REGISTRATION RIGHTS AGREEMENT


     Registration  Rights  Agreement  (the  "Agreement"), dated as of August 10,
2004,  by and between Nighthawk Systems, Inc., a corporation organized under the
laws  of  State  of  Nevada,  with  its  principal executive office at Nighthawk
Systems,  Inc.,  10715  Gulfdale,  Suite  200,  San  Antonio,  Texas 78216, (the
"Company"),  and  Dutchess  Private  Equities Fund, II, L.P., a Delaware limited
partnership  with  its  principal  office at 312 Stuart Street, Boston, MA 02116
(the  "Holder").

     WHEREAS,  upon  the terms and subject to the conditions of the Subscription
Agreement between the Holder and the Company (the "Subscription Agreement"), the
Company has agreed to issue and sell to the Holder convertible debentures of the
Company  (the "Debentures"), which will be convertible into shares of the common
stock,  no  par  value  per  share  (the  "Common  Stock"),  of  the  Company.

     WHEREAS,  to  induce  the  Holder  to  execute and deliver the Subscription
Agreement,  the  Company has agreed to provide certain registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable  state  securities  laws,  with respect to the shares of Common Stock
issuable  pursuant  to  the  Subscription  Agreement  and  Debenture.

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


1.           DEFINITIONS.

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

a.  "Closing  Date" means the date funds are received by the Company pursuant to
the  Subscription  Agreement.

b.  "Holder"  means  Dutchess  Private  Equities  Fund,  II,  LP.

c.   "Person"  means a corporation, a limited liability company, an association,
a  partnership,  an  organization,  a business, an individual, a governmental or
political  subdivision  thereof  or  a  governmental  agency.

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

e.  "Principal  Market"  means either The American Stock Exchange, Inc., The New
York  Stock  Exchange,  Inc.,  the  Nasdaq  National Market, The Nasdaq SmallCap
Market  or  the National Association of Securities Dealer's, Inc. OTC electronic
bulletin  board  whichever  is the principal market on which the Common Stock is
listed.

f.  "Register,"  "Registered,"  and  "Registration"  refer  to  a  registration
effected  by preparing and filing with the United States Securities and Exchange
Commission  (the  "SEC")  one or more Registration Statements in compliance with
the  1933  Act and pursuant to Rule 415 under the 1933 Act or any successor rule
providing  for  offering  securities  on  a  continuous  basis ("Rule 415"), and
effectiveness  of  such  Registration  Statement(s).

g.  "Registrable Securities" means the shares of Common Stock issued or issuable
(i)  pursuant  to  the  Subscription Agreement, (ii) any shares of capital stock
issued or issuable with respect to the such shares of Common Stock and Warrants,
if  any,  as  a  result  of  any  stock split, stock dividend, recapitalization,
exchange  or  similar  event or otherwise, which have not been (x) included in a
Registration  Statement that has been declared effective by the SEC, or (y) sold
under circumstances meeting all of the applicable conditions of Rule 144 (or any
similar  provision  then  in  force)  under  the  1933  Act.

h.  "Registration Statement" means a registration statement of the Company filed
under  the  1933  Act.

i.  "Debenture"  means  the  convertible  debenture issued by the Company to the
Holder.

j.  Face Amount means $250,000 to be invested by Dutchess Private Equities Fund,
II,  LP

     All  capitalized  terms  used  in  this Agreement and not otherwise defined
herein  shall  have  the  same  meaning  ascribed to them as in the Subscription
Agreement.

     2.     REGISTRATION.

a.     Mandatory  Registration.  The  Company  shall  prepare,  and,  as soon as
practicable  file  with  the  SEC  a  Registration  Statement  or  Registration
Statements  (as  is necessary) on Form SB-2 (or, if such form is unavailable for
such  a  registration,  on  such  other  form  as  is  available  for  such  a
registration),  covering  the resale of all of the Registrable Securities, which
Registration  Statement(s)  shall  state  that,  in  accordance  with  Rule  416
promulgated  under  the  1933  Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon  stock  splits, stock dividends or similar transactions.  The Company shall
initially  register for resale ___________ shares of Common Stock which would be
issuable on the date preceding the filing of the Registration Statement based on
the  closing bid price of the Company's Common Stock on such date and the amount
reasonably  calculated that represents the number of shares issuable pursuant to
the  terms  of the Offering. In the event the Company cannot register sufficient
shares  of  Common  Stock,  due  to the remaining number of authorized shares of
Common  Stock  being  insufficient,  the  Company  will  use its best efforts to
register  the  maximum number of shares it can based on the remaining balance of
authorized  shares  and  will use its best efforts to increase the number of its
authorized  shares  as  soon  as  reasonably  practicable.

b.     The Company shall use its best efforts to have the Registration Statement
filed  with  the SEC within thirty (30) calendar days after the Closing Date. If
the  Registration  Statement  covering the Registrable Securities required to be
filed  by the Company pursuant to Section 2(a) hereof is not filed within thirty
(30)  calendar  days  following the Closing Date, then the Company shall pay the
Holder  the  sum  of  two  percent  (2%) of the of the Debentures outstanding as
liquidated  damages,  and  not  as  a penalty, for each thirty (30) calendar day
period,  pro  rata,  following  the  thirty  (30)  calendar day period until the
Registration  Statement  is filed compounded daily.  In addition, for each sixty
(60)  calendar  period,  the Conversion Price of the Debentures will increase by
two  percent  (2%).

     Notwithstanding  the foregoing, the amounts payable by the Company pursuant
to  this  Section  shall not be payable to the extent any delay in the filing of
the  Registration  Statement occurs because of an act of, or a failure to act or
to  act  timely  by  the  Holder.  The  damages  set forth in this Section shall
continue  until  the  obligation is fulfilled and shall be paid within three (3)
business  days  after each thirty (30) day period, or portion thereof, until the
Registration  Statement is filed.  Failure of the Company to make payment within
said  three  (3)  business  days  shall  be  considered  a  default.

     The  Company  acknowledges  that  its  failure  to  have  the  Registration
Statement  filed  within  said  thirty  (30)  calendar day period will cause the
Holder  to  suffer  damages  in  an  amount that will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Agreement a provision for liquidated damages.  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and  amount  of  such  liquidated  damages  are  reasonable  and  will not
constitute  a  penalty.  The payment of liquidated damages shall not relieve the
Company from its obligations to register the Common Stock and deliver the Common
Stock  pursuant  to  the terms of this Agreement, the Subscription Agreement and
the  Debenture.

c.     The Company shall use its best efforts to have the Registration Statement
declared effective by the SEC within ninety (90) calendar days after the Closing
Date. If the Registration Statement covering the Registrable Securities required
to  be  filed  by  the  Company  pursuant  to Section 2(a) hereof has not become
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effective  within ninety (90) calendar days following the Closing Date, then the
Company  shall  pay  the Holder the sum of two percent (2%) of the amount of the
Debentures  outstanding  as  liquidated  damages  and  not as a penalty for each
thirty (30) calendar day period, pro rata, following the ninety (90)calendar day
period  until  the  Registration  Statement  is  declared  effective.

     If  the Registration Statement covering the Registrable Securities required
to be filed by the Company pursuant to Section 2(a) hereof has become effective,
but  after  the effective date the Holder's right to sell is suspended, then the
Company  shall  pay the Holder the sum of 2% of the purchase price plus interest
and  penalties  due to the Holder for the Registrable Securities pursuant to the
Subscription  Agreement  for  each  thirty  (30)  calendar day period, pro rata,
following  the  suspension  until  such  suspension  ceases.

     Notwithstanding  the foregoing, the amounts payable by the Company pursuant
to  this  Section  shall  not  be  payable  to  the  extent  any  delay  in  the
effectiveness  of  the  Registration Statement occurs because of an act of, or a
failure  to  act  or  to act timely by the Holder. The damages set forth in this
Section  shall  continue  until  the  obligation  is fulfilled and shall be paid
within  three  (3)  business  days after each thirty (30) day period, or portion
thereof,  until  the  Registration  Statement  is  declared  effective  or  such
suspension  is  released.  Failure  of  the  Company to make payment within said
three  (3)  business  days  shall  be  considered  a  default.

     The  Company  acknowledges  that  its  failure  to  have  the  Registration
Statement  become  effective  within  said ninety (90) calendar day period or to
permit  the  suspension of the effectiveness of the Registration Statement, will
cause  the  Holder  to  suffer  damages  in  an amount that will be difficult to
ascertain.  Accordingly,  the parties agree that it is appropriate to include in
this  Agreement a provision for liquidated damages.  The parties acknowledge and
agree that the liquidated damages provision set forth in this section represents
the parties' good faith effort to quantify such damages and, as such, agree that
the  form  and  amount  of  such  liquidated damages are reasonable and will not
constitute  a  penalty.  The payment of liquidated damages shall not relieve the
Company from its obligations to register the Common Stock and deliver the Common
Stock  pursuant  to  the terms of this Agreement, the Subscription Agreement and
the  Debenture.

d.     The  Company  agrees  not  to  include  any  other  securities,  in  this
Registration  Statement  without  Holder  prior  written consent, unless for the
Holder.Furthermore,  the  Company  agrees  that  it  will  not  file  any  other
Registration Statement, including those on Form S-8, for other securities (other
than those for existing option holders, strategic partners or in connection with
a merger or acquisition), until one hundred and eighty (180) calendar days after
the  Registration Statement for the Registrable Securities is declared effective
unless  it  has  written  approval from the Holder. Failure to so will result in
damages  difficult to ascertain, the Company will pay ,the Holder the sum of two
percent  (2%)  of the amount of the Debentures outstanding as liquidated damages
and  not  as  a  penalty  for  each  thirty  (30) calendar day period, pro rata.



     3.     RELATED  OBLIGATIONS.

     At such time as the Company is obligated to prepare and file a Registration
Statement  with  the SEC pursuant to Section 2(a), the Company will use its best
efforts  to  effect the registration of the Registrable Securities in accordance
with  the  intended method of disposition thereof and, with respect thereto, the
Company  shall  have  the  following  obligations:


a.          The  Company  shall  use its best efforts to cause such Registration
Statement  relating  to  the  Registrable  Securities to become effective within
ninety  (90)  calendar  days  after  the  date  and shall keep such Registration
Statement effective pursuant to Rule 415 until the earlier of (i) the date as of
which  the Holder may sell all of the Registrable Securities without restriction
pursuant to Rule 144(k) or 144A  promulgated under the 1933 Act or (ii) the date
on  which  (A) the Holder shall have sold all the Registrable Securities and (B)
the  Holder  has  no right to convert the Shares it owns into Common Stock under
the  Subscription  Agreement  respectively  (the  "Registration  Period"), which
Registration  Statement  (including  any  amendments  or supplements thereto and
prospectuses  contained  therein)  shall  not  contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they  were  made,  not misleading. The Company shall respond to all SEC comments
within  seven (7) business days of receipt by the Company.  If the Company fails
to  respond  within  seven  (7)  business  days  of receipt of SEC comments, the
Company  shall pay to the Holder a cash amount within three (3) business days of
the  end  of the month equal to 2% per month, on a pro rata basis, of the amount
paid  to purchase the Debentures then outstanding, as liquidated damages and not
as  a  penalty;  provided that the seven (7) business day period provided herein
shall  be  extended  as  may  be  required  by delays caused by Holder's counsel
pursuant  to  paragraph  3g  below,  and,  provided further, that such seven (7)
business day period shall be extended two (2) business days for responses to SEC
staff  accounting  comments.  The Company shall cause the Registration Statement
relating  to  the Registrable Securities to become effective no later than three
(3)  business days after notice from the SEC that the Registration Statement may
be  declared  effective.  Failure  to  do  so  will  result  in  the Debenture's
Conversion  Price  to  be increased by one percent (1%) per day the company does
not  request  acceleration  from  the  SEC.

b.     The  Company  shall  prepare  and  file  with  the  SEC  such  amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used  in  connection  with  such  Registration
Statement,  which  prospectus  is  to  be filed pursuant to Rule 424 promulgated
under  the  1933  Act,  as  may be necessary to keep such Registration Statement
effective  during  the Registration Period, and, during such period, comply with
the  provisions  of  the  1933  Act  with  respect  to  the  disposition  of all
Registrable  Securities  of  the  Company covered by such Registration Statement
until  such  time as all of such Registrable Securities shall have been disposed
of  in accordance with the intended methods of disposition by the Holder thereof
as  set forth in such Registration Statement.  In the event the number of shares
of  Common Stock available under a Registration Statement filed pursuant to this
Agreement  is  at  any  time  insufficient  to  cover  all  of  the  Registrable
Securities,  the  Company shall amend such Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case, as soon as
practicable,  but  in  any  event  within  thirty  (30)  calendar days after the
necessity  therefor arises (based on the then Purchase Price of the Common Stock
and  other  relevant  factors  on  which the Company reasonably elects to rely),
assuming  the  Company  has sufficient authorized shares at that time, and if it
does  not,  within  thirty  (30) calendar days after such shares are authorized.
The  Company  shall  use  it  best  efforts  to  cause such amendment and/or new
Registration  Statement to become effective as soon as practicable following the
filing  thereof.

     Prior to conversion of all the Shares, if at any time the conversion of all
the  Shares  outstanding  would  result  in an insufficient number of authorized
shares  of  Common  Stock  being available to cover all the conversions, then in
such  event,  the  Company  will  move  to call and hold a shareholder's meeting
within  thirty  (30)  calendar  days  of  such  event  for  the  sole purpose of
authorizing  additional  shares  of  Common Stock to facilitate the conversions.
In  such an event the Company shall recommend to all shareholders and management
of the Company to vote their shares in favor of increasing the authorized number
of  shares  of  Common Stock.  The Company represents and warrants that under no
circumstances will it deny or prevent Purchaser's right to convert the Shares as
permitted  under  the  terms of this Subscription Agreement or this Registration
Rights Agreement. The Holder retains the right to request additional shares upon
the  determination  the company may not be able to facilitate conversions in the
future.

c     The  Company  shall furnish to the Holder whose Registrable Securities are
included  in any Registration Statement and its legal counsel without charge (i)
promptly  after the same is prepared and filed with the SEC at least one copy of
such  Registration  Statement  and any amendment(s) thereto, including financial
statements  and  schedules,  all documents incorporated therein by reference and
all  exhibits, the prospectus included in such Registration Statement (including
each  preliminary  prospectus)  and,  with  regards  to  such  Registration
Statement(s),  any  correspondence  by or on behalf of the Company to the SEC or
the staff of the SEC and any correspondence from the SEC or the staff of the SEC
to  the  Company  or  its  representatives, (ii) such other documents, including
copies  of  any  preliminary  or  final prospectus, as the Holder may reasonably
request  from  time  to  time  in  order  to  facilitate  the disposition of the
Registrable  Securities.

d.     The  Company shall use reasonable efforts to (i) register and qualify the
Registrable  Securities covered by a Registration Statement under the applicable
securities  or  "blue sky" laws of such states of the United States as specified
by  the  Holder,  (ii)  prepare and file in those jurisdictions, such amendments
(including  post-effective amendments) and supplements to such registrations and
qualifications  as may be necessary to maintain the effectiveness thereof during
the  Registration  Period,  (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration  Period,  and  (iv)  take all other actions reasonably necessary or
advisable  to qualify the Registrable Securities for sale in such jurisdictions;
provided,  however,  that  the  Company  shall  not  be  required  in connection
therewith  or  as  a  condition  thereto  to  (x)  qualify to do business in any
jurisdiction  where  it  would not otherwise be required to qualify but for this
Section  3(d),  (y) subject itself to general taxation in any such jurisdiction,
or  (z)  file  a general consent to service of process in any such jurisdiction.
The  Company shall promptly notify the  Holder of the  Registrable Securities of
the receipt by the Company of any notification with respect to the suspension of
the  registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or  its  receipt  of  actual  notice  of  the  initiation  or threatening of any
proceeding  for  such  purpose.

e.  As  promptly  as practicable after becoming aware of such event, the Company
shall  notify  Holder  in  writing  of the happening of any event as a result of
which  the  prospectus  included in a Registration Statement, as then in effect,
includes  an untrue statement of a material fact or omission 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,
("Registration  Default")  and  use  all  diligent efforts to promptly prepare a
supplement  or  amendment  to  such  Registration  Statement  and take any other
necessary  steps  to cure the Registration Default, (which, if such Registration
Statement  is  on Form S-3, may consist of a document to be filed by the Company
with  the  SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as
defined below) and to be incorporated by reference in the prospectus) to correct
such  untrue  statement  or  omission.  Failure to cure the Registration Default
within  two  (2)  business  days  shall  result in the Company paying liquidated
damages  of 2.0% of the remaining amount then held by the Holder for each thirty
(30)  calendar  day  period  or  portion  thereof,  beginning  on  the  date  of
suspension.  The Company shall also promptly notify Holder in writing (i) when a
prospectus  or  any  prospectus  supplement or post-effective amendment has been
filed,  and  when  a  Registration Statement or any post-effective amendment has
become  effective  (notification  of  such  effectiveness  shall be delivered to
Holder  by  facsimile  on  the  same  day of such effectiveness and by overnight
mail),  (ii)  of  any  request  by  the  SEC  for amendments or supplements to a
Registration  Statement  or  related prospectus or related information, (iii) of
the  Company's  reasonable  determination  that  a post-effective amendment to a
Registration  Statement would be appropriate, (iv) in the event the Registration
Statement is no longer effective or, (v) the Registration Statement is stale for
a  period of more than two (2) Trading Days as a result of the Company's failure
to  timely  file  its  financials.

     The  Company acknowledges that its failure to cure the Registration Default
within  five  (5)  business  days  will cause the Holder to suffer damages in an
amount that will be difficult to ascertain.  Accordingly, the parties agree that
it  is  appropriate  to  include  in  this  Agreement a provision for liquidated
damages.  The  parties  acknowledge  and  agree  that  the  liquidated  damages
provision set forth in this section represents the parties' good faith effort to
quantify  such  damages  and,  as  such,  agree that the form and amount of such
liquidated  damages  are  reasonable  and  will  not  constitute  a  penalty.
It  is the intention of the parties that interest payable under any of the terms
of  this  Agreement  shall  not  exceed  the  maximum amount permitted under any
applicable law. If a law, which applies to this Agreement which sets the maximum
interest  amount, is finally interpreted so that the interest in connection with
this  Agreement  exceeds the permitted limits, then: (1) any such interest shall
be  reduced  by  the  amount  necessary  to reduce the interest to the permitted
limit; and (2) any sums already collected (if any) from the Company which exceed
the  permitted  limits  shall  notl  be  refunded  to  the Company.  In case any
provision  of  this Agreement is held by a court of competent jurisdiction to be
excessive  in  scope or otherwise invalid or unenforceable, such provision shall
be  adjusted  rather  than voided, if possible, so that it is enforceable to the
maximum  extent  possible,  and the validity and enforceability of the remaining
provisions  of  this  Agreement  will  not  in  any  way be affected or impaired
thereby.

f.  The  Company  shall use its best efforts to prevent the issuance of any stop
order  or other  suspension of effectiveness of a Registration Statement, or the
suspension of the qualification of any of the Registrable Securities for sale in
any  jurisdiction  and, if such an order or suspension is issued,  to obtain the
withdrawal  of  such  order or suspension at the earliest possible moment and to
notify  each  Holder who holds Registrable Securities being sold of the issuance
of such order and the  resolution thereof or its receipt of actual notice of the
initiation  or  threat  of  any  proceeding  for  such  purpose.

g.     The  Company shall permit Holder and a single firm of counsel, designated
as  selling  shareholders'  counsel  by  the  Holder  who hold a majority of the
Registrable  Securities  being  sold,  to review and comment upon a Registration
Statement and all amendments and supplements thereto at least seven (7) business
days  prior to their filing with the SEC, and not file any document in a form to
which  such counsel reasonably objects.  The Company shall not submit to the SEC
a  request  for acceleration of the effectiveness of a Registration Statement or
file  with  the  SEC  a  Registration  Statement  or any amendment or supplement
thereto  without the prior approval of such counsel, which approval shall not be
unreasonably  withheld.

h.     At the request of Holder, the Company shall cause to be furnished to such
Holder,  on  the  date  of  the  effectiveness  of  a Registration Statement, an
opinion, dated as of such date, of counsel representing the Company for purposes
of  such  Registration  Statement,  in  the  form  of  Exhibit D attached to the
Subscription  Agreement.

i.     The  Company  shall  make available for inspection by (i) Holder and (ii)
one  firm  of  attorneys and one firm of accountants or other agents retained by
the  Holder  (collectively,  the "Inspectors") all pertinent financial and other
records,  and  pertinent  corporate  documents  and  properties  of  the Company
(collectively,  the  "Records"), as shall be reasonably deemed necessary by each
Inspector,  and  cause the Company's officers, directors and employees to supply
all  information  which any Inspector may reasonably request; provided, however,
that  each  Inspector  shall  hold  in  strict confidence and shall not make any
disclosure  (except to a Holder) or use of any Record or other information which
the  Company  determines  in  good  faith  to  be  confidential,  and  of  which
determination  the Inspectors are so notified, unless (a) the disclosure of such
Records  is  necessary  to  avoid  or  correct a misstatement or omission in any
Registration  Statement  or  is  otherwise  required under the 1933 Act, (b) the
release  of such Records is ordered pursuant to a final, non-appealable subpoena
or  order  from a court or government body of competent jurisdiction, or (c) the
information  in  such  Records  has  been made generally available to the public
other  than  by  disclosure in violation of this or any other agreement of which
the  Inspector  has  knowledge.  Each Holder agrees that it shall, upon learning
that  disclosure of such Records is sought in or by a court or governmental body
of  competent  jurisdiction  or  through  other means, give prompt notice to the
Company  and  allow the Company, at its expense, to undertake appropriate action
to  prevent  disclosure  of,  or  to  obtain a protective order for, the Records
deemed  confidential.

j.     The  Company  shall  hold  in  confidence  and not make any disclosure of
information  concerning  Holder provided to the Company unless (i) disclosure of
such  information  is necessary to comply with federal or state securities laws,
(ii)  the  disclosure  of  such  information  is necessary to avoid or correct a
misstatement  or  omission  in  any Registration Statement, (iii) the release of
such  information  is  ordered  pursuant  to  a  subpoena  or  other  final,
non-appealable  order  from  a  court  or  governmental  body  of  competent
jurisdiction,  or (iv) such information has been made generally available to the
public  other  than  by  disclosure  in violation of this Agreement or any other
agreement.  The  Company  agrees that it shall, upon learning that disclosure of
such  information  concerning  Holder is sought in or by a court or governmental
body  of  competent  jurisdiction  or  through  other means, give prompt written
notice  to  Holder  and  allow  Holder,  at  the  Holder's expense, to undertake
appropriate  action  to  prevent  disclosure of, or to obtain a protective order
for,  such  information.

k.     The  Company  shall  use  its  best  efforts  to  secure  designation and
quotation  of  all  the  Registrable  Securities  covered  by  any  Registration
Statement  on the Principal Market.  If, despite the Company's best efforts, the
Company  is  unsuccessful in satisfying the preceding sentence, it shall use its
best efforts to cause all the Registrable Securities covered by any Registration
Statement  to be listed on each other national securities exchange and automated
quotation system, if any, on which securities of the same class or series issued
by  the  Company  are  then  listed,  if any, if the listing of such Registrable
Securities  is  then  permitted under the rules of such exchange or system.  If,
despite  the  Company's  best efforts, the Company is unsuccessful in satisfying
the  two  preceding  sentences,  it  will  use  its  best  efforts to secure the
inclusion  for  quotation with Pink Sheets, LLC.  The Company shall pay all fees
and  expenses  in  connection  with satisfying its obligation under this Section
3(k).

l.     The  Company  shall  cooperate  with  the Holder to facilitate the timely
preparation  and  delivery  of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement  and  enable such certificates to be in such denominations or amounts,
as  the case may be, as the Holder may reasonably request and registered in such
names  of  the  Persons  who  shall acquire such Registrable Securities from the
Holder,  as  the  Holder  may  request.

m.     The  Company  shall  provide  a  transfer  agent  for all the Registrable
Securities not later than the effective date of the first Registration Statement
filed  pursuant  hereto.

n.     If  requested  by  the  Holder  holding  a  majority  of  the Registrable
Securities, the Company shall (i) as soon as reasonably practical incorporate in
a  prospectus  supplement  or  post-effective amendment such information as such
Holder  reasonably determine should be included therein relating to the sale and
distribution  of  Registrable  Securities,  including,  without  limitation,
information  with  respect  to  the offering of the Registrable Securities to be
sold  in  such  offering;  (ii)  make  all  required  filings of such prospectus
supplement  or post-effective amendment as soon as notified of the matters to be
incorporated  in  such  prospectus  supplement  or post-effective amendment; and
(iii)  supplement or make amendments to any Registration Statement if reasonably
requested  by  such  Holder.

o.     The  Company  shall  use  its  best  efforts  to  cause  the  Registrable
Securities  covered  by  the  applicable Registration Statement to be registered
with  or  approved  by such other governmental agencies or authorities as may be
necessary  to  consummate  the  disposition  of  such  Registrable  Securities.

p.     The  Company  shall  make  generally available to its security holders as
soon as reasonably practical, but not later than ninety (90) calendar days after
the  close  of  the  period  covered  thereby,  an  earnings  statement (in form
complying  with  the  provisions  of  Rule  158  under  the 1933 Act) covering a
twelve-month  period  beginning  not  later  than the first day of the Company's
fiscal  quarter next following the effective date of any Registration Statement.

q.     The  Company  shall  otherwise  use  its  best efforts to comply with all
applicable  rules and regulations of the SEC in connection with any registration
hereunder.

r.     Within  one  (1)  business  day  after  the  Registration Statement which
includes  Registrable  Securities  is declared effective by the SEC, the Company
shall  deliver, and shall cause legal counsel for the Company to deliver, to the
transfer  agent  for  such  Registrable  Securities,  with copies to the Holder,
confirmation that such Registration Statement has been declared effective by the
SEC  in  the  form  attached  hereto  as  Exhibit  A.

s.     reserved

t.     The Company shall take all other reasonable actions necessary to expedite
and facilitate disposition by the Holder of Registrable Securities pursuant to a
Registration  Statement.

     4.     OBLIGATIONS  OF  THE  HOLDER.

a.     At  least  five  (5)  calendar days prior to the first anticipated filing
date  of a Registration Statement  the Company shall notify Holder in writing of
the  information  the Company requires from such Holder if Holder elects to have
any  of Holder's Registrable Securities included in such Registration Statement.
It  shall be a condition precedent to the obligations of the Company to complete
the  registration  pursuant  to  this  Agreement with respect to the Registrable
Securities  of  Holder  that Holder shall furnish in writing to the Company such
information  regarding  itself,  the  Registrable  Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
reasonably be required to effect the registration of such Registrable Securities
and  shall  execute  such  documents in connection with such registration as the
Company  may  reasonably  request.  Each  Holder  covenants  and agrees that, in
connection  with  any  resale  of  Registrable  Securities  by  it pursuant to a
Registration  Statement, it shall comply with the "Plan of Distribution" section
of  the  current  prospectus  relating  to  such  Registration  Statement.

b.     Holder,  by  Holder's acceptance of the Registrable Securities, agrees to
cooperate  with the Company as reasonably requested by the Company in connection
with  the  preparation  and  filing  of  any  Registration  Statement hereunder.

c.     Holder  agrees  that,  upon receipt of any notice from the Company of the
happening  of  any  event  of  the  kind  described in Section 3(f) or the first
sentence  of  3(e),  such  Holder  will  immediately  discontinue disposition of
Registrable  Securities  pursuant to any Registration Statement(s) covering such
Registrable  Securities until Holder's receipt of the copies of the supplemented
or  amended  prospectus  contemplated  by  Section 3(f) or the first sentence of
3(e).

     5.     EXPENSES  OF  REGISTRATION.

     All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections  2  and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel  for  the  Company  shall  be  paid  by  the  Company.

     6.     INDEMNIFICATION.

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

a.          To the fullest extent permitted by law, the Company will, and hereby
does,  indemnify,  hold  harmless  and  defend Holder who holds such Registrable
Securities,  the  directors,  officers,  partners,  employees,  agents,
representatives  of,  and  each  Person, if any, who controls, Holder within the
meaning  of the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934  Act"),  (each,  an  "Indemnified  Person"),  against  any losses, claims,
damages,  liabilities,  judgments,  fines, penalties, charges, costs, attorneys'
fees,  amounts  paid  in settlement or expenses, joint or several (collectively,
"Claims"),  incurred in investigating, preparing or defending any action, claim,
suit,  inquiry,  proceeding, investigation or appeal taken from the foregoing by
or  before any court or governmental, administrative or other regulatory agency,
body  or  the  SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may  become  subject  insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any  untrue  statement  or  alleged  untrue  statement  of  a material fact in a
Registration  Statement or any post-effective amendment thereto or in any filing
made  in  connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered  ("Blue  Sky  Filing"),  or  the omission or alleged omission to state a
material  fact required to be stated therein or necessary to make the statements
therein,  in  light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material  fact contained in the final prospectus (as amended or supplemented, if
the  Company  files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make  the statements made therein, in light of the circumstances under which the
statements  therein were made, not misleading, or (iii) any violation or alleged
violation  by  the  Company  of  the  1933  Act,  the  1934  Act, any other law,
including,  without  limitation,  any  state  securities  law,  or  any  rule or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant  to  a Registration Statement (the matters in the foregoing
clauses  (i)  through  (iii) being, collectively, "Violations").  Subject to the
restrictions  set  forth  in  Section  6(c)  with respect to the number of legal
counsel,  the  Company  shall  reimburse  the  Holder  and each such controlling
person,  promptly as such expenses are incurred and are due and payable, for any
reasonable  legal  fees  or  other  reasonable  expenses  incurred  by  them  in
connection  with  investigating  or  defending  any  such Claim. Notwithstanding
anything  to  the  contrary  contained  herein,  the  indemnification  agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based  upon  a  Violation  which  occurs in reliance upon and in conformity with
information  furnished  in  writing  to  the  Company  by any Indemnified Person
expressly  for  use  in  connection  with  the  preparation  of the Registration
Statement  or  any  such  amendment  thereof  or  supplement  thereto,  if  such
prospectus  were  timely made available by the Company pursuant to Section 3(c);
(ii)  shall  not be available to the extent such Claim is based on (a) a failure
of  the  Holder  to  deliver  or  to  cause  to be delivered the prospectus made
available  by  the  Company  or (b) the Indemnified Person's use of an incorrect
prospectus  despite  being promptly advised in advance by the Company in writing
not  to use such incorrect prospectus; and (iii) shall not apply to amounts paid
in  settlement  of  any  Claim  if such settlement is effected without the prior
written  consent  of  the  Company,  which  consent  shall  not  be unreasonably
withheld.  Such  indemnity  shall  remain in full force and effect regardless of
any  investigation  made  by  or on  behalf of the Indemnified Person and  shall
survive  the  resale of the Registrable Securities by the Holder pursuant to the
Registration  Statement.

b.          In  connection  with  any  Registration Statement in which Holder is
participating,  Holder  agrees  to  severally  and  not  jointly indemnify, hold
harmless  and defend, to the  same extent and in the same manner as is set forth
in  Section  6(a), the Company, each of its  directors, each of its officers who
signs  the Registration Statement, each Person, if any, who controls the Company
within  the  meaning  of the 1933 Act or the 1934 Act (collectively and together
with  an  Indemnified  Person,  an  "Indemnified  Party"),  against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the  1934  Act  or otherwise, insofar as such Claim or Indemnified Damages arise
out  of or are based upon any Violation, in each case to the extent, and only to
the  extent,  that such Violation occurs in reliance upon and in conformity with
written  information  furnished  to  the  Company by Holder expressly for use in
connection  with such Registration Statement; and, subject to Section 6(c), such
Holder will reimburse any legal or other expenses reasonably incurred by them in
connection  with  investigating  or defending any such Claim; provided, however,
that  the  indemnity  agreement contained in this Section 6(b) and the agreement
with  respect  to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written  consent  of  Holder,  which consent shall not be unreasonably withheld;
provided,  further,  however, that the Holder shall be liable under this Section
6(b)  for  only that amount of a Claim or Indemnified Damages as does not exceed
the  net  proceeds  to  Holder as a result of the sale of Registrable Securities
pursuant  to  such  Registration Statement.  Such indemnity shall remain in full
force  and  effect  regardless of any investigation made by or on behalf of such
Indemnified  Party and shall survive the resale of the Registrable Securities by
the  Holder  pursuant to the Registration Statement. Notwithstanding anything to
the  contrary  contained herein, the indemnification agreement contained in this
Section  6(b)  with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus were corrected on a timely basis in
the  prospectus,  as  then  amended  or  supplemented.

c.          Promptly after receipt by an Indemnified Person or Indemnified Party
under  this  Section 6 of notice of the commencement of any action or proceeding
(including  any  governmental  action  or  proceeding)  involving  a Claim, such
Indemnified  Person or Indemnified Party shall, if a Claim in respect thereof is
to  be  made against any indemnifying party under this Section 6, deliver to the
indemnifying  party  a  written  notice  of  the  commencement  thereof, and the
indemnifying  party  shall  have the right to participate in, and, to the extent
the  indemnifying  party  so  desires, jointly with any other indemnifying party
similarly  noticed,  to  assume  control  of  the  defense  thereof with counsel
mutually  satisfactory  to  the indemnifying party and the Indemnified Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person  or Indemnified Party shall have the right to retain its own
counsel  with the fees and expenses to be paid by the indemnifying party, if, in
the  reasonable  opinion  of  counsel  retained  by  the indemnifying party, the
representation  by  such  counsel of the Indemnified Person or Indemnified Party
and  the  indemnifying  party  would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other  party  represented  by such counsel in such proceeding.  The indemnifying
party  shall pay for only one separate legal counsel for the Indemnified Persons
or the Indemnified Parties, as applicable, and such counsel shall be selected by
Holder  holding a majority-in-interest of the Registrable Securities included in
the Registration Statement to which the Claim relates, if the Holder is entitled
to  indemnification  hereunder,  or  the Company, if the Company is  entitled to
indemnification  hereunder, as applicable.  The Indemnified Party or Indemnified
Person  shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall  furnish to the indemnifying party all information reasonably available to
the  Indemnified  Party  or  Indemnified  Person which relates to such action or
claim.  The  indemnifying  party shall keep the Indemnified Party or Indemnified
Person  fully  appraised  at  all  times  as to the status of the defense or any
settlement  negotiations  with  respect thereto.  No indemnifying party shall be
liable  for  any  settlement of any action, claim or proceeding effected without
its  written  consent,  provided, however, that the indemnifying party shall not
unreasonably  withhold,  delay  or  condition its consent. No indemnifying party
shall,  without  the  consent  of  the  Indemnified Party or Indemnified Person,
consent  to  entry  of  any  judgment  or  enter  into  any  settlement or other
compromise which does not include as an unconditional term thereof the giving by
the  claimant  or plaintiff to such Indemnified Party or Indemnified Person of a
release  from all liability in respect to such Claim.  Following indemnification
as  provided  for  hereunder,  the indemnifying party shall be surrogated to all
rights  of the Indemnified Party or Indemnified Person with respect to all third
parties,  firms or corporations relating to the matter for which indemnification
has  been made.  The failure to deliver written notice to the indemnifying party
within  a  reasonable  time  of  the  commencement  of any such action shall not
relieve  such  indemnifying  party of any liability to the Indemnified Person or
Indemnified  Party  under  this  Section  6,  except  to  the  extent  that  the
indemnifying  party  is  prejudiced  in  its  ability  to  defend  such  action.

d.          The  indemnification  required  by  this  Section 6 shall be made by
periodic  payments  of the amount thereof during the course of the investigation
or  defense, as and when bills are received or Indemnified Damages are incurred.

e.          The  indemnity  agreements  contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person  against  the  indemnifying party or others, and (ii) any liabilities the
indemnifying  party  may  be  subject  to  pursuant  to  the  law.

     7.     CONTRIBUTION.

     To the extent any indemnification by an indemnifying party is prohibited or
limited  by  law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6  to  the  fullest  extent  permitted  by  law; provided, however, that: (i) no
contribution  shall  be  made under circumstances where the maker would not have
been  liable  for indemnification under the fault standards set forth in Section
6;  (ii)  no  seller  of  Registrable  Securities  guilty  of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled  to  contribution from any seller of Registrable Securities who was not
guilty  of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received  by  such  seller  from  the  sale  of  such  Registrable  Securities.

     8.     REPORTS  UNDER  THE  1934  ACT.

     With  a  view  to  making  available to the Holder the benefits of Rule 144
promulgated  under  the  1933 Act or any other similar rule or regulation of the
SEC  that may at any time permit the Holder to sell securities of the Company to
the  public  without  registration  ("Rule  144"),  the  Company  agrees  to:

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

b.     file  with  the  SEC  in  a timely manner all reports and other documents
required  of  the  Company  under  the  1933 Act and the 1934 Act so long as the
Company  remains  subject to such requirements (it being understood that nothing
herein  shall  limit  the  Company's  obligations  under  Section  4(c)  of  the
Subscription  Agreement)  and  the filing of such reports and other documents is
required  for  the  applicable  provisions  of  Rule  144;  and

c.     furnish  to the Holder, promptly upon request, (i) a written statement by
the  Company  that  it has complied with the reporting requirements of Rule 144,
the  1933  Act  and  the  1934  Act,  (ii)  a  copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the  Company, and (iii) such other information as may be reasonably requested to
permit  the  Holder  to  sell  such  securities  pursuant  to  Rule  144 without
registration.

d.     all  conversions  and  sales  of the Shares pursuant to Rule 144 shall be
executed by the Company in a timely manner.  Within three (3) days of receipt of
notice  of  a  sale  by Holder of Shares pursuant to Rule 144, the Company shall
instruct  legal  counsel  to  write  a letter to the Company's transfer agent to
expedite  the  removal  of the legend; and, the Company shall have the necessary
board  resolutions  delivered  to the transfer agent with instructions of legend
removal.  Failure  to  remove  all  legends on restricted stock within three (3)
days of receipt, will result in the Holder paying the sum of two percent (2%) of
the  amount  of  the  Debentures  outstanding as liquidated damages and not as a
penalty  for  each  one  (1)  calendar  day  period,  pro  rata.

     9.     NO  ASSIGNMENT  OF  REGISTRATION  RIGHTS.

     The  rights  under  this  Agreement  shall  not  be  assignable.

     10.     AMENDMENT  OF  REGISTRATION  RIGHTS.

     Provisions  of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or  prospectively),  only with the written consent of the Company and Holder who
hold  two-thirds  (2/3)  of  the Registrable Securities. Any amendment or waiver
effected  in  accordance  with this Section 10 shall be binding upon each Holder
and  the  Company.  No  such  amendment shall be effective to the extent that it
applies  to  less  than  all  of  the  Holder's  Registrable  Securities.  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 this Agreement unless the same
consideration  also  is  offered  to  all  of  the  parties  to  this Agreement.

     11.     MISCELLANEOUS.

a.     A Person is deemed to be a Holder of Registrable Securities whenever such
Person  owns  of  record  such  Registrable Securities.  If the Company receives
conflicting  instructions,  notices  or  elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of  instructions,  notice or election received from the registered owner of such
Registrable  Securities.

b.     Any  notices,  consents,  waivers  or  other  communications  required or
permitted  to  be given under the terms of this Agreement must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:


Nighthawk  Systems,  Inc.
10715  Gulfdale,  Suite  200
San  Antonio,  Texas  78216
Telephone:        210-341-4811
Facsimile:     210-341-2011

If  to  the  Holder:

Dutchess  Private  Equities  Fund,  II,  LP
312  Stuart  St,  Third  Floor
Boston,  MA  02116
Telephone:     617-960-3570
Facsimile:     617-960-3772



     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

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

d.     All  disputes  arising  under  this  agreement  shall  be governed by and
interpreted  in  accordance  with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws.  The parties to this agreement
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in the Commonwealth of Massachusetts.  No
party  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.

e.     This  Agreement  and  the  Transaction  Documents(as  defined  in  the
Subscription Agreement) constitute the entire agreement among the parties hereto
with  respect  to  the  subject  matter  hereof  and  thereof.  There  are  no
restrictions,  promises,  warranties or undertakings, other than those set forth
or  referred  to  herein  and  therein.

f.     This  Agreement  and  the  Transaction  Documents  supersede  all  prior
agreements  and  understandings  among  the  parties  hereto with respect to the
subject  matter  hereof  and  thereof.

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

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

i.     Each  party  shall do and perform, or cause to be done and performed, all
such  further  acts  and  things,  and  shall execute and deliver all such other
agreements,  certificates,  instruments  and  documents,  as the other party may
reasonably  request in order to carry out the intent and accomplish the purposes
of  this Agreement and the consummation of the transactions contemplated hereby.

j.     All  consents  and other determinations to be made by the Holder pursuant
to  this  Agreement shall be made, unless otherwise specified in this Agreement,
by  Holder  holding  a  majority  of  the  Registrable  Securities.

k.     The  language  used  in  this Agreement will be deemed to be the language
chosen  by  the  parties  to  express their mutual intent and no rules of strict
construction  will  be  applied  against  any  party.

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


Nighthawk  Systems,  Inc



               By:     /s/ H. Douglas Saathoff
               Name:     H.  Douglas  Saathoff
               Title:     Chief  Executive  Officer


                    DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
                    BY  ITS  GENERAL  PARTNER  DUTCHESS
                    CAPITAL  MANAGEMENT,  LLC



               By: /s/ Douglas H. Leighton
              Name:  Douglas  H.  Leighton
               Title:  A  Managing  Member







                                    EXHIBIT A

FORM  OF  NOTICE  OF  EFFECTIVENESS
OF  REGISTRATION  STATEMENT

                                             Date:  __________
[TRANSFER  AGENT]

     Re:     Nighthawk  Systems,  Inc

Ladies  and  Gentlemen:

     We  are  counsel  to  Nighthawk  Systems,  Inc.,  a Nevada corporation (the
"Company"),  and  have  represented  the Company in connection with that certain
Subscription Agreement (the "Subscription  Agreement") entered into by and among
the  Company  and _________________________ (the "Holder") pursuant to which the
Company  has agreed to issue to the Holder shares of the Company's common stock,
no  par  value  per  share  (the "Common Stock") on the terms and conditions set
forth  in  the  Subscription Agreement.  Pursuant to the Subscription Agreement,
the  Company  also  has  entered  into  a Registration Rights Agreement with the
Holder  (the  "Registration  Rights  Agreement")  pursuant  to which the Company
agreed,  among  other things, to register the Registrable Securities (as defined
in  the  Registration  Rights  Agreement),  including the shares of Common Stock
issued  or issuable under the Subscription Agreement under the Securities Act of
1933, as amended (the "1933 Act").  In connection with the Company's obligations
under  the Registration Rights Agreement, on ____________ ___, 2004, the Company
filed  a  Registration  Statement  on  Form  S- ___ (File No. 333-________) (the
"Registration  Statement")  with  the  Securities  and  Exchange Commission (the
"SEC")  relating  to  the  Registrable  Securities  which  names the Holder as a
selling  shareholder  thereunder.

     In connection with the foregoing, we advise you that [a member of the SEC's
                                                          =
staff  has  advised  us by telephone that the SEC has entered an order declaring
the  Registration  Statement  effective]  [the Registration Statement has become
                                       =========================================
effective] under the 1933 Act at [enter the time of effectiveness] on [enter the
   =======
date  of  effectiveness]  and  to  the  best  of our knowledge, after telephonic
inquiry  of  a  member  of  the  SEC's  staff,  no  stop  order  suspending  its
effectiveness  has  been  issued and no proceedings for that purpose are pending
before,  or  threatened by, the SEC and the Registrable Securities are available
for  resale  under  the  1933  Act  pursuant  to  the  Registration  Statement.

                                   Very  truly  yours,

                                   [Company  Counsel]

     By:     ____________________
cc:     [Holder]