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<SEC-DOCUMENT>0001170918-07-000160.txt : 20070306
<SEC-HEADER>0001170918-07-000160.hdr.sgml : 20070306
<ACCEPTANCE-DATETIME>20070306171255
ACCESSION NUMBER:		0001170918-07-000160
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20070228
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070306
DATE AS OF CHANGE:		20070306

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MPLC, Inc.
		CENTRAL INDEX KEY:			0001022899
		STANDARD INDUSTRIAL CLASSIFICATION:	BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731]
		IRS NUMBER:				061390025
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-51353
		FILM NUMBER:		07675599

	BUSINESS ADDRESS:	
		STREET 1:		42 CORPORATION PARK, SUITE 250
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92606
		BUSINESS PHONE:		(949) 777-3700

	MAIL ADDRESS:	
		STREET 1:		42 CORPORATION PARK, SUITE 250
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92606

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MILLBROOK PRESS INC
		DATE OF NAME CHANGE:	19961022
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>fm8k-022807.txt
<TEXT>

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

                                  UNITED STATES
                       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

       DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 28, 2007

                                   MPLC, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                     34-51353                  06-1390025
(STATE OR OTHER JURISDICTION    (COMMISSION FILE NUMBER)       (IRS EMPLOYER
     OF INCORPORATION)                                       IDENTIFICATION NO.)

                         42 CORPORATION PARK, SUITE 250
                            IRVINE, CALIFORNIA 92606
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 777-3700



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 (SEE General Instruction A.2. below):

|_|      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>


SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         Information  included  in this  Form  8-K may  contain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act and Section
21E of the  Securities  Exchange Act of 1934, as amended (the  "Exchange  Act").
This  information may involve known and unknown risks,  uncertainties  and other
factors which may cause the actual results, performance or achievements of MPLC,
Inc.  ("MPLC" or the "Company") to be materially  different from future results,
performance  or  achievements   expressed  or  implied  by  any  forward-looking
statements.  Forward-looking statements,  which involve assumptions and describe
future  plans,  strategies  and  expectations  of  the  Company,  are  generally
identifiable   by  use  of  the  words  "may,"   "will,"   "should,"   "expect,"
"anticipate,"  "estimate,"  "believe,"  "intend" or "project" or the negative of
these  words  or other  variations  on these  words or  comparable  terminology.
Forward-looking  statements are based on assumptions that may be incorrect,  and
there can be no assurance that any projection or other  expectation  included in
any  forward-looking  statement  will come to pass.  The  actual  results of the
Company  could  differ  materially  from  those  expressed  or  implied  by  the
forward-looking statements as a result of various factors. Except as required by
applicable   laws,   MPLC  undertakes  no  obligation  to  update  publicly  any
forward-looking  statements  for any  reason,  even if new  information  becomes
available or other events occur in the future.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

         On February 28, 2007, we entered into a Securities  Purchase  Agreement
(the "Purchase  Agreement") with various  accredited  investors as listed on the
signature pages thereto (the  "Investors"),  pursuant to which we agreed to sell
to the Investors in a private offering  approximately 8,334 shares of our Series
D 8%  Convertible  Preferred  Stock,  par value  $0.10 per share (the  "Series D
Preferred Stock"),  for an aggregate purchase price of approximately ten million
eight hundred dollars ($10,000,800). After placement agent fees and expenses, we
received net proceeds of approximately $9,250,000 in the offering.

         In  addition,  pursuant to a  Registration  Rights  Agreement  with the
Investors,  dated as of February 28, 2007 (the "Registration Rights Agreement"),
we granted the Investors certain  registration rights with respect to all of the
shares of our common stock,  par value $0.01 per share ("Common Stock") issuable
upon  conversion  of the shares of Preferred  Stock and upon  conversion  of the
shares of any other series of our preferred  stock  (including  our Series B and
Series C convertible  Preferred  Stock) owned by the  Investors.  On or prior to
April 14,  2007,  we are  required to prepare and file with the  Securities  and
Exchange  Commission  a  registration  statement  on  Form  S-3,  or on  another
appropriate form, covering the resale of all of the registerable securities.

         The  description  contained  in this Item 1.01 of certain  terms of the
Purchase  Agreement and the  Registration  Rights Agreement and the transactions
contemplated by the Purchase Agreement and the Registration Rights Agreement are
qualified  in their  entirety  by  reference  to the full  text of the  forms of
Purchase  Agreement  and  Registration  Rights  Agreement,  a copy of which  are
attached hereto as Exhibits 10.1 and 10.2 respectively.

         On March 6, 2007, we filed a press release announcing the completion of
financing,  a copy of which is  attached to this  Current  Report on Form 8-K as
Exhibit 99.1.


                                       2
<PAGE>


ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

         The  information  contained  in Item 1.01 and Item 5.03 of this Current
Report on Form 8-K with respect to the securities issued in the private offering
is hereby incorporated by reference. The securities issued pursuant to the above
transactions were issued pursuant to Section 4(2) of the Securities Act, and the
rules and regulations promulgated  thereunder,  including Rule 506 of Regulation
D.

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION  OR BY-LAWS;  CHANGE IN FISCAL
YEAR

         On February 28, 2007 we filed with the  Secretary of State of the State
of Delaware a Certificate  of  Designation,  Preferences  and Rights of Series D
Convertible Preferred Stock (the "Certificate of Designation") designating 8,334
shares of our  authorized  preferred  stock as  Series D  Preferred  Stock.  The
Certificate of Designation was approved by our Board of Directors.

         Each share of Series D Preferred Stock will be automatically  converted
into sixty thousand  (60,000)  shares of Common Stock without any further action
by the holder of such share,  whether or not the certificates  representing such
shares are surrendered, immediately upon the availability of a sufficient number
of authorized  shares of Common Stock to permit the  conversion of the shares of
Series D Preferred Stock into shares of Common Stock (the "Conversion Date").

         The holders of Series D Preferred  Stock are entitled to vote or render
written  consents  together with the holders of the Common Stock,  and any other
class or series of capital  stock of the  corporation  entitled to vote together
with the holders of the Common Stock as a single class on all matters  submitted
for a vote (or written  consents in lieu of a vote) of holders of Common  Stock,
and are entitled to other voting rights as are specified in the Delaware General
Corporation  Law,  our  certificate  of  incorporation,  as  amended to date and
currently in effect, and the Certificate of Designation.

         On all matters as to which shares of Common Stock or Series D Preferred
Stock are  entitled to vote or consent,  each share of Series D Preferred  Stock
entitles  its holder to the number of votes that the Common  Stock into which it
is convertible would have if such Series D Preferred Stock had been so converted
into Common Stock as of the record date  established,  or if no such record date
is  established,  at the  date  such  vote is taken or any  written  consent  of
stockholders is solicited.  The holders of Series D Preferred Stock are entitled
to  receive  notice  of  any  stockholders'   meeting  in  accordance  with  our
certificate of incorporation  and bylaws,  each as amended to date and currently
in effect.

         Holders of the shares of Series D Preferred  Stock shall be entitled to
receive,  and the Corporation  shall pay,  dividends at the rate per share (as a
percentage  of the stated value per share,  which is  $1,200.00) of 8% per annum
accruing  daily from and after the 90th calendar day after the first issuance of
shares of Series D Preferred Stock.  Accrued  dividends shall be accreted to the
stated value and converted into Common Stock on the Conversion Date.


                                       3
<PAGE>


ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

         (d)      Exhibits

         NUMBER   DESCRIPTION
         ------   -----------
         4.1      Certificate of Designation
         10.1     Form of Securities Purchase Agreement
         10.2     Form of Registration Rights Agreement
         99.1     Press Release


                                       4
<PAGE>


                                   SIGNATURES

         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 hereunto duly authorized.


                                  MPLC, INC.
                                  (Registrant)

Dated: March 6, 2007
                                  /s/ Allan Legator
                                  -------------------------------------
                                  Allan Legator
                                  Chief Financial Officer and Secretary


                                       5
<PAGE>


                                  EXHIBIT INDEX

NUMBER            DESCRIPTION
- ------            -----------
4.1               Certificate of Designation
10.1              Form of Securities Purchase Agreement
10.2              Form of Registration Rights Agreement
99.1              Press Release


                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>2
<FILENAME>ex4-1.txt
<DESCRIPTION>EX-4.1
<TEXT>
                                                                     EXHIBIT 4.1


                     CERTIFICATE OF DESIGNATION, PREFERENCES
                                  AND RIGHTS OF
                      SERIES D CONVERTIBLE PREFERRED STOCK
                                       OF
                                   MPLC, INC.

                    (PURSUANT TO SECTIONS 141 AND 151 OF THE
                        DELAWARE GENERAL CORPORATION LAW)


         MPLC,  Inc.,  a  Delaware  corporation  (the   "CORPORATION"),   hereby
certifies  that the  following  resolution  was duly approved and adopted by the
Board of Directors of the Corporation (the "BOARD OF DIRECTORS") at a meeting of
the Board of Directors held on February 13, 2007 in accordance with the Delaware
General Corporation Law (the "DGCL"), which resolution remains in full force and
effect on the date hereof:

         RESOLVED,  that  pursuant  to the  authority  expressly  granted to and
vested  in the  Board of  Directors  by the  provisions  of the  Certificate  of
Incorporation  of the  Corporation,  as  amended  to date (the  "CERTIFICATE  OF
INCORPORATION"),  a series  of  Preferred  Stock,  par  value  $0.10  per  share
("PREFERRED  STOCK"), to be known as "Series D Convertible  Preferred Stock," of
the Corporation be hereby  created,  and that the designation and amount thereof
and the voting powers,  preferences  and relative,  participating,  optional and
other  special  rights of the  shares of such  series,  and the  qualifications,
limitations  or  restrictions  thereof  shall  be  fixed  as set  forth  in this
Certificate  of  Designation,  Preferences  and  Rights of Series D  Convertible
Preferred Stock of the Corporation (the "CERTIFICATE OF DESIGNATION"):

         SECTION 1 DESIGNATION OF AMOUNT.     Eight   Thousand   Three   Hundred
Thirty-Four  (8,334)  shares of  Preferred  Stock  shall  be,  and  hereby  are,
designated the "Series D Convertible  Preferred  Stock" (the "SERIES D PREFERRED
STOCK"), par value $0.10 per share.

         SECTION 2 CERTAIN DEFINITIONS.

         Unless  the  context  otherwise  requires,  the terms  defined  in this
Section  2  shall  have,  for all  purposes  of this  resolution,  the  meanings
specified  (with terms defined in the singular having  comparable  meanings when
used in the plural).

         "COMMON STOCK" shall mean the common stock,  par value $0.01 per share,
of the Corporation.

         "CONVERSION  DATE"  shall  have the  meaning  ascribed  to such term in
Section 6(c).

         "DGCL"  shall  have  the  meaning  set  forth in the  preamble  to this
Certificate of Designation.

         "FAIR MARKET  VALUE" shall mean,  with respect to any listed  security,
its Market Price,  and with respect to any property or assets other than cash or
listed securities,  the fair value thereof determined in good faith by the Board
of Directors.

         "MARKET PRICE" means, as to any class of listed securities, the average
of the closing prices of such  security's  sales on all United Sates  securities
exchanges on which such  security  may at the time be listed,  or, if there have
been no sales on any such  exchange  on any day,  the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day,


<PAGE>


or,  if on  any  day  such  security  is  not  so  listed,  the  average  of the
representative  bid and asked  prices  quoted by the Nasdaq Stock  Market,  Inc.
("NASDAQ")  as of 4:00 P.M.,  New York time, on such day, or, if on any day such
security is not quoted by the Nasdaq,  the average of the highest bid and lowest
asked prices on such day in the domestic  over-the-counter market as reported by
the  National  Quotation  Bureau,  Incorporated,  or any  similar  or  successor
organization,  in each such case averaged over a period of 21 days consisting of
the day as of which "Market  Price" is being  determined  and the 20 consecutive
business days prior to such day.

         "PERSON"  shall  mean any  individual,  partnership,  company,  limited
liability  company,  joint venture,  association,  joint-stock  company,  trust,
unincorporated  organization,  government  or  agency or  political  subdivision
thereof, or other entity.

         "PREFERRED  STOCK"  shall have the meaning set forth in the preamble to
this Certificate of Designation.

         "SERIES D PREFERRED  STOCK" shall have the meaning set forth in Section
1 hereof.

         "SERIES D RECAPITALIZATION EVENT" shall mean any stock dividend,  stock
split, combination, reorganization, recapitalization, reclassification, or other
similar  event  involving  a change in the  capital  structure  of the  Series D
Preferred Stock.

         "STATED  VALUE"  shall mean the stated value of each shares of Series D
Preferred Stock, which shall be $1,200.00 per share.

SECTION  3  VOTING  RIGHTS.  Except  as  otherwise  provided  by the DGCL and in
addition to any voting rights provided by the DGCL or other  applicable law, the
holders of Series D Preferred Stock shall be entitled to vote (or render written
consents)  together  with the holders of the Common Stock and any other class or
series of capital  stock of the  Corporation  entitled to vote together with the
holders of the Common  Stock as a single  class on all matters  submitted  for a
vote of (or written  consents in lieu of a vote as  permitted  by the DGCL,  the
Certificate  of  Incorporation  and the  Bylaws of the  Corporation)  holders of
Common Stock.  When voting together with the holders of Common Stock, each share
of Series D Preferred  Stock shall  entitle the holder  thereof to cast one vote
for each  vote  that  such  holder  would be  entitled  to cast had such  holder
converted  its Series D Preferred  Stock into  shares of Common  Stock as of the
record date for determining the stockholders of the Corporation eligible to vote
on any such matter or, if no such record date is  established,  at the date such
vote is taken or any written consent of  stockholders is solicited.  The holders
of  Series D  Preferred  Stock  shall  be  entitled  to  receive  notice  of any
stockholders'  meeting in accordance with the Certificate of  Incorporation  and
Bylaws of the Corporation.

         SECTION 4 DIVIDENDS.

         (a) DIVIDEND AMOUNT.  Holders of the shares of Series D Preferred Stock
shall be entitled to receive,  and the Corporation  shall pay,  dividends at the
rate per share (as a percentage  of the Stated  Value) of 8% per annum  accruing
daily from and after the 90th calendar day after the first issuance of shares of
Series D Preferred  Stock.  Accrued  dividends shall be accreted to Stated Value
and converted into Common Stock on the Conversion Date.

         (b) EQUITABLE  ADJUSTMENTS.  All numbers relating to the calculation of
dividends shall be subject to an equitable adjustment in the event of any Series
D Recapitalization Event.


                                      -2-
<PAGE>


         SECTION 5 LIQUIDATION. In the event of any liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary, or in the event
of its insolvency,  and after provision for payment of all debts and liabilities
of the  Corporation  in accordance  with the DGCL,  any remaining  assets of the
Corporation shall be distributed pro rata to the holders of Common Stock and the
holders of Series D Preferred  Stock as if the Series D Preferred Stock had been
converted  into shares of Common Stock  pursuant to the  provisions of Section 6
hereof immediately prior to such distribution.

         SECTION 6 CONVERSION RIGHTS.

         (a)  GENERAL.   All  shares  of  Series  D  Preferred  Stock  shall  be
automatically  converted  into  shares  of  Common  Stock in the  ratio of Sixty
Thousand  (60,000)  shares of Common  Stock for each share of Series D Preferred
Stock  without any  further  action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the Corporation
or its transfer agent  immediately upon the availability of a sufficient  number
of authorized  shares of Common Stock to permit the  conversion of the shares of
Series D Preferred  Stock into  shares of Common  Stock,  whether  pursuant to a
stock split, combination,  reorganization,  recapitalization,  reclassification,
the effectiveness of the filing of an amendment to the Corporation's Certificate
of Incorporation, or otherwise.

         (b) FRACTIONS OF SHARES.  No fractional shares of Common Stock shall be
issued upon  conversion  of shares of Series D Preferred  Stock.  Instead of any
fractional  shares of Common  Stock  which  would  otherwise  be  issuable  upon
conversion of any shares of Series D Preferred Stock, the Corporation  shall pay
a cash adjustment in respect of such fractional  share in an amount equal to the
product of such  fraction  multiplied  by the Fair Market  Value of one share of
Common Stock on the Conversion Date.

         (c) MECHANICS OF CONVERSION.  Series D Preferred  Stock shall be deemed
to have been  converted  immediately  prior to the close of business on the date
(the "CONVERSION DATE") of the event triggering automatic conversion pursuant to
Section 6(a), and at such time the rights of the holder of such shares of Series
D Preferred Stock as a holder shall cease, and the person or persons entitled to
receive  the Common  Stock  issuable  upon  conversion  shall be treated for all
purposes as the record  holder or holders of such Common Stock as and after such
time. As promptly as practicable on or after the Conversion Date the Corporation
shall  provide  written  notice to each  holder of record of Series D  Preferred
Stock of such event, and upon surrender of the certificate evidencing such share
of Series D Preferred  Stock,  the Corporation  shall issue and shall deliver at
any office or agency of the Corporation maintained for the surrender of Series D
Preferred Stock a certificate or  certificates  for the number of full shares of
Common Stock  issuable  upon  conversion,  together  with payment in lieu of any
fraction of a share, as provided in Section 6(b).

         (d)  ADJUSTMENTS.  The conversion ratio set forth in Section 6(a) shall
be  subject  to  an  equitable   adjustment   in  the  event  of  any  Series  D
Recapitalization Event.


                                      -3-
<PAGE>


         IN WITNESS  WHEREOF,  the  Corporation  has caused this  Certificate of
Designation,  Preferences  and  Rights  to  be  signed  by  Raymond  Musci,  its
President, this 28 day of February, 2007.


                                  By:   /s/ Raymond Musci
                                        --------------------------
                                        Name:  Raymond Musci
                                        Title: President


                                      -4-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-1.txt
<DESCRIPTION>EX-10.1
<TEXT>
                                                                    EXHIBIT 10.1


                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
February 28, 2007, among MPLC, 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  Certificate  of  Designation  (as  defined
herein), and (b) the following terms have the meanings set forth 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.

                  "APPROVED  CHARTER  AMENDMENT"  means,  pursuant  to  Delaware
         General  Corporation  Law, the affirmative  vote by the shareholders of
         the  Corporation to amend the articles or certificate of  incorporation
         of the  Corporation  (i) to effect a 1:300  reverse  stock split of the
         Common  Stock and (ii) to increase the number of  authorized  shares of
         Common Stock of the Corporation from 75,000,000 to 100,000,000.

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

                  "CERTIFICATE   OF   DESIGNATION"   means  the  Certificate  of
         Designation to be filed prior


<PAGE>


         to the Closing by the Company with the  Secretary of State of Delaware,
         in the form of EXHIBIT A attached hereto.

                  "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.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON  STOCK"  means the common  stock of the  Company,  par
         value  $0.01 per share,  and any other class of  securities  into which
         such securities may hereafter be 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 exercisable or  exchangeable  for, or
         otherwise entitles the holder thereof to receive, Common Stock.

                  "COMPANY COUNSEL" means Stubbs Alderton & Markiles,  LLP, with
         offices located at 15260 Ventura Boulevard,  20th Floor,  Sherman Oaks,
         CA 91403.

                  "CONVERSION  PRICE"  shall have the  meaning  ascribed to such
         term in the Certificate of Designation.

                  "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.

                  "ELECTION OF DIRECTORS"  means,  pursuant to Delaware  General
         Corporation  Law, (i) the affirmative  vote by the  shareholders of the
         Corporation to elect Ray Musci,  Drew Larner and Burton Katz as members
         of the board of  directors of the  Corporation  and (ii) the seating of
         such persons as directors.

                  "ESCROW  AGENT"  means   Signature  Bank,  a  New  York  State
         chartered bank, with offices located at 950 Third Avenue, New York, New
         York 10022.

                  "ESCROW  AGREEMENT" means the Escrow Deposit Agreement entered
         into prior to the date hereof,  by and among the Company and the Escrow
         Agent  pursuant to which the  Purchasers,  shall  deposit  Subscription
         Amounts with the Escrow Agent to be applied to


                                       2
<PAGE>


         the transactions contemplated hereunder.

                  "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, and the rules and regulations promulgated thereunder.

                  "EXEMPT  ISSUANCE"  means the issuance of (a) shares of Common
         Stock or options to  employees,  officers or  directors  of the Company
         pursuant to any stock or option plan duly adopted for such purpose 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,  (b) securities upon the exercise or exchange of
         or  conversion  of  any  Securities   issued   hereunder  and/or  other
         securities  exercisable or exchangeable  for or convertible into shares
         of Common Stock 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 the number of such securities or to decrease
         the exercise,  exchange or conversion price of such securities, and (c)
         securities  issued pursuant to  acquisitions or strategic  transactions
         approved by a majority of the  disinterested  directors of the Company,
         provided  that any such  issuance  shall only be to a Person  which is,
         itself or through its subsidiaries,  an operating company in a business
         synergistic  with the  business of the Company and in which the Company
         receives benefits in addition to the investment of funds, 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.

                  "FWS"  means  Feldman  Weinstein  & Smith  LLP,  with  offices
         located  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).

                  "INDEBTEDNESS" shall have the meaning ascribed to such term in
         Section 3.1(aa).

                  "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, preemptive right or other restriction.

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

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


                                       3
<PAGE>


                  "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.

                  "PLACEMENT  AGENT" means Sanders Morris  Harris,  with offices
         located at 527 Madison Avenue, 14th Floor, New York, New York 10022.

                  "PREFERRED  STOCK"  means the  maximum of 8,334  shares of the
         Company's  Series D 8% Convertible  Preferred  Stock issued  hereunder,
         having  the  rights,  preferences  and  privileges  set  forth  in  the
         Certificate of Designation, in the form of EXHIBIT A hereto.

                  "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.

                  "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 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 conversion in full of all shares of
         Preferred Stock.

                  "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  Preferred  Stock  and the  Underlying
         Shares.

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


                                       4
<PAGE>


                  "SHAREHOLDER  APPROVAL"  means,  collectively,   the  Approved
         Charter Amendment and the Election of Directors.

                  "SHORT  SALES" means all "short  sales" as defined in Rule 200
         of  Regulation  SHO under the  Exchange Act (but shall not be deemed to
         include the location and/or  reservation of borrowable shares of Common
         Stock).

                  "STATED VALUE" means $1,200.00 per share of Preferred Stock.

                  "SUBSCRIPTION  AMOUNT" shall mean, as to each  Purchaser,  the
         aggregate amount to be paid for the Preferred Stock 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 subsidiary of the Company as set forth
         on SCHEDULE 3.1(A), and shall include, without limitation,  New Motion,
         Inc., a Delaware corporation.

                  "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 American Stock Exchange,  the Nasdaq Capital Market, the
         Nasdaq Global  Market,  the Nasdaq Global Select  Market,  the New York
         Stock Exchange or the OTC Bulletin Board.

                  "TRANSACTION DOCUMENTS" means this Agreement,  the Certificate
         of  Designation,  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 issued
         and issuable upon conversion of the Preferred Stock.

                  "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 L.P.  (based on a Trading Day from 9:30
         a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the
         OTC Bulletin Board is not a Trading Market, 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 quoted
         for  trading  on the OTC  Bulletin  Board and if prices  for the Common
         Stock are then reported in the "Pink Sheets"  published by 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 (d) in all other cases, the


                                       5
<PAGE>


         fair  market  value of a share of  Common  Stock  as  determined  by as
         determined by the Board of Directors of the Corporation in good faith.


                                   ARTICLE II
                                PURCHASE AND SALE

         2.1  CLOSING.  On the Closing  Date,  upon the terms and subject to the
conditions  set forth herein,  substantially  concurrent  with the execution and
delivery of this  Agreement by the parties  hereto,  the Company agrees to sell,
and each  Purchaser,  severally  and not jointly,  agrees to purchase,  up to an
aggregate of $10,000,800 of shares of Preferred  Stock with an aggregate  Stated
Value equal to such  Purchaser's  Subscription  Amount.  The aggregate number of
shares of Preferred  Stock sold hereunder  shall be up to 8,334.  Each Purchaser
shall  deliver to the Escrow  Agent via wire  transfer or a  certified  check of
immediately  available funds equal to their Subscription  Amount and the Company
shall deliver to each  Purchaser  its  respective  shares of Preferred  Stock 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 FWS or such
other  location  as the  parties  shall  mutually  agree and the Company and the
Placement  Agent  shall  deliver to the Escrow  Agent the duly  executed  Escrow
Release Notice (as defined in the Escrow Agreement).

         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 legal  opinion of Company  Counsel,  in the form of
                           EXHIBIT C attached hereto;

                  (iii)    a  certificate  evidencing  a  number  of  shares  of
                           Preferred    Stock   equal   to   such    Purchaser's
                           Subscription  Amount  divided  by the  Stated  Value,
                           registered in the name of such Purchaser;

                  (iv)     a  certificate,   executed  by  the  Chief  Executive
                           Officer or the Chief Financial Officer of the Company
                           certifying that, on the day immediately preceding the
                           date hereof,  the Company  holds cash and  marketable
                           securities  of an  aggregate  value  that  equals  or
                           exceeds $10,000,000; and

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

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

                  (i)      this Agreement duly executed by such Purchaser;


                                       6
<PAGE>


                  (ii)     such Purchaser's Subscription Amount by wire transfer
                           or certified check to the Escrow Agent; 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;

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

                  (iv)     the Company shall have  completed the  acquisition of
                           New Motion, Inc., a Delaware corporation.

         (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  when made and
                           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)     the aggregate  Subscription Amounts payable hereunder
                           shall equal or exceed $8,000,000;

                  (v)      the Company shall have  completed the  acquisition of
                           New Motion, Inc., a Delaware corporation;

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

                  (vii)    from the date hereof to the Closing Date,  trading in
                           the Common Stock shall not have been suspended by the
                           Commission or the Company's


                                       7
<PAGE>


                           principal  Trading  Market (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  L.P.  shall  not  have  been
                           suspended  or limited,  or minimum  prices  shall not
                           have been  established on securities whose trades are
                           reported by such service,  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
                           Preferred Stock 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 and to qualify any  representation  or
warranty  otherwise  made herein to the extent of such  disclosure,  the Company
hereby makes the following representations and warranties to each Purchaser:

         (a)      SUBSIDIARIES.   The   Company   has  no  direct  or   indirect
                  Subsidiaries  other  than  those  listed  in the SEC  Reports.
                  Except as  disclosed  in the SEC  Reports,  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 of the issued and outstanding shares of capital
                  stock or other equity interests 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.  If the  Company  has no  subsidiaries,  all other
                  references  to  the   Subsidiaries  or  any  of  them  in  the
                  Transaction Documents shall be disregarded.

         (b)      ORGANIZATION  AND  QUALIFICATION.  The Company and each of the
                  Subsidiaries  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 power and authority to own
                  or lease and use its properties and assets and to carry on its
                  business as currently  conducted.  Neither the Company nor any
                  Subsidiary is in violation or default of any of the provisions
                  of its respective  certificate  or articles of  incorporation,
                  bylaws or other  organizational or charter documents.  Each of
                  the Company and the  Subsidiaries 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


                                       8
<PAGE>


                  condition  (financial  or  otherwise)  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 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.

         (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 hereunder
                  and  thereunder.  The  execution  and  delivery of each of the
                  Transaction  Documents by the Company and the  consummation by
                  it of the  transactions  contemplated  hereby and thereby have
                  been duly  authorized by all  necessary  action on the part of
                  the Company and no further  action is required by the Company,
                  its  board of  directors  or its  stockholders  in  connection
                  therewith other than in connection with the Required Approvals
                  and the  adoption of the  Approved  Charter  Amendments.  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 and thereof,  will constitute
                  the valid and binding  obligation  of the Company  enforceable
                  against the Company 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.

         (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 hereby and
                  thereby do not and will not: (i) conflict  with or violate any
                  provision of the Company's or any Subsidiary's  certificate or
                  articles of incorporation,  bylaws or other  organizational or
                  charter documents, (ii) conflict with, or constitute a default
                  (or an event  that with  notice or lapse of time or both would
                  become a default)  under,  result in the  creation of any Lien
                  upon any of the  properties  or assets of the  Company  or any
                  Subsidiary,  or give to  others  any  rights  of  termination,
                  amendment,  acceleration  or  cancellation  (with  or  without
                  notice,  lapse of time or both) of,  any  material  agreement,
                  credit  facility,  debt  or  other  instrument  (evidencing  a
                  Company   or   Subsidiary   debt  or   otherwise)   or   other
                  understanding  (as determined  pursuant to Item  601(b)(10) of
                  Regulation  SB) to which the  Company or any  Subsidiary  is a
                  party or by which any  property or asset of the Company or any
                  Subsidiary  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  or a  Subsidiary  is  subject  (including
                  federal  and state  securities  laws and  regulations),  or by
                  which any property or asset of the Company or a Subsidiary  is
                  bound or affected;  except in the case of each of clauses (ii)
                  and (iii), such as could not have or reasonably be expected to
                  result in a Material Adverse Effect.


                                       9
<PAGE>


         (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  with  the   Commission
                  disclosing  the  transactions  contemplated  hereby,  (ii) the
                  filing  with the  Commission  of the  Registration  Statement,
                  (iii)  the  notice  and/or  application(s)  (if  any)  to each
                  applicable  Trading  Market for the  issuance  and sale of the
                  Securities  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  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 will reserve,  following the adoption of
                  the  Approved  Charter  Amendments,  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),  which  SCHEDULE  3.1(G) shall also
                  include   the   number  of  shares  of  Common   Stock   owned
                  beneficially,  and of record,  by Affiliates of the Company as
                  of the date  hereof.  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 Common Stock Equivalents outstanding
                  as of the  date of the most  recently  filed  periodic  report
                  under the Exchange Act. To the Company's knowledge,  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  or
                  except for Common Stock Equivalents outstanding as of the date
                  of the most recently filed periodic  report under the Exchange
                  Act, there are no outstanding options,  warrants, scrip rights
                  to  subscribe  to,  calls  or  commitments  of  any  character
                  whatsoever  relating to, or securities,  rights or obligations
                  convertible into or exercisable or exchangeable for, or giving
                  any Person any right to subscribe  for or acquire,  any shares
                  of Common Stock, or contracts, commitments,  understandings or
                  arrangements  by which the Company or any Subsidiary is or may
                  become  bound to issue  additional  shares of Common  Stock or
                  Common Stock  Equivalents.  To the  Company's  knowledge,  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


                                       10
<PAGE>


                  under any of 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.  Other than the adoption of the  Approved  Charter
                  Amendment,   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. To the Company's knowledge,
                  the  Company  has  filed  all   reports,   schedules,   forms,
                  statements  and other  documents  required  to be filed by the
                  Company  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 or  regulation  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.  To the Company's knowledge,
                  as of their respective  dates, the SEC Reports complied in all
                  material  respects with the requirements of the Securities Act
                  and the  Exchange  Act,  as  applicable,  and  none of the SEC
                  Reports,  when  filed,  contained  any untrue  statement  of a
                  material  fact or omitted to state a material fact required to
                  be stated therein or necessary in order to make the statements
                  therein,  in the light of the  circumstances  under which they
                  were made, not  misleading.  To the Company's  knowledge,  the
                  financial  statements  of the  Company  included  in  the  SEC
                  Reports  comply  in  all  material  respects  with  applicable
                  accounting  requirements  and the rules and regulations of the
                  Commission  with  respect  thereto as in effect at the time of
                  filing.  Such  financial  statements  have  been  prepared  in
                  accordance with United States  generally  accepted  accounting
                  principles  applied on a  consistent  basis during the periods
                  involved  ("GAAP"),  except as may be  otherwise  specified in
                  such financial statements or the notes thereto and 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 a  subsequent  SEC Report filed
                  prior  to the  date  hereof,  (i)  there  has  been no  event,
                  occurrence  or   development   that  has  had  or  that  could
                  reasonably be expected to result in a Material Adverse Effect,
                  (ii) the Company has not incurred any liabilities  (contingent
                  or  otherwise)  other  than (A)  trade  payables  and  accrued
                  expenses   incurred  in  the   ordinary   course  of  business
                  consistent with past practice and (B) liabilities not required
                  to be reflected in the Company's financial statements pursuant
                  to GAAP or disclosed in filings


                                       11
<PAGE>


                  made with the  Commission,  (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.  Except for the  issuance  of the  Securities
                  contemplated  by this  Agreement  or as set forth on  SCHEDULE
                  3.1(I),  no event,  liability or  development  has occurred or
                  exists  with  respect to the  Company or its  Subsidiaries  or
                  their respective business, properties, operations or financial
                  condition,  that  would be  required  to be  disclosed  by the
                  Company  under  applicable  securities  laws at the time  this
                  representation is made that has not been publicly disclosed at
                  least 1 Trading Day prior to the date that this representation
                  is made.

         (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 or  reasonably  be  expected  to  result  in a
                  Material   Adverse   Effect.   Neither  the  Company  nor  any
                  Subsidiary,  nor,  to the  Company's  knowledge,  any  current
                  director or officer  thereof (in his capacity as such),  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, to the  Company's  knowledge,  any
                  current director or officer of the Company (in his capacity as
                  such).  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  could  reasonably  be
                  expected to result in a Material  Adverse Effect.  None of the
                  Company's  or its  Subsidiaries'  employees  is a member  of a
                  union that relates to such  employee's  relationship  with the
                  Company, and neither the Company or any of its Subsidiaries is
                  a party to a collective bargaining agreement,  and the Company
                  and its  Subsidiaries  believe that their  relationships  with
                  their  employees  are  good.  No  executive  officer,  to  the
                  knowledge  of the  Company,  is, or is now  expected to be, in
                  violation of any  material  term of any  employment  contract,
                  confidentiality,   disclosure   or   proprietary   information
                  agreement or non-competition  agreement, or any other contract
                  or agreement or any  restrictive  covenant,  and the continued
                  employment of each such executive officer does not subject the
                  Company  or any  of its  Subsidiaries  to any  liability  with
                  respect to any of the foregoing  matters.  The Company and its
                  Subsidiaries are in compliance with all U.S.  federal,  state,
                  local and foreign laws and regulations  relating to employment
                  and


                                       12
<PAGE>


                  employment  practices,  terms and conditions of employment and
                  wages and hours,  except where the failure to be in compliance
                  could not,  individually  or in the  aggregate,  reasonably be
                  expected to have a Material Adverse Effect.

         (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 having  jurisdiction over the Company or its
                  properties or assets,  or (iii) is or has been in violation of
                  any statute, rule or regulation of any governmental authority,
                  except  in each  case as  could  not  have  or  reasonably  be
                  expected to result in 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  could not have or reasonably be expected
                  to result in 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,  except for Liens as do not  materially  affect the
                  value of such property and do not  materially  interfere  with
                  the use made and  proposed to be made of such  property by the
                  Company  and the  Subsidiaries  and Liens for the  payment  of
                  federal, state or other taxes, the payment of which is neither
                  delinquent  nor subject to  penalties.  Any real  property and
                  facilities   held  under   lease  by  the   Company   and  the
                  Subsidiaries  are held by them  under  valid,  subsisting  and
                  enforceable leases with which the Company and the Subsidiaries
                  are in 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,  trade secrets,  inventions,  copyrights,  licenses and
                  other   intellectual   property   rights  and  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  could  have a Material  Adverse
                  Effect  (collectively,  the "INTELLECTUAL  PROPERTY  RIGHTS").
                  Neither the Company nor any  Subsidiary  has received a notice
                  (written or otherwise) 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


                                       13
<PAGE>


                  another Person of any of the Intellectual Property Rights. The
                  Company and its Subsidiaries  have taken  reasonable  security
                  measures to protect the secrecy,  confidentiality and value of
                  all of their intellectual properties,  except where failure to
                  do so could not, individually or in the aggregate,  reasonably
                  be expected to have a Material Adverse Effect.

         (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  Company  and the
                  Subsidiaries   are  engaged.   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 for (i)  payment of
                  salary  or  consulting  fees  for  services   rendered,   (ii)
                  reimbursement  for expenses  incurred on behalf of the Company
                  and (iii) other  employee  benefits,  including  stock  option
                  agreements under any stock option plan of the Company.

         (r)      SARBANES-OXLEY;   DISCLOSURE  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 information required to be disclosed
                  by the  Company in the  reports it files or submits  under the
                  Exchange Act is recorded, processed,  summarized and reported,
                  within the time periods  specified in the  Commission's  rules
                  and forms.  The Company's  certifying  officers have evaluated
                  the  effectiveness  of the Company's  disclosure  controls and
                  procedures  as of  the  end  of  the  period  covered  by  the
                  Company's  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.  Except
                  as set forth in Schedule  3.1(r) of the  Disclosure  Schedule,
                  since the Evaluation  Date,  there have been no changes in the
                  Company's  internal control over financial  reporting (as such
                  term is  defined  in the  Exchange  Act)  that has  materially
                  affected,  or is reasonably likely to materially  affect,  the
                  Company's internal control over financial reporting.


                                       14
<PAGE>


         (s)      CERTAIN  FEES.  Except  for fees  payable  to  Sanders  Morris
                  Harris,  no brokerage or finder's fees or  commissions  are or
                  will  be  payable  by the  Company  to any  broker,  financial
                  advisor or consultant,  finder,  placement  agent,  investment
                  banker,  bank or other Person with respect to the transactions
                  contemplated  by the  Transaction  Documents.  The  Purchasers
                  shall  have no  obligation  with  respect  to any fees or with
                  respect  to any claims  made by or on behalf of other  Persons
                  for fees of a type  contemplated  in this  Section that may be
                  due in connection  with the  transactions  contemplated by the
                  Transaction Documents.

         (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  Securities  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 of 1940, as amended.

         (v)      REGISTRATION RIGHTS. Other than each of the Purchasers, to the
                  Company's  knowledge,  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(b) or 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.  Except as  specified  in the SEC  Reports,  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)      DISCLOSURE.  Except  with  respect to the  material  terms and
                  conditions of the transactions contemplated by the Transaction
                  Documents,  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 it
                  believes constitutes or might constitute  material,  nonpublic
                  information.  The Company  understands  and confirms  that the
                  Purchasers  will  rely  on  the  foregoing  representation  in
                  effecting  transactions  in  securities  of the  Company.  All
                  disclosure  furnished  by or on behalf of the  Company  to the
                  Purchasers   regarding  the  Company,  its  business  and  the
                  transactions  contemplated  hereby,  including the  Disclosure
                  Schedules  to this  Agreement,  is  true  and  correct  in all


                                       15
<PAGE>


                  material respects and does 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, not misleading.  To
                  the Company's  knowledge,  the press releases  disseminated by
                  the Company  during the twelve  months  preceding  the date of
                  this  Agreement  taken as a whole do not  contain  any  untrue
                  statement of a material  fact or omit to state a material fact
                  required to be stated  therein or  necessary  in order to make
                  the statements, in light of the circumstances under which they
                  were  made  and  when  made,  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.

         (y)      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
                  provision of any Trading Market on which any of the securities
                  of the Company are listed or designated.

         (z)      TAX STATUS. Except for matters that would not, individually or
                  in the aggregate,  have or reasonably be expected to result in
                  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.

         (aa)     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.

         (bb)     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.

         (cc)     ACKNOWLEDGMENT  REGARDING  PURCHASERS' PURCHASE OF SECURITIES.
                  The  Company   acknowledges   and  agrees  that  each  of  the
                  Purchasers is acting solely in the


                                       16
<PAGE>


                  capacity  of an arm's  length  purchaser  with  respect to the
                  Transaction   Documents  and  the  transactions   contemplated
                  thereby. 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 the  Transaction
                  Documents and the  transactions  contemplated  thereby and any
                  advice  given  by any  Purchaser  or any of  their  respective
                  representatives  or agents in connection  with the Transaction
                  Documents and the transactions  contemplated thereby 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 and the other
                  Transaction Documents has been based solely on the independent
                  evaluation  of the  transactions  contemplated  hereby  by the
                  Company and its representatives.

         (dd)     ACKNOWLEDGEMENT   REGARDING   PURCHASERS'   TRADING  ACTIVITY.
                  Anything in this Agreement or elsewhere herein to the contrary
                  notwithstanding  (except for Sections  3.2(f) and 4.5 hereof),
                  it is understood and acknowledged 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;   (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; and
                  (iv)  that  each  Purchaser  shall  not be  deemed to have any
                  affiliation   with  or   control   over   any   arm's   length
                  counter-party  in any  "derivative"  transaction.  The Company
                  further  understands  and  acknowledges  that  (a) one or more
                  Purchasers  may engage in hedging  activities at various times
                  during  the  period  that  the  Securities  are   outstanding,
                  including,  without  limitation,  during the periods  that the
                  value of the  Underlying  Shares  deliverable  with respect to
                  Securities   are  being   determined   and  (b)  such  hedging
                  activities  (if any) could  reduce  the value of the  existing
                  stockholders' equity interests in the Company at and after the
                  time that the  hedging  activities  are being  conducted.  The
                  Company   acknowledges   that  such   aforementioned   hedging
                  activities   do  not   constitute  a  breach  of  any  of  the
                  Transaction Documents.

         (ee)     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 Company and
                  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.

         (ff)     REGULATION  M  COMPLIANCE.  The  Company  has not,  and to its
                  knowledge no one acting on its behalf has, (i) taken, directly
                  or  indirectly,  any action  designed to cause or to result in
                  the stabilization or manipulation of the price of any security
                  of the Company to facilitate  the sale or resale of any of the
                  Securities,  (ii)  sold,  bid  for,  purchased,  or  paid  any
                  compensation   for   soliciting   purchases  of,  any  of  the
                  securities of


                                       17
<PAGE>


                  the Company,  or (iii) paid or agreed to pay to any Person any
                  compensation  for  soliciting  another to  purchase  any other
                  securities of the Company,  other than, in the case of clauses
                  (ii) and (iii),  compensation paid to the Company's  placement
                  agent in connection with the placement of the Securities.

         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, if it is an entity,
                  is 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 hereunder and 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  Document to which it is a party
                  has been duly executed by such  Purchaser,  and when delivered
                  by such  Purchaser in 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 in violation of the  Securities
                  Act or any  applicable  state  securities  law, has no present
                  intention of distributing  any of such Securities in violation
                  of the Securities Act or any applicable  state  securities law
                  and has no direct or indirect  arrangement  or  understandings
                  with  any  other   persons  to  distribute  or  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) in violation  of the  Securities  Act or any  applicable
                  state   securities   law.  Such  Purchaser  is  acquiring  the
                  Securities hereunder in the ordinary course of its business.

         (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 converts  any shares of Preferred  Stock,  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.


                                       18
<PAGE>


         (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  AND  CONFIDENTIALITY  PRIOR TO THE DATE  HEREOF.
                  Other  than  the  transaction  contemplated  hereunder,   such
                  Purchaser has not directly or  indirectly,  nor has any Person
                  acting on behalf of or pursuant to any understanding with such
                  Purchaser, executed any disposition, including Short Sales, in
                  the  securities  of the Company  during the period  commencing
                  from the time that such Purchaser  first received a term sheet
                  (written or oral) from the Company or any other Person setting
                  forth  the  material  terms of the  transactions  contemplated
                  hereunder   until  the  date   hereof   ("DISCUSSION   TIME").
                  Notwithstanding the foregoing, in the case of a Purchaser that
                  is  a  multi-managed   investment   vehicle  whereby  separate
                  portfolio   managers   manage   separate   portions   of  such
                  Purchaser's  assets and the portfolio  managers have no direct
                  knowledge of the  investment  decisions  made by the portfolio
                  managers  managing other portions of such Purchaser's  assets,
                  the  representation  set forth  above  shall  only  apply with
                  respect  to the  portion of assets  managed  by the  portfolio
                  manager  that made the  investment  decision to  purchase  the
                  Securities  covered  by this  Agreement.  Other  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).


                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1      TRANSFER RESTRICTIONS.

         (a)      The  Securities  may only be  disposed of in  compliance  with
                  state and federal  securities  laws.  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


                                       19
<PAGE>


                  bound by the terms of this Agreement and shall have the rights
                  of a  Purchaser  under  this  Agreement  and the  Registration
                  Rights Agreement.

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

                  [NEITHER]  THIS SECURITY [NOR THE  SECURITIES  INTO WHICH THIS
                  SECURITY IS  CONVERTIBLE]  HAS [NOT] BEEN  REGISTERED WITH THE
                  SECURITIES   AND  EXCHANGE   COMMISSION   OR  THE   SECURITIES
                  COMMISSION  OF ANY STATE IN RELIANCE  UPON AN  EXEMPTION  FROM
                  REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                  "SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED OR
                  SOLD EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
                  UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
                  FROM,  OR IN A  TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION
                  REQUIREMENTS  OF THE  SECURITIES  ACT AND IN  ACCORDANCE  WITH
                  APPLICABLE  STATE  SECURITIES  LAWS  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.

                  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


                                       20
<PAGE>


                  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  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
                  shares of Preferred  Stock are  converted 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 and pronouncements issued
                  by the staff of the Commission)  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 Underlying  Shares 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.  The Company shall  reimburse a Purchaser for any loss
                  occasioned by any "buy-in" suffered by a Purchaser as a result
                  of the  Company's  failure to deliver or cause to be delivered
                  Underlying  Shares  without a legend on or before  the  Legend
                  Removal Date.

         (d)      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,  and  that if  Securities  are sold  pursuant  to a
                  Registration  Statement,  they will be sold in compliance with
                  the plan of distribution set forth therein.

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


                                       21
<PAGE>


         4.3 USE OF  PROCEEDS.  Except as set  forth on  SCHEDULE  4.3  attached
hereto,  the Company shall use the net proceeds from the sale of the  Securities
hereunder for working  capital  purposes and shall not use such proceeds for the
satisfaction  of any portion of the Company's  debt (other than payment of trade
payables in the ordinary course of the Company's  business and prior practices),
or to redeem  any  Common  Stock or Common  Stock  Equivalents  or to settle any
outstanding litigation.

         4.4 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.   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 for the Company to treat the  Purchasers 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.

         4.5  SHORT  SALES  AND  CONFIDENTIALITY  AFTER  THE DATE  HEREOF.  Each
Purchaser  severally and not jointly with the other  Purchasers  covenants  that
neither  it  nor  any  Affiliate  acting  on  its  behalf  or  pursuant  to  any
understanding  with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by this Agreement are first publicly  announced.  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,  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  Commission
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 Securities is a violation of Section 5 of the Securities Act,
as set  forth  in Item  65,  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.
Notwithstanding   the  foregoing,   in  the  case  of  a  Purchaser  that  is  a
multi-managed  investment  vehicle whereby  separate  portfolio  managers manage
separate portions of such Purchaser's  assets and the portfolio managers have no
direct  knowledge of the  investment  decisions  made by the portfolio  managers
managing other portions of such Purchaser's assets, the covenant set forth above
shall only apply with respect to the portion of assets  managed by the portfolio
manager that made the investment  decision to purchase the Securities covered by
this Agreement.

         4.6  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,  if the Company is not
required to file  reports  pursuant  to the  Exchange  Act, it will  prepare and
furnish to the


                                       22
<PAGE>


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, to the extent required from time to
time to enable such Person to sell such Securities  without  registration  under
the Securities  Act within the  requirements  of the exemption  provided by Rule
144.

         4.7 FORM D; BLUE SKY FILINGS.  The Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D and to provide a
copy  thereof,  promptly upon request of any  Purchaser.  The Company shall take
such action as the Company shall  reasonably  determine is necessary in order to
obtain  an  exemption  for,  or to  qualify  the  Securities  for,  sale  to the
Purchasers at the Closing under applicable  securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

         4.8 SHAREHOLDER APPROVAL.  As soon as reasonably  practicable following
the date  hereof,  the  Company  shall use best  efforts  to obtain  Shareholder
Approval by: (a) obtaining a written  consent of or holding a special meeting of
shareholders of the Company at the earliest practical date to obtain Shareholder
Approval; (b) providing an information statement, or soliciting proxies from its
shareholders in connection with  Shareholder  Approval in the same manner as the
Company has  solicited  proxies for other  management  proposals in recent proxy
statements of the Company; and (c) if applicable,  voting all management proxies
in favor of  Shareholder  Approval.  If the Company does not obtain  Shareholder
Approval at the first special meeting of shareholders,  the Company shall call a
special meeting every four months thereafter to seek Shareholder Approval.

         4.9 SECURITIES  LAWS  DISCLOSURE;  PUBLICITY.  The Company shall file a
Current Report on Form 8-K,  disclosing  the material terms of the  transactions
contemplated hereby and including the Transaction  Documents as exhibits thereto
within the time required by the Exchange Act. 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  (A)  any
registration statement contemplated by the Registration Rights Agreement and (B)
the filing of final Transaction  Documents  (including  signature pages thereto)
with the Commission 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 this subclause
(ii).

         4.10 NON-PUBLIC INFORMATION.  Except with respect to the material terms
and conditions of the  transactions  contemplated by the Transaction  Documents,
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.


                                       23
<PAGE>


         4.11  INDEMNIFICATION OF PURCHASERS.  Subject to the provisions of this
Section  4.11,  the  Company  will  indemnify  and hold each  Purchaser  and its
directors, officers, shareholders,  members, partners, employees and agents (and
any other Persons with a functionally  equivalent  role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser  (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such  title or any other  title) of such  controlling  person  (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  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
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  reasonably
acceptable to the Purchaser  Party.  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,  in which case the
Company shall be  responsible  for the  reasonable  fees and expenses of no more
than one such separate counsel.  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 such
Purchaser Party in this Agreement or in the other Transaction Documents.


                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 TERMINATION.  This Agreement may be terminated by any Purchaser, as
to such Purchaser's obligations hereunder only and without any effect whatsoever
on the  obligations  between the Company  and the other  Purchasers,  by written
notice to the other  parties,  if the  Closing  has not been  consummated  on or
before February 28, 2007; PROVIDED, HOWEVER, that


                                       24
<PAGE>


such termination will not 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 the Placement Agent the  non-accountable  sum of $______ for its legal
fees and expenses. 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 to the Purchasers.

         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 2nd Trading  Day  following  the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

         5.5 AMENDMENTS;  WAIVERS. No provision of this Agreement may be waived,
modified,  supplemented 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 waived  provision 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 any 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.

         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 (other than by merger).  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


                                       25
<PAGE>


such transferee  agrees in writing to be bound,  with respect to the transferred
Securities,  by the  provisions of the  Transaction  Documents 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.

         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
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 is an 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 other 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 reasonable  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  shall survive the
Closing and the delivery of Securities 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  or by e-mail  delivery of a ".pdf"  format
data file,  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 or ".pdf"  signature page were an original
thereof.


                                       26
<PAGE>


         5.12 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.

         5.13 RESCISSION AND WITHDRAWAL RIGHT.  Notwithstanding  anything to the
contrary  contained in (and without  limiting any similar  provisions of) any of
the other  Transaction  Documents,  whenever  any  Purchaser  exercises a right,
election, demand or option under a Transaction Document 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.

         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 (in the case of mutilation), 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.  The
applicant for a new  certificate or instrument  under such  circumstances  shall
also  pay any  reasonable  third-party  costs  (including  customary  indemnity)
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  contained in the  Transaction  Documents and hereby agrees to waive
and not to assert 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.


                                       27
<PAGE>


         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 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 or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any  other  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 FWS. FWS
does not  represent any of the  Purchasers  but only the  Placement  Agent.  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  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


                                       28
<PAGE>


drafting party shall not be employed in the  interpretation  of the  Transaction
Documents or any amendments hereto.



                            [Signature Page Follows]


                                       29
<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.


MPLC, INC.                              ADDRESS/FACSIMILE NUMBER/E-MAIL ADDRESS
                                        FOR NOTICE:
By:  /s/ Raymond Musci                  42 CORPORATE PARK, SUITE 250
     ------------------------           IRVINE, CA 92606
     Name:  Raymond Musci               FACSIMILE: _________________
     Title: President                   E-MAIL: ____________________
                                        ATTENTION: _________________
With a copy to (which shall not
constitute notice):







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


                                       30
<PAGE>


        [PURCHASER SIGNATURE PAGES TO MPLC 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 Authorized Signatory: _________________________________________

Fax Number of Authorized Signatory: ____________________________________________


Address for Notice of Purchaser:




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





Subscription Amount: $____________

Shares of Preferred Stock: ____________

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]



                           [SIGNATURE PAGES CONTINUE]


                                       31

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-2.txt
<DESCRIPTION>EX-10.2
<TEXT>
                                                                    EXHIBIT 10.2


                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "AGREEMENT")  is made and
entered  into as of February 28, 2007 among MPLC,  Inc., a Delaware  corporation
(the  "COMPANY"),  and  the  several  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 of the  date  hereof  between  the  Company  and  each  Purchaser  (the
"PURCHASE AGREEMENT").

         The Company and each Purchaser hereby agrees as follows:

         1.       DEFINITIONS.  Capitalized terms used and not otherwise defined
herein that are defined in the Purchase  Agreement shall have the meanings given
such terms in the Purchase Agreement.  As used in this Agreement,  the following
terms shall have the following meanings:

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

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

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

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

                  "FILING   DATE"  means,   (i)  with  respect  to  the  initial
         Registration  Statement  required  hereunder,  the  75th  calendar  day
         following  the date  hereof,  (ii)  with  respect  to any  Registration
         Statement  required  by Section  2(d)  hereof,  as soon as  practicable
         following  the filing of the initial  Registration  Statement  required
         hereunder and in compliance with the Commission's rules and regulations
         and (iii) with respect to any additional  Registration Statements which
         may be  required  pursuant  to  Section  3(c),  the 30th  calendar  day
         following  the date on which the Company  first  knows,  or  reasonably
         should  have  known  that such  additional  Registration  Statement  is
         required hereunder.

                  "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).

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

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


                                        1
<PAGE>


                   "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.

                   "REGISTRABLE  SECURITIES"  means, as of the date in question,
         (i) all of the shares of Common Stock issuable upon  conversion in full
         of the shares of  Preferred  Stock and upon  conversion  in full of the
         shares of any other series of preferred stock of the Company (including
         the Series B and Series C Convertible  Preferred  Stock of the Company)
         owned by a Purchaser as of the date of this  Agreement or acquired by a
         Purchaser  prior to the filing of the  initial  Registration  Statement
         hereunder,  (ii) any additional  shares issuable in connection with any
         anti-dilution  provisions associated with the Preferred Stock and other
         shares listed in (i) above (in each case,  without giving effect to any
         limitations on conversion set forth in the  Certificate of Designation)
         and  (iii) any  securities  issued or  issuable  upon any stock  split,
         dividend or other distribution,  recapitalization or similar event with
         respect to the  foregoing,  in each case not  previously  included in a
         Registration  Statement,  provided that a Holder's security shall cease
         to be  Registrable  Securities  upon  the  earliest  to  occur  of  the
         following:  (A) sale pursuant to a  Registration  Statement or Rule 144
         under the Securities Act (in which case,  only such security sold shall
         cease to be a  Registrable  Security);  or (B) such  security  becoming
         eligible for sale by the Holder pursuant to Rule 144(k).

                   "REGISTRATION  STATEMENT" means the  registration  statements
         required  to  be  filed   hereunder,   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


                                       2
<PAGE>


         (a)      On or prior to each Filing Date, the Company shall prepare and
                  file with the Commission a Registration Statement covering the
                  resale of all of the  Registrable  Securities  on such  Filing
                  Date for an offering to be made on a continuous basis pursuant
                  to Rule 415. The  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 at  least  an 85%  majority  in  interest  of the
                  Holders)  substantially  the "PLAN OF  DISTRIBUTION"  attached
                  hereto as ANNEX A. Subject to the terms of this Agreement, the
                  Company  shall use its best  efforts  to cause a  Registration
                  Statement to be declared effective under the Securities Act as
                  promptly  as possible  after the filing  thereof and shall use
                  its  best   efforts  to  keep  such   Registration   Statement
                  continuously  effective  under  the  Securities  Act until all
                  Registrable  Securities covered by such Registration Statement
                  have  been  sold,  or may be  sold by  non-affiliates  without
                  volume restrictions  pursuant to Rule 144(k), 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  telephonically
                  request  effectiveness of a Registration  Statement as of 5:00
                  p.m. New York City time on a Trading  Day.  The Company  shall
                  immediately   notify  the   Holders  via   facsimile   of  the
                  effectiveness of a Registration  Statement on the same Trading
                  Day that the  Company  telephonically  confirms  effectiveness
                  with the  Commission,  which shall be the date  requested  for
                  effectiveness of a Registration Statement.  The Company shall,
                  by 9:30 a.m.  New York City time on the  Trading Day after the
                  Effective Date (as defined in the Purchase Agreement),  file a
                  final  Prospectus with the Commission as required by Rule 424.
                  Failure to so notify the Holder  within 1 Trading  Day of such
                  notification  of  effectiveness  or  failure  to  file a final
                  Prospectus as foresaid  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 be deemed to have not  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)
                  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 30
                  calendar  days after the receipt of comments by or notice from
                  the Commission  that such amendment is required in order for a
                  Registration  Statement  to be  declared  effective,  or  (iv)
                  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,  or the  Holders are  otherwise  not  permitted  to
                  utilize  the  Prospectus  therein to resell  such  Registrable
                  Securities for more than 30  consecutive  Trading Days or more
                  than an  aggregate  of 60 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) the date on which such Event occurs, or
                  for purposes of


                                       3
<PAGE>


                  clause (ii) the date on which such five  Trading Day period is
                  exceeded,  or for  purposes of clause  (iii) the date on which
                  such 20 calendar  day period is  exceeded,  or for purposes of
                  clause  (iv)  the  date on  which  such 30 or 60  Trading  Day
                  period, as applicable, is exceeded being referred to as "EVENT
                  DATE"),  then, 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
                  (if the  applicable  Event  shall not have been  cured by such
                  date) until the applicable  Event is cured,  the Company shall
                  pay to each  Holder an amount in cash,  as partial  liquidated
                  damages and not as a penalty,  equal to 1.0% of the  aggregate
                  purchase  price paid by such Holder  pursuant to the  Purchase
                  Agreement  for any  Registrable  Securities  then held by such
                  Holder  (calculated as if all convertible  securities had been
                  fully  converted.) The parties agree that (1) the Company will
                  not be liable for liquidated damages under this Agreement with
                  respect to any  Warrants  or Warrant  Shares,  (2) in no event
                  will the Company be liable for  liquidated  damages under this
                  Agreement  in  excess  of 1.0% of the  aggregate  Subscription
                  Amount of the Holders in any 30-day period and (3) the maximum
                  aggregate  liquidated  damages  payable to a Holder under this
                  Agreement  shall be  twelve  percent  (12%)  of the  aggregate
                  Subscription  Amount  paid  by  such  Holder  pursuant  to the
                  Purchase Agreement. 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,  except in
                  the case of the first Event Date.

         (c)      Each Holder  agrees to furnish to the Company a completed  and
                  executed Selling Shareholder Questionnaire.  The Company shall
                  not be  required to include the  Registrable  Securities  of a
                  Holder in a  Registration  Statement and shall not be required
                  to pay any  liquidated  or other damages under Section 2(b) to
                  any  Holder  who  fails  to  furnish  to the  Company  a fully
                  completed and executed  Selling  Shareholder  Questionnaire at
                  least two Trading Days prior to the Filing  Deadline  (subject
                  to the requirements set forth in Section 3(a)).

         (d)      Notwithstanding anything in this Agreement to the contrary, if
                  the  Commission  refuses to declare a  Registration  Statement
                  filed  pursuant  to  this  Agreement   effective  as  a  valid
                  secondary  offering  under  Rule  415  due  to the  number  of
                  Registrable Securities included in such Registration Statement
                  relative to the outstanding  number of shares of Common Stock,
                  then,  without any  obligation to pay any amount under Section
                  2(b) with respect to such excess Registrable  Securities,  (i)
                  the  Company  shall be  permitted  to  reduce  the  number  of
                  Registrable Securities included in such Registration Statement
                  to  an  amount  that  does  not  exceed  an  amount  that  the
                  Commission allows for the offering  thereunder to qualify as a
                  valid secondary  offering under Rule 415, and (ii) the Company
                  shall  file,  as  soon  as   practicable   thereafter  and  in
                  compliance  with the  Commission's  rules and  regulations,  a
                  Registration   Statement  (or  Registration   Statements,   as
                  required  by  the  Commission)  to  register  the  Registrable
                  Securities  excluded from the initial  Registration  Statement
                  filed hereunder, provided that the terms of Sections 2(b), (c)
                  and  (d)  shall  apply  to  such  Registration   Statement  or
                  Registration Statements once filed.

         3.       REGISTRATION PROCEDURES.


                                       4
<PAGE>


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

         (a)      Not less  than 5  Trading  Days  prior to the  filing  of each
                  Registration  Statement  and not less than one 1  Trading  Day
                  prior to the filing of any related Prospectus or any amendment
                  or supplement  thereto  (including  any document that would be
                  incorporated   or  deemed  to  be   incorporated   therein  by
                  reference),  (i)  furnish  to each  Holder  copies of all such
                  documents  proposed to be filed,  which documents  (other than
                  those  incorporated or deemed to be incorporated by reference)
                  will be subject to the review of such 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
                  each Holder to conduct a reasonable  investigation  within the
                  meaning of the Securities Act.

         (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
                  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  of  all
                  correspondence  from  and  to  the  Commission  relating  to a
                  Registration  Statement  (provided that the Company may excise
                  any  information  contained  therein  which  would  constitute
                  material non-public information as to any Holder which has not
                  executed a  confidentiality  agreement with the Company);  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  (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 the number of such Registrable Securities.

         (d)      Notify the Holders of Registrable Securities to be sold (which
                  notice  shall,  pursuant to clauses (iii) 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


                                       5
<PAGE>


                  reasonably  possible  (and, in the case of (i)(A)  below,  not
                  less  than 1  Trading  Day  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; 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 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, makes it not in the
                  best interest of the Company to allow  continued  availability
                  of a 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 best  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)      If  requested  by a Holder,  furnish to such  Holder,  without
                  charge,  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


                                       6
<PAGE>


                  Commission;   provided,   that  the  Company   shall  have  no
                  obligation  to provide  any  document  pursuant to this clause
                  that is available on the Commission's website.

         (g)      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 of any  notice
                  pursuant to Section 3(d).

         (h)      [Reserved].

         (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  the
                  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  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 this Section
                  3, 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 (iii) 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 best efforts to


                                       7
<PAGE>


                  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 calendar days
                  (which need not be consecutive days) in any 12 month period.

         (l)      Comply  with  all  applicable  rules  and  regulations  of the
                  Commission.

         (m)      The Company may require each selling  Holder to furnish to the
                  Company a  certified  statement  as to the number of shares of
                  Common  Stock  beneficially  owned  by  such  Holder  and,  if
                  required by the  Commission,  the natural persons thereof that
                  have voting and  dispositive  control over the Shares.  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.

         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 a
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 any Trading  Market on which the Common  Stock is then
listed for trading,  and (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 (C)
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 (not to exceed $10,000),  (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  of any Holder or, except to
the extent  provided for in the Transaction  Documents,  any legal fees or other
costs of the Holders.


                                       8
<PAGE>


         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,
                  members,  partners,  agents,  brokers  (including  brokers who
                  offer and sell Registrable Securities as principal as a result
                  of a pledge or any  failure to perform  under a margin call of
                  Common  Stock),  investment  advisors and  employees  (and any
                  other Persons with a functionally  equivalent role of a Person
                  holding such titles,  notwithstanding  a lack of such title or
                  any other title) 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, members,  shareholders,  partners, agents
                  and  employees  (and any  other  Persons  with a  functionally
                  equivalent   role   of   a   Person   holding   such   titles,
                  notwithstanding  a lack of such  title or any other  title) 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 (1) 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,  or
                  (2) any  violation or alleged  violation by the Company of the
                  Securities Act,  Exchange Act or any state  securities law, or
                  any rule or  regulation  thereunder,  in  connection  with the
                  performance of its obligations under this Agreement, 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)(iii)-(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).  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  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:


                                       9
<PAGE>


                  (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 such
                  information  relates  to  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  (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 (z) in the case of an  occurrence of an
                  event of the type specified in Section 3(d)(iii)-(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
         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 counsel to the Indemnified  Party shall  reasonably  believe
         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


                                       10
<PAGE>


         thereof  and the  reasonable  fees  and  expenses  of no more  than 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 or delayed.  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
         judicially determined to be not entitled to indemnification hereunder.

         (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 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  contribute,  in the
         aggregate, any amount in excess of the amount by which the net 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.


                                       11
<PAGE>


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

         6.       MISCELLANEOUS.

         (a)      REMEDIES.  In the  event of a breach  by the  Company  or by a
                  Holder,  of any of their  respective  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 not assert or shall waive the defense
                  that a remedy at law would be adequate.

         (b)      NO PIGGYBACK ON REGISTRATIONS. Except as set forth on SCHEDULE
                  6(B)  attached  hereto,  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 the
                  initial  Registration  Statement  other  than the  Registrable
                  Securities.  The Company shall not file any other registration
                  statements until the initial  Registration  Statement required
                  hereunder is declared  effective by the  Commission,  provided
                  that this  Section  6(b) shall not  prohibit  the Company from
                  filing amendments to registration statements already filed.

         (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 a Registration Statement.

         (d)      DISCONTINUED  DISPOSITION.  The Company  acknowledges that the
                  Registrable   Securities   are  not  subject  to  any  lock-up
                  agreement  in  favor  of  the  Company.   Notwithstanding  the
                  foregoing,   each  Holder   agrees  by  its   acquisition   of
                  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)(iii) through (vi), such Holder will forthwith
                  discontinue disposition of such Registrable Securities under a
                  Registration  Statement  until it is advised  in writing  (the
                  "ADVICE")  by the  Company  that  the  use  of the  applicable
                  Prospectus (as it may have been  supplemented  or amended) may
                  be resumed.  The Company  will use its best  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


                                       12
<PAGE>


                  statement  relating to an offering  for its own account or the
                  account  of  others  under  the  Securities  Act of any of its
                  equity securities, other than on Form S-4 or Form S-8 (each as
                  promulgated   under  the   Securities   Act)  or  their   then
                  equivalents  relating to equity securities to be issued solely
                  in connection  with any  acquisition of any entity or business
                  or equity  securities  issuable in  connection  with 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 on a pro rata basis;  PROVIDED,
                  that  if at  any  time  after  giving  written  notice  of its
                  intention  to  register  any   securities  and  prior  to  the
                  effective  date  of  the   registration   statement  filed  in
                  connection with such registration, the Company shall determine
                  for any reason not to  register  or to delay  registration  of
                  such  securities,  the  Company  may,  at its  election,  give
                  written  notice  of such  determination  to such  Holder  and,
                  thereupon, (i) in the case of a determination not to register,
                  shall  be  relieved  of  its   obligation   to  register   any
                  Registrable  Securities  pursuant  to  this  Section  6(e)  in
                  connection with such registration (but not from its obligation
                  to pay expenses in accordance with Section 4 hereof), and (ii)
                  in the case of a determination to delay registering,  shall be
                  permitted  to delay  registering  any  Registrable  Securities
                  being  registered  pursuant to this  Section 6(e) for the same
                  period as the delay in registering such other securities.  The
                  provisions  of Section 2(b) shall not apply to a  Registration
                  Statement filed pursuant to this Section 6(e).

         (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  of a  majority  of the then  outstanding  Registrable
                  Securities.  If a Registration Statement does not register all
                  of  the  Registrable   Securities  pursuant  to  a  waiver  or
                  amendment done in compliance with the previous sentence,  then
                  the number of Registrable Securities to be registered for each
                  Holder  shall be reduced  pro rata among all  Holders and each
                  Holder  shall  have  the  right  to  designate  which  of  its
                  Registrable Securities shall be omitted from such Registration
                  Statement.  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 Holders  and that
                  does not  directly  or  indirectly  affect the rights of other
                  Holders  may be given  by  Holders  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


                                       13
<PAGE>


                  inure to the  benefit  of each  Holder.  The  Company  may not
                  assign (except by merger) 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.  Except for the agreements listed
                  on  SCHEDULE  6(B),   neither  the  Company  nor  any  of  its
                  Subsidiaries has entered, as of the date hereof, nor shall the
                  Company  or any of its  Subsidiaries,  on or after the date of
                  this  Agreement,  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  otherwise
                  conflicts   with  the  provisions   hereof.   Except  for  the
                  securities and agreements listed on SCHEDULE 6(B), 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
                  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  or by e-mail  delivery  of a ".pdf"  format data
                  file,   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  or ".pdf"  signature  page  were an  original
                  thereof.

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

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


                                       14
<PAGE>


         (n)      HEADINGS.  The headings in this Agreement 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.

         (o)      ENTIRE   AGREEMENT.   This   Agreement   contains  the  entire
                  understanding  of the  parties  with  respect  to the  subject
                  matter hereof and  supersedes  all prior  registration  rights
                  agreements,   including  the  registration   rights  agreement
                  entered  into in  connection  with the  sale of the  Company's
                  Series B Convertible  Preferred Stock, and similar  agreements
                  and understandings  between the parties, oral or written, with
                  respect  to  subject   matter   hereof,   which  the   parties
                  acknowledge have been merged into this Agreement.

         (p)      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.

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


                                       15
<PAGE>


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


MPLC, INC.


By:  /s/ Raymond Musci
     ------------------------
     Name:  Raymond Musci
     Title: President





                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       16
<PAGE>


                     [SIGNATURE PAGE OF HOLDERS TO MPLC RRA]

Name of Holder: __________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________



                           [SIGNATURE PAGES CONTINUE]


                                       17
<PAGE>


                                     ANNEX A

                              PLAN OF DISTRIBUTION

         Each Selling  Stockholder  (the "SELLING  STOCKHOLDERS")  of the common
stock and any of their pledgees,  assignees and successors-in-interest may, from
time to  time,  sell  any or all of  their  shares  of  common  stock on the OTC
Bulletin Board 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  effective
                  date of the registration statement of which this prospectus is
                  a part;

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

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

         o        a combination of any such methods of sale; 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.


                                       18
<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 including Rule 172  thereunder.  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.  There is no  underwriter  or  coordinating  broker
acting in connection  with the proposed sale of the resale shares by the Selling
Stockholders.

         We agreed to keep this  prospectus  effective  until the earlier of (i)
the date on which the shares may be resold by non-affiliate stockholders without
registration  and  without  regard to any volume  limitations  by reason of 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 this  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 the
applicable restricted period, as defined in Regulation


                                       19
<PAGE>


M, prior to the  commencement  of the  distribution.  In  addition,  the Selling
Stockholders  will be subject to  applicable  provisions of the 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 (including by compliance with Rule 172 under the Securities Act).


                                       20
<PAGE>


                                                                         ANNEX B

                                   MPLC, INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned  beneficial  owner of common stock, par value $0.01 per
share  (the  "COMMON  STOCK"),  of  MPLC,  Inc.,  a  Delaware  corporation  (the
"COMPANY"),  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 (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  __,  2007 (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.


                                       21
<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:


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

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

- --------------------------------------------------------------------------------
Telephone:
          ----------------------------------------------------------------------
Fax:
     ---------------------------------------------------------------------------
Contact Person:
                ----------------------------------------------------------------
E-mail address of Contact Person:
                                  ----------------------------------------------

3.       BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

         (a)      Type and Number of Registrable Securities beneficially owned:


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

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

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


                                       22
<PAGE>


4.       BROKER-DEALER STATUS:

         (a)      Are you a broker-dealer?

                                Yes [_]     No [_]

         (b)      If "yes" to Section  4(a),  did you receive  your  Registrable
                  Securities as compensation for investment  banking services to
                  the Company.

                                Yes [_]     No [_]

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

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

                                Yes [_]     No [_]

         Note:    If yes, provide a narrative explanation below:


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

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


         (d)      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)      As of  ___________,  2007,  the Selling  Securityholder  owned
                  outright    (including    shares    registered    in   Selling
                  Securityholder's  name  individually  or jointly  with others,
                  shares held in the name of a bank, broker, nominee, depository
                  or in "street name" for its account),  _________ shares of the
                  Company's    capital   stock    (excluding   the   Registrable
                  Securities). If "zero," please so state.


                                       23
<PAGE>


         (b)      In  addition  to the number of shares  Selling  Securityholder
                  owned  outright  as  indicated  in  Item  5(a)  above,  as  of
                  ________________,  2007,  the  Selling  Securityholder  had or
                  shared   voting  power  or  investment   power,   directly  or
                  indirectly,  through a contract,  arrangement,  understanding,
                  relationship  or  otherwise,  with  respect to  ______________
                  shares  of  the  Company's   capital  stock   (excluding   the
                  Registrable Securities). If "zero," please so state.

                  If the answer to Item 7(b) is not "zero," please  complete the
                  following tables:


                  SOLE VOTING POWER:

                  NUMBER OF SHARES       NATURE OF RELATIONSHIP RESULTING IN
                                                SOLE VOTING POWER

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

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

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

                  SHARED VOTING POWER:

                  NUMBER OF SHARES       WITH WHOM SHARED        NATURE OF
                                                               RELATIONSHIP

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

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

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

                  SOLE INVESTMENT POWER:

                  NUMBER OF SHARES       NATURE OF RELATIONSHIP RESULTING IN
                                                SOLE INVESTMENT POWER

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

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

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

                  SHARED INVESTMENT POWER:

                  NUMBER OF SHARES       WITH WHOM SHARED        NATURE OF
                                                               RELATIONSHIP

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

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

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


                                       24
<PAGE>


         (c)      As of _____________,  2007, the Selling Securityholder had the
                  right to acquire the following  shares of the Company's common
                  stock pursuant to the exercise of  outstanding  stock options,
                  warrants   or  other   rights   (excluding   the   Registrable
                  Securities). Please describe the number, type and terms of the
                  securities,   the  method  of   ownership,   and  whether  the
                  undersigned  holds sole or shared voting and investment power.
                  If "none", please so state.


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

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


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.

         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:


                                       25
<PAGE>


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


                                       26
<PAGE>


                                  SCHEDULE 6(B)


The following securities will be included in the initial Registration  Statement
on a pari passu basis with the Registrable Securities:

1.       All  registrable  securities  under that  certain  registration  rights
         agreement  entered into in  connection  with the sale of the  Company's
         Series B Convertible Preferred Stock; and

2.       All securities  issuable upon conversion of the convertible  promissory
         note issued to Index Visual & Games Ltd.


                                       27


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>ex99-1.txt
<DESCRIPTION>EX-99.1
<TEXT>
                                                                    EXHIBIT 99.1


FOR IMMEDIATE RELEASE                CONTACT: Dean Oakey -- Financial Inquiries
March 6, 2007                                 213-253-2282
                                              Karen Strickholm - Press Inquiries
                                              505-988-4401
                                              strickholmcompany@msn.com


                       NEW MOTION, INC. PARENT MPLC, INC.
                     CLOSES ON $10,000,000 PRIVATE PLACEMENT

                 LATEST INVESTMENT BRINGS TOTAL TO $20,000,000;
                          REVERSE STOCK SPLIT IN WORKS


IRVINE,  CA -- MPLC, Inc.  ("MPLC")  (OTCBB:  MPNC),  the publicly traded parent
company of digital  entertainment company New Motion, Inc., announced today that
it has closed a private placement,  raising gross proceeds of $10,000,000.  This
investment  enables the two year old company to continue to grow organically and
participate in the rapidly consolidating mobile entertainment marketplace.

In the placement, MPLC sold approximately 8,334 shares of its Series D Preferred
Stock which are  convertible  into an  aggregate  of  approximately  500,040,000
shares of its Common  Stock.  This  results in an  effective  price per share of
Common Stock of approximately $.02.


<PAGE>


MPLC's  board has also  authorized  a 300 for 1 reverse  stock  split to go into
effect  in the next 30 to 60 days.  Following  the  completion  of the 300 for 1
reverse stock-split,  MPLC estimates that it will have approximately  11,680,488
shares of Common  Stock  outstanding.  Calculations  are that shares of Series D
Preferred   Stock  sold  in  the  offering  will   automatically   convert  into
approximately  1,666,800 shares of MPLC Common Stock,  resulting in an effective
price  per  share of  Common  Stock  of  approximately  $6.00 on a post  reverse
stock-split  basis.  Shares of Series A, Series B and Series C  Preferred  Stock
will  automatically  convert into a total of  approximately  9,763,688 shares of
MPLC Common Stock. The currently outstanding shares of MPLC Common Stock will be
reduced from  75,000,000  shares to  approximately  250,000  shares.  For a more
complete  discussion  of the  currently  planed  reverse-split  and the  capital
structure of MPLC,  please refer to MPLC's public filings and  specifically  the
Form 8-K dated February 12, 2007.

"We are excited  about the  completion of the Series D private  placement.  This
completes a series of  transactions  whereby we have  acquired  and financed New
Motion,  Inc.,  a  consumer  digital  entertainment  company  that  is now  well
positioned  to take  advantage of projected  growth in the mobile  entertainment
market," said Burton Katz, chief executive officer of MPLC and New Motion,  Inc.
"The $20 million in gross proceeds we recently  raised in the combined Series A,
B and D offerings, along with the assets recently acquired from Mobliss, provide
us with the capital,  platform and technology  necessary to execute our strategy
and leverage  the growing  trend of  consumers  who use their mobile  devices to
interact with media services on the Internet."


                                       2
<PAGE>


Sanders  Morris  Harris,  Inc.  acted as  advisor  to New  Motion,  Inc.  on the
$10,000,000  private  placement.  Please contact Dean Oakey at 213-253-2282  for
more information.

ABOUT MPLC, INC. AND NEW MOTION, INC.

MPLC, Inc.  operates through its wholly owned subsidiary,  New Motion,  Inc. New
Motion is a digital entertainment company providing a broad range of digital and
mobile products and services to consumers.  New Motion combines the power of the
Internet,  the  latest  in  mobile  technology,   and  traditional  marketing  /
advertising  methodologies  in  their  brands:  MobileSidewalk(TM),  one  of the
largest U.S. based mobile  entertainment  companies,  RingtoneChannel,  a mobile
storefront provider, Bid4Prizes, a low-bid mobile auction game, and GatorArcade,
an online and mobile  game site.  Headed by a  seasoned  team of  Internet,  new
media,  entertainment  and technology  professionals,  New Motion was founded in
2005 and is  headquartered  in Irvine,  California  with a branch  office in Los
Angeles.   WIRED  MAGAZINE   recently   declared  New  Motion's  mobile  content
capabilities a "rival to those of their mainstream-media counterparts," WIRELESS
BUSINESS  FORECAST  named New Motion "a company to watch," and RCR WIRELESS NEWS
noted that New Motion is "gaining traction in the direct-to-consumer  ring." For
more information, please visit www.newmotioninc.com.

SAFE HARBOR

This press release contains forward-looking statements within the meaning of the
Private  Securities  Litigation  Reform Act of 1995,  about MPLC and New Motion.
Forward-looking  statements are statements that are not historical  facts.  Such
forward-looking  statements,  based upon the current beliefs and expectations of
MPLC's  management,  are subject to risks and  uncertainties,  which could cause
actual  results to differ from the forward  looking  statements.  The  following
factors, among others, could cause actual results to differ from those set forth
in  the  forward-looking  statements:   changing  interpretations  of  generally
accepted   accounting   principles;   continued   compliance   with   government
regulations;  legislation or regulatory  environments,  requirements  or changes
adversely  affecting the businesses in which New Motion engaged;  demand for the
products and services that New Motion  provides,  general  economic  conditions;
geopolitical  events and  regulatory  changes,  as well as other  relevant risks
detailed in MPLC's  filings with the  Securities  and Exchange  Commission.  The
information set forth herein should be read in light of such risks. MPLC assumes
no obligation to update the information contained in this press release.

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