Stock or interests therein,  the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
Common Stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of the Common  Stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the Common
Stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

      The  Selling  Stockholders  and any  broker~dealers  or  agents  that  are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker~dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any written or oral  agreement  or
understanding,  directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      The Company is required to pay certain fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has advised the Company that it has not entered into any written or
oral   agreement,   understanding   or  arrangement   with  any  underwriter  or
broker-dealer  regarding the sale of the resale shares.  There is no underwriter
or coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.

      The Company has agreed to keep this prospectus effective until the earlier
of (i) the date on which the  shares may be resold by the  Selling  Stockholders
without  registration and without regard to any volume  limitations  pursuant to
Rule 144(k) under the Securities Act or any other rule of similar effect or (ii)
all of the shares have been sold  pursuant to the  prospectus  or Rule 144 under
the Securities Act or any other rule of similar  effect.  The resale shares will
be sold only through registered or licensed brokers or dealers if required under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.

     Under applicable  rules and regulations  under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the
Selling Stockholders will be subject to applicable provisions of the

                                       18
<PAGE>

Exchange Act and the rules and regulations  thereunder,  including Regulation M,
which may limit the timing of purchases  and sales of shares of the Common Stock
by the Selling  Stockholders  or any other  person.  We will make copies of this
prospectus  available to the Selling  Stockholders and have informed them of the
need to deliver a copy of this  prospectus to each  purchaser at or prior to the
time of the sale.









                                       19
<PAGE>
                                                                        ANNEX B

                      ACCESS INTEGRATED TECHNOLOGIES, INC.

                      SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

      The undersigned beneficial owner of Class A common stock, par value $0.001
per share (the  "COMMON  STOCK"),  of Access  Integrated  Technologies,  Inc., a
Delaware corporation (the "COMPANY"), (the "REGISTRABLE SECURITIES") understands
that the Company has filed or intends to file with the  Securities  and Exchange
Commission (the  "COMMISSION")  a registration  statement on Form S-3, or if the
Company is not then eligible to register for resale the  Registrable  Securities
on Form S-3,  in which case such  registration  shall be on another  appropriate
form in accordance with the  Registration  Rights  Agreement (the  "REGISTRATION
STATEMENT") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "SECURITIES  ACT"), of the Registrable  Securities,  in
accordance  with the terms of the  Registration  Rights  Agreement,  dated as of
February __, 2005 (the "REGISTRATION  RIGHTS AGREEMENT"),  among the Company and
the purchasers  named therein.  A copy of the  Registration  Rights Agreement is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

      Certain   legal   consequences   arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE

      The  undersigned  beneficial  owner  (the  "SELLING   SECURITYHOLDER")  of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.


                                       20
<PAGE>

      The undersigned  hereby provides the following  information to the Company
and represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.    NAME.

          (a)  Full Legal Name of Selling Securityholder


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

          (b)  Full  Legal  Name of  Registered  Holder  (if not the same as (a)
               above)  through  which  Registrable  Securities  Listed in Item 3
               below are held:

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

          (c)  Full Legal Name of Natural  Control Person (which means a natural
               person who directly or indirectly  alone or with others has power
               to  vote  or   dispose   of  the   securities   covered   by  the
               questionnaire):


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


2.    ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:


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Telephone:
          ----------------------------------------------------------------------
Fax:
    ----------------------------------------------------------------------------
Contact Person:
               -----------------------------------------------------------------

3.    BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

          (a)  Type and Principal Amount of Registrable Securities  beneficially
               owned:

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

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

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

4.    BROKER-DEALER STATUS:

          (a)  Are you a broker-dealer?

                              Yes  |_|    No  |_|

                                       21
<PAGE>

          Note:If yes, the  Commission's  staff has indicated that you should be
               identified as an underwriter in the Registration Statement.

          (b)  Are you an affiliate of a broker-dealer?

                              Yes  |_|    No  |_|

          (c)  If you are an affiliate of a  broker-dealer,  do you certify that
               you bought the  Registrable  Securities in the ordinary course of
               business,  and at the  time of the  purchase  of the  Registrable
               Securities to be resold, you had no agreements or understandings,
               directly  or  indirectly,  with  any  person  to  distribute  the
               Registrable Securities?

                              Yes  |_|    No  |_|

          Note:If no, the  Commission's  staff has indicated  that you should be
               identified as an underwriter in the Registration Statement.

5.    BENEFICIAL  OWNERSHIP  OF OTHER  SECURITIES  OF THE  COMPANY  OWNED BY THE
      SELLING SECURITYHOLDER.

      EXCEPT  AS SET  FORTH  BELOW IN THIS  ITEM 5, THE  UNDERSIGNED  IS NOT THE
      BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER THAN
      THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM 3.

          (a)  Type and  Amount of Other  Securities  beneficially  owned by the
               Selling Securityholder:


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

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


6.    RELATIONSHIPS WITH THE COMPANY:

      EXCEPT  AS  SET  FORTH  BELOW,  NEITHER  THE  UNDERSIGNED  NOR  ANY OF ITS
      AFFILIATES,  OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (OWNERS OF 5%
      OF MORE OF THE EQUITY SECURITIES OF THE UNDERSIGNED) HAS HELD ANY POSITION
      OR OFFICE OR HAS HAD ANY OTHER MATERIAL  RELATIONSHIP WITH THE COMPANY (OR
      ITS PREDECESSORS OR AFFILIATES) DURING THE PAST THREE YEARS.

      State any exceptions here:

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

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

      The undersigned  agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein that may occur  subsequent to the
date hereof at any time while the Registration Statement remains effective.

                                       22
<PAGE>

      By signing  below,  the  undersigned  consents  to the  disclosure  of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus  and  any  amendments  or  supplements   thereto.   The   undersigned
understands  that  such  information  will  be  relied  upon by the  Company  in
connection with the preparation or amendment of the  Registration  Statement and
the related prospectus.

      IN WITNESS WHEREOF the  undersigned,  by authority duly given,  has caused
this Notice and  Questionnaire  to be executed and delivered either in person or
by its duly authorized agent.

Dated:                           Beneficial Owner:
       --------------------                       -----------------------------

                                 By:
                                    -------------------------------------------
                                     Name:
                                     Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:




                                       23
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>exh99-1_991612.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
[Graphic Omitted]                                                   Exhibit 99.1

FOR IMMEDIATE RELEASE

          ACCESS INTEGRATED TECHNOLOGIES COMPLETES $7.6 MILLION PRIVATE
                   FINANCING OF 4-YEAR CONVERTIBLE DEBENTURES

MORRISTOWN,  N.J. - FEBRUARY  10, 2005 - ACCESS  INTEGRATED  TECHNOLOGIES,  INC.
("ACCESSIT")  (AMEX:  AIX) today  announced that it has entered into  definitive
agreements with institutional  investors relating to a private financing of $7.6
million in the form of 4-year  Convertible  Debentures  bearing  interest at the
rate of 7  percent  per  year.  The  Debentures  will  convert  into  shares  of
ACCESSIT's  Class A common  stock at the  price of  $4.07  subject  to  possible
adjustments  from  time to time.  In  connection  with the  Debenture  offering,
AccessIT will issue  Warrants  exercisable  for up to 560,197  shares of Class A
common stock at an initial exercise price of $4.44,  subject to adjustments from
time to time. The Warrants may be exercised beginning on September 9, 2005 until
five  years  thereafter.  The  company  intends to use the net  proceeds  of the
private placement to complete the previously  announced purchase of the Pavilion
Theater in Brooklyn, New York and to provide working capital.

"With the completion of this financing, ACCESSIT will be able to take a historic
step forward by  purchasing  the  Pavilion  Theater  complex.  The Pavilion is a
unique  theater  and a valuable  asset.  We  anticipate  this  acquisition  will
generate revenues of up to $5 million per year and produce substantial cash flow
and to enable  ACCESSIT to showcase  its wide range of products and services for
the motion  picture  entertainment  industry,"  said Bud Mayo,  Chief  Executive
Officer of ACCESSIT.  "We look forward to having the ability to demonstrate  the
value to the industry,  of a state-of-the-art,  fully digitally equipped theater
and to completing the planned addition of a ninth screen by the seller."

The Debenture and Warrant offering will be made in a transaction exempt from the
registration  requirements  of the  Securities  Act of  1933,  as  amended  (the
"Securities  Act").  The  shares of Class A common  stock to be issued  upon any
conversion  of the  Debentures  or any  exercise of the  Warrants  have not been
registered under the Securities Act, or any state securities laws, and unless so
registered,  may not be offered or sold in the United States absent registration
or an applicable exemption from the registration  requirements of the Securities
Act and applicable state securities laws.

This press release does not constitute an offer to sell, or the  solicitation of
an offer to buy, any  securities,  nor shall there be any sale of the securities
in any jurisdiction in which such offering would be unlawful.

ACCESS INTEGRATED TECHNOLOGIES,  INC. (ACCESSIT) is an early mover in offering a
fully  managed  storage  and  delivery  service for owners and  distributors  of
digital  content to movie  theaters  and other  venues.  Supported by its robust
platform of fail-safe  Internet data  centers,  ACCESSIT is able to leverage the
market-leading  role of its Hollywood  Software  subsidiary  with the innovative
digital  delivery  capabilities of its Digital Media unit to provide the highest
level of technology  available to service the emerging  digital cinema industry.
For more information, visit our website at WWW.ACCESSITX.COM.


SAFE HARBOR STATEMENT
Investors and readers are cautioned  that certain  statements  contained in this
document,  as well as some  statements in periodic  press releases and some oral
statements  of ACCESSIT  officials  during  presentations  about  ACCESSIT,  are
"forward-looking"  statements  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995 (the "Act").  Forward-looking  statements  include
statements  that are predictive in nature,  which depend upon or refer to future
events or  conditions,  which include  words such as  "expects",  "anticipates",
"intends",  "plans",  "could",  "might",  "believes",  "seeks",  "estimates"  or
similar  expressions.  In addition,  any statements  concerning future financial
performance  (including  future  revenues,  earnings or growth  rates),  ongoing
business  strategies or prospects,  and possible  future  actions,  which may be
provided  by  ACCESSIT's  management,  are also  forward-looking  statements  as
defined by the Act. Forward-looking statements are based on current expectations
and  projections   about  future  events  and  are  subject  to  various  risks,
uncertainties  and  assumptions  about ACCESSIT,  its  technology,  economic and
market factors and the  industries in which ACCESSIT does business,  among other
things.  These statements are not guarantees of future  performance and ACCESSIT
has no specific intention to update these statements.

                                      # # #

Contact:

Suzanne Tregenza                       Michael Glickman
ACCESSIT                               The Dilenschneider Group
55 Madison Avenue                      212.922.0900
Suite 300
Morristown, NJ  07960
973.290.0080
www.accessitx.com
</TEXT>
</DOCUMENT>
</SUBMISSION>
