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                          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  "Investor").



     Whereas,  in  connection  with  the Investment Agreement by and between the

Company and the Investor of even date herewith (the "Investment Agreement"), the

Company  has agreed to issue and sell to the Investor an indeterminate number of

shares  of  the  Company's  Common  Stock,  no  par value per share (the "Common

Stock"), to be purchased pursuant to the terms and subject to the conditions set

forth  in  the  Investment  Agreement;  and



     Whereas,  to  induce  the  Investor  to  execute and deliver the Investment

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  Investment  Agreement.



     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

Investor  hereby  agree  as  follows:















Section  1.  DEFINITIONS.



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

meanings:



     "Execution  Date"  means  the  date  first  written  above.



     "Investor"  means  Dutchess  Private  Equities  Fund,  II, L.P., a Delaware

limited  partnership.



     "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.



"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.



     "Principal  Market"  shall  mean  The  American  Stock  Exchange,  National

Association  of  Securities  Dealer's, Inc. Over-the-Counter electronic bulletin

board, the Nasdaq National Market or The Nasdaq SmallCap Market whichever is the

principal  market  on  which  the  Common  Stock  is  listed.



     "Register,"  "Registered,"  and  "Registration"  refer  to  a  registration

effected  by  preparing  and  filing  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  the  declaration  or ordering of effectiveness of such Registration

Statement(s)  by  the  United  States  Securities  and  Exchange Commission (the

"SEC").



     "Registrable  Securities"  means  (i)  the shares of Common Stock issued or

issuable  pursuant  to  the Investment Agreement, and (ii) any shares of capital

stock issued or issuable with respect to such shares of Common Stock, 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.



     "Registration  Statement"  means  a  registration  statement of the Company

filed  under  the  1933  Act  covering  the  Registrable  Securities.

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