SECURITIES PURCHASE AGREEMENT
 
Securities Purchase Agreement dated as of January 24, 2006 (this “Agreement”) by
and between Infinium Labs, Inc., a Delaware corporation, with principal
executive offices located at 1191 Second Avenue, 5th Floor, Seattle, Washington
98101 (the “Company”), and Golden Gate Investors, Inc. (“Holder”).
 
WHEREAS, Holder desires to purchase from the Company, and the Company desires to
issue and sell to Holder, upon the terms and subject to the conditions of this
Agreement, a Convertible Debenture of the Company in the aggregate principal
amount of $500,000 (the “Debenture”); and
 
WHEREAS, in conjunction with the Debenture, the Company has issued a Warrant to
Purchase Common Stock to the Holder (the “Warrant”); and
 
WHEREAS, upon the terms and subject to the conditions set forth in the Debenture
and the Warrant, the Debenture and Warrant are convertible and exercisable,
respectively, into shares of the Company’s Common Stock (the “Common Stock”).
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
 

I.            
PURCHASE AND SALE OF DEBENTURE

 
A.  Transaction. Holder hereby agrees to purchase from the Company, and the
Company has offered and hereby agrees to issue and sell to Holder in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the “Securities Act”), the Debenture.
 
B.  Purchase Price; Form of Payment. The purchase price for the Debenture to be
purchased by Holder hereunder shall be $500,000 (the “Purchase Price”).
Simultaneously with the execution of this Agreement, Holder shall pay the
Purchase Price by wire transfer of immediately available funds to the Company.
Simultaneously with the execution of this Agreement, the Company shall deliver
the Convertible Debenture and the Warrants (which shall have been duly
authorized, issued and executed I/N/O Holder or, if the Company otherwise has
been notified, I/N/O Holder’s nominee).
 

II.            
HOLDER’S REPRESENTATIONS AND WARRANTIES

 
Holder represents and warrants to and covenants and agrees with the Company as
follows:
 
1.  Holder is purchasing the Debenture and the Common Stock issuable upon
conversion or redemption of the Debenture (the “Conversion Shares” and,
collectively with the Debenture and the Warrant Shares, the “Securities”) for
its own account, for investment purposes only and not with a view towards or in
connection with the public sale or distribution thereof in violation of the
Securities Act.
 

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2.  Holder is (i) an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.
 
3.  Holder understands that the Securities are being offered and sold by the
Company in reliance on an exemption from the registration requirements of the
Securities Act and equivalent state securities and “blue sky” laws, and that the
Company is relying upon the accuracy of, and Holder’s compliance with, Holder’s
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Holder to
purchase the Securities;
 
4.  Holder understands that the Securities have not been approved or disapproved
by the Commission or any state or provincial securities commission.
 
5.  This Agreement has been duly and validly authorized, executed and delivered
by Holder and is a valid and binding agreement of Holder enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the public
policy underlying such laws.
 

III.  
THE COMPANY’S REPRESENTATIONS

 
The Company represents and warrants to Holder, as of the Closing Date, that,
except as provided in Exhibit 1 or the Company’s Commission Filings:
 
A.  Capitalization.
 
1.  The authorized capital stock of the Company consists of 600,000,000 shares
of Common Stock of which, as of December 31, 2005, 398,000,000 shares are issued
and outstanding as of the date hereof and are fully paid and nonassessable. The
amount, exercise, conversion or subscription price and expiration date for each
outstanding option and other security or agreement to purchase shares of Common
Stock is accurately set forth on Schedule II.A.1 or in the Company’s Commission
Filings.
 
2.  The Conversion Shares and the Warrant Shares have been duly and validly
authorized and reserved for issuance by the Company, and, when issued by the
Company upon conversion of the Debenture, will be duly and validly issued, fully
paid and nonassessable and will not subject the holder thereof to personal
liability by reason of being such holder.
 
3.  Except as disclosed on Schedule II.A.3 or in the Company’s Commission
Filings., there are no preemptive, subscription, “call,” right of first refusal
or other similar rights to acquire any capital stock of the Company or other
voting securities of the Company that have been issued or granted to any person
and no other obligations of the Company to issue, grant, extend or enter into
any security, option, warrant, “call,” right, commitment, agreement, arrangement
or undertaking with respect to any of their respective capital stock.
 

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B.  Organization; Reporting Company Status.
 
1.  The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state or jurisdiction in which it is incorporated
and is duly qualified as a foreign corporation in all jurisdictions in which the
failure so to qualify would reasonably be expected to have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the consummation of any
of the transactions contemplated by this Agreement (a “Material Adverse
Effect”).
 
2.  The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The Common Stock is
traded on the OTC Bulletin Board service of the National Association of
Securities Dealers, Inc. (“OTCBB”) and the Company has not received any notice
regarding, and to its knowledge there is no threat of, the termination or
discontinuance of the eligibility of the Common Stock for such trading.
 
C.  Authorization. The Company (i) has duly and validly authorized and reserved
for issuance shares of Common Stock, which is a number sufficient for the
conversion of the Debenture and the exercise of the Warrant and (ii) at all
times from and after the date hereof shall have a sufficient number of shares of
Common Stock duly and validly authorized and reserved for issuance to satisfy
the conversion of the Debenture in full and the exercise of the Warrant. The
Company understands and acknowledges the potentially dilutive effect on the
Common Stock of the issuance of the Conversion Shares and the Warrant Shares.
The Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Debenture and the exercise of the Warrant in accordance
with this Agreement is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of the Company and notwithstanding the commencement of any case
under 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”). In the event the Company
is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
respect of the conversion of the Debenture. The Company agrees, without cost or
expense to Holder, to take or consent to any and all action necessary to
effectuate relief under 11 U.S.C. § 362.
 
D.  Authority; Validity and Enforceability. The Company has the requisite
corporate power and authority to enter into the Documents (as such term is
hereinafter defined) and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Holder of the
Securities). The execution, delivery and performance by the Company of the
Documents and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the Debenture
and the issuance and reservation for issuance of the Conversion Shares and the
Warrant Shares) have been duly and validly authorized by all necessary corporate
action on the part of the Company. Each of the Documents has been duly and
validly executed and delivered by the Company and each Document constitutes a
valid and binding obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and except as rights to indemnity and contribution
may be limited by federal or state securities laws or the public policy
underlying such laws. The Securities have been duly and validly authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid and binding obligations of the Company enforceable against it in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally. For purposes of this
Agreement, the term “Documents” means (i) this Agreement; (ii) the Registration
Rights Agreement dated as of even date herewith between the Company and Holder;
(iii) the Debenture; and (iv) the Warrant.
 

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E.  Validity of Issuance of the Securities. The Debenture, the Conversion Shares
upon their issuance in accordance with the Debenture, and the Warrant Shares
will be validly issued and outstanding, fully paid and nonassessable, and not
subject to any preemptive rights, rights of first refusal, tag-along rights,
drag-along rights or other similar rights.
 
F.  Non-contravention. The execution and delivery by the Company of the
Documents, the issuance of the Securities, and the consummation by the Company
of the other transactions contemplated hereby and thereby do not, and compliance
with the provisions of this Agreement and other Documents will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (as such term is hereinafter defined) upon any of the
properties or assets of the Company or any of its Subsidiaries under, or result
in the termination of, or require that any consent be obtained or any notice be
given with respect to (i) the Articles or Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organizational documents of
any of its Subsidiaries, in each case as amended to the date of this Agreement,
(ii) any loan or credit agreement, Debenture, bond, mortgage, indenture, lease,
contract or other agreement, instrument or permit applicable to the Company or
any of its Subsidiaries or their respective properties or assets or (iii) any
Law (as such term is hereinafter defined) applicable to, or any judgment, decree
or order of any court or government body having jurisdiction over, the Company
or any of its Subsidiaries or any of their respective properties or assets.
 
G.  Approvals. No authorization, approval or consent of any court or public or
governmental authority is required to be obtained by the Company for the
issuance and sale of the Securities to Holder as contemplated by this Agreement,
except such authorizations, approvals and consents as have been obtained by the
Company prior to the date hereof.
 
H.  Commission Filings. The Company has properly and timely filed with the
Commission all reports, proxy statements, forms and other documents required to
be filed with the Commission under the Securities Act and the Exchange Act since
becoming subject to such Acts (the “Commission Filings”). As of their respective
dates, (i) the Commission Filings complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder applicable to
such Commission Filings and (ii) none of the Commission Filings contained at the
time of its filing any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the
Commission Filings, as of the dates of such documents, were true and complete in
all material respects and complied with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto, were
prepared in accordance with generally accepted accounting principles in the
United States (“GAAP”) (except in the case of unaudited statements permitted by
Form 10-Q under the Exchange Act) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments that in the aggregate
are not material and to any other adjustment described therein).
 

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I.  Full Disclosure. There is no fact known to the Company (other than general
economic or industry conditions known to the public generally) that has not been
fully disclosed in the Commission Filings that (i) reasonably could be expected
to have a Material Adverse Effect or (ii) reasonably could be expected to
materially and adversely affect the ability of the Company to perform its
obligations pursuant to the Documents.
 
J.  Absence of Events of Default. No “Event of Default” (as defined in any
agreement or instrument to which the Company is a party) and no event which,
with notice, lapse of time or both, would constitute an Event of Default (as so
defined), has occurred and is continuing.
 
K.  Securities Law Matters. Assuming the accuracy of the representations and
warranties of Holder set forth in Article I.C, the offer and sale by the Company
of the Securities is exempt from (i) the registration and prospectus delivery
requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state and provincial securities and “blue sky” laws. The
Company shall not directly or indirectly take, and shall not permit any of its
directors, officers or Affiliates directly or indirectly to take, any action
(including, without limitation, any offering or sale to any person or entity of
any security similar to the Debenture) which will make unavailable the exemption
from Securities Act registration being relied upon by the Company for the offer
and sale to Holder of the Debenture, the Conversion Shares and the Warrant
Shares as contemplated by this Agreement. No form of general solicitation or
advertising has been used or authorized by the Company or any of its officers,
directors or Affiliates in connection with the offer or sale of the Debenture
(and the Conversion Shares) as contemplated by this Agreement or any other
agreement to which the Company is a party.
 
L.  Registration Rights. Except as set forth on Schedule II.L., no Person has,
and as of the Closing (as such term is hereinafter defined), no Person shall
have, any demand, “piggy-back” or other rights to cause the Company to file any
registration statement under the Securities Act relating to any of its
securities or to participate in any such registration statement.
 
M.  Interest. The timely payment of interest on the Debenture is not prohibited
by the Articles or Certificate of Incorporation or By-Laws of the Company, in
each case as amended to the date of this Agreement, or any agreement, contract,
document or other undertaking to which the Company is a party.
 

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N.  No Misrepresentation. No representation or warranty of the Company contained
in this Agreement or any of the other Documents, any schedule, annex or exhibit
hereto or thereto or any agreement, instrument or certificate furnished by the
Company to Holder pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
 
O.  Finder’s Fee. Except for a 3% cash and stock fee to Falcon Financial Group,
there is no finder’s fee, brokerage commission or like payment in connection
with the transactions contemplated by this Agreement for which Holder is liable
or responsible.
 

IV.           
CERTAIN COVENANTS AND ACKNOWLEDGMENTS

 
A.  Filings. The Company shall make all necessary Commission Filings and “blue
sky” filings required to be made by the Company in connection with the sale of
the Securities to Holder as required by all applicable laws, and shall provide a
copy thereof to Holder promptly after such filing.
 
B.  Reporting Status. So long as Holder beneficially owns any of the Securities,
the Company shall timely file all reports required to be filed by it with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
 
C.  Listing. Except to the extent the Company lists its Common Stock on The New
York Stock Exchange, The American Stock Exchange or The Nasdaq Stock Market, the
Company shall use its best efforts to maintain its listing of the Common Stock
on OTCBB. If the Common Stock is delisted from OTCBB, the Company will use its
best efforts to list the Common Stock on the most liquid national securities
exchange or quotation system that the Common Stock is qualified to be listed on.
 
D.  Reserved Conversion Common Stock. The Company will initially reserve
50,000,000 shares of Common Stock until it receives shareholder approval to
increase its authorized shares. The Company at all times from and after the date
thereof shall have such number of shares of Common Stock duly and validly
authorized and reserved for issuance as shall be sufficient for the conversion
in full of the Debenture and the exercise of the Warrant.
 
E.  Information. Each of the parties hereto acknowledges and agrees that Holder
shall not be provided with, nor be given access to, any material non-public
information relating to the Company.
 
F.  Accounting and Reserves. The Company shall maintain a standard and uniform
system of accounting and shall keep proper books and records and accounts in
which full, true, and correct entries shall be made of its transactions, all in
accordance with GAAP applied on consistent basis through all periods, and shall
set aside on such books for each fiscal year all such reserves for depreciation,
obsolescence, amortization, bad debts and other purposes in connection with its
operations as are required by such principles so applied.
 
G.  Transactions with Affiliates. So long as the Debenture is outstanding,
neither the Company nor any of its Subsidiaries shall, directly or indirectly,
enter into any material transaction or agreement with any stockholder, officer,
director or Affiliate of the Company or family member of any officer, director
or Affiliate of the Company, unless the transaction or agreement is (i) reviewed
and approved by a majority of Disinterested Directors (as such term is
hereinafter defined) and (ii) on terms no less favorable to the Company or the
applicable Subsidiary than those obtainable from a nonaffiliated person. A
“Disinterested Director” shall mean a director of the Company who is not and has
not been an officer or employee of the Company and who is not a member of the
family of, controlled by or under common control with, any such officer or
employee.
 

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H.  Certain Restrictions. So long as the Debenture is outstanding, no dividends
shall be declared or paid or set apart for payment nor shall any other
distribution be declared or made upon any capital stock of the Company, nor
shall any capital stock of the Company be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares of
Common Stock made for purposes of an employee incentive or benefit plan
(including a stock option plan) of the Company or pursuant to any of the
security agreements listed on Schedule III.H) for any consideration by the
Company, directly or indirectly, nor shall any moneys be paid to or made
available for a sinking fund for the redemption of any Common Stock.
 
I. Short Selling.  So long as the Debenture is outstanding, Holder agrees and
covenants on its behalf and on behalf of its affiliates that neither Holder nor
its affiliates shall at any time engage in any short sales with respect to the
Company’s Common Stock, or sell put options or similar instruments with respect
to the Company’s Common Stock. The parties acknowledge that Holder shall be
entitled to sell the Common Stock from each Debenture conversion and Warrant
exercise immediately upon submission of the applicable Debenture Conversion
Notice and Warrant Notice of Exercise, and payment of the purchase price, to the
Company for such Common Stock.
 

V.  
ISSUANCE OF COMMON STOCK

 
A.  The Company undertakes and agrees that no instruction other than the
instructions referred to in this Article V and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement shall be given to its
transfer agent for the Conversion Shares and the Warrant Shares and that the
Conversion Shares and the Warrant Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement and applicable law. Nothing
contained in this Section V.A. shall affect in any way Holder’s obligations and
agreement to comply with all applicable securities laws upon resale of such
Common Stock.
 
B.  Holder shall have the right to convert the Debenture and exercise the
Warrant by telecopying an executed and completed Conversion Notice (as such term
is defined in the Debenture) or Warrant Notice of Exercise (as such term is
defined in the Warrant) to the Company. Each date on which a Conversion Notice
or Warrant Notice of Exercise is telecopied to and received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date (as such
term is defined in the Debenture). The Company shall cause the transfer agent to
transmit the certificates evidencing the Common Stock issuable upon conversion
of the Debenture (together with a new debenture, if any, representing the
principal amount of the Debenture not being so converted) or exercise of the
Warrant (together with a new Warrant, if any, representing the amount of the
Warrant not being so exercised) to Holder via express courier, or if a
Registration Statement covering the Common Stock has been declared effective by
the SEC by electronic transfer, within three (3) business days after receipt by
the Company of the Conversion Notice or Warrant Notice of Exercise (the
“Delivery Date”).
 

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C.  Upon the conversion of the Debenture or exercise of the Warrant or part
thereof, the Company shall, at its own cost and expense, take all necessary
action (including the issuance of an opinion of counsel) to assure that the
Company's transfer agent shall issue stock certificates in the name of Holder
(or its nominee) or such other persons as designated by Holder and in such
denominations to be specified at conversion representing the number of shares of
common stock issuable upon such conversion or exercise. The Company warrants
that the Conversion Shares and Warrant Shares will be unlegended, free-trading,
and freely transferable, and will not contain a legend restricting the resale or
transferability of the Company Common Stock provided the Conversion Shares and
Warrant Shares are being sold pursuant to an effective registration statement
covering the Common Stock to be sold or is otherwise exempt from registration
when sold.
 
D.  The Company understands that a delay in the delivery of the Common Stock in
the form required pursuant to this section, or the Mandatory Redemption Amount
described in Section E hereof, beyond the Delivery Date or Mandatory Redemption
Payment Date (as hereinafter defined) could result in economic loss to the
Holder. As compensation to the Holder for such loss, the Company agrees to pay
late payments to the Holder for late issuance of Common Stock in the form
required pursuant to Section E hereof upon Conversion of the Debenture or late
payment of the Mandatory Redemption Amount, in the amount of $100 per business
day after the Delivery Date or Mandatory Redemption Payment Date, as the case
may be, for each $10,000 of Debenture principal amount being converted or
redeemed. The Company shall pay any payments incurred under this Section in
immediately available funds upon demand. Furthermore, in addition to any other
remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Common Stock by the Delivery Date
or make payment by the Mandatory Redemption Payment Date, the Holder will be
entitled to revoke all or part of the relevant Notice of Conversion or rescind
all or part of the notice of Mandatory Redemption by delivery of a notice to
such effect to the Company whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the delivery of such
notice, except that late payment charges described above shall be payable
through the date notice of revocation or rescission is given to the Company.
 
E.  Mandatory Redemption. In the event the Company is prohibited from issuing
Common Stock, or fails to timely deliver Common Stock on a Delivery Date, or
upon the occurrence of an Event of Default (as defined in the Debenture) or for
any reason other than pursuant to the limitations set forth herein, or upon the
occurrence of an Event of Default as defined in the Debenture, then at the
Holder's election, the Company must pay to the Holder ten (10) business days
after request by the Holder or on the Delivery Date (if requested by the Holder)
a sum of money determined by multiplying up to the outstanding principal amount
of the Debenture designated by the Holder by 120%, together with accrued but
unpaid interest thereon ("Mandatory Redemption Payment"). The Mandatory
Redemption Payment must be received by the Holder on the same date as the
Company Common Stock otherwise deliverable or within ten (10) business days
after request, whichever is sooner ("Mandatory Redemption Payment Date"). Upon
receipt of the Mandatory Redemption Payment, the corresponding Debenture
principal and interest will be deemed paid and no longer outstanding.
 

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F.  Buy-In. In addition to any other rights available to the Holder, if the
Company fails to deliver to the Holder such Common Stock issuable upon
conversion of a Debenture or exercise of a Warrant by the Delivery Date and if
ten (10) days after the Delivery Date the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Common Stock which the Holder anticipated receiving
upon such conversion (a "Buy-In"), then the Company shall pay in cash to the
Holder (in addition to any remedies available to or elected by the Holder) the
amount by which (A) the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (B) the
aggregate principal and/or interest amount of the Debenture or Warrant for which
such conversion or exercise was not timely honored, together with interest
thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty). For example, if the Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted conversion of $10,000 of Debenture or Warrant principal
and/or interest, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
 

VI.           
CLOSING DATE

 
The Closing shall occur by the delivery: (i) to the Holder of the certificate
evidencing the Debenture and all other Agreements, and (ii) to the Company the
Purchase Price.
 

VII.          
CONDITIONS TO THE COMPANY’S OBLIGATIONS

 
Holder understands that the Company’s obligation to sell the Debenture on the
Closing Date to Holder pursuant to this Agreement is conditioned upon:
 
A.  Delivery by Holder to the Company of the Initial Purchase Price;
 
B.  The accuracy on the Closing Date of the representations and warranties of
Holder contained in this Agreement as if made on the Closing Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as of
such specified date) and the performance by Holder in all material respects on
or before the Closing Date of all covenants and agreements of Holder required to
be performed by it pursuant to this Agreement on or before the Closing Date; and
 
C.  There shall not be in effect any law or order, ruling, judgment or writ of
any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.
 

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VIII.         
CONDITIONS TO HOLDER’S OBLIGATIONS

 
The Company understands that Holder’s obligation to purchase the Securities on
the Closing Date pursuant to this Agreement is conditioned upon:
 
A.  Delivery by the Company of the Debenture, the Warrant and the other
Agreements (I/N/O Holder or I/N/O Holder’s nominee);
 
B.  The accuracy on the Closing Date of the representations and warranties of
the Company contained in this Agreement as if made on the Closing Date (except
for representations and warranties which, by their express terms, speak as of
and relate to a specified date, in which case such accuracy shall be measured as
of such specified date) and the performance by the Company in all respects on or
before the Closing Date of all covenants and agreements of the Company required
to be performed by it pursuant to this Agreement on or before the Closing Date,
all of which shall be confirmed to Holder by delivery of the certificate of the
chief executive officer of the Company to that effect;
 
C.  There not having occurred (i) any general suspension of trading in, or
limitation on prices listed for, the Common Stock on the OTCBB/Pink Sheet, (ii)
the declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or any of its territories, protectorates or
possessions or (iv) in the case of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof;
 
D.  There not having occurred any event or development, and there being in
existence no condition, having or which reasonably and foreseeably could have a
Material Adverse Effect;
 
E.  There shall not be in effect any Law, order, ruling, judgment or writ of any
court or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement;
 
F. The Company shall have obtained all consents, approvals or waivers from
governmental authorities and third persons necessary for the execution, delivery
and performance of the Documents and the transactions contemplated thereby, all
without material cost to the Company;
 
G.  Holder shall have received such additional documents, certificates, payment,
assignments, transfers and other deliveries as it or its legal counsel may
reasonably request and as are customary to effect a closing of the matters
herein contemplated;

H. Delivery by the Company of an enforceability opinion from its outside counsel
in form and substance satisfactory to Holder.
 

IX.           
SURVIVAL; INDEMNIFICATION

 
A.  The representations, warranties and covenants made by each of the Company
and Holder in this Agreement, the annexes, schedules and exhibits hereto and in
each instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby. In the event of a breach or violation of any
of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.
 

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B.  The Company hereby agrees to indemnify and hold harmless Holder, its
affiliates and their respective officers, directors, partners and members
(collectively, the “Holder Indemnitees”) from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, “Losses”) and agrees to reimburse Holder Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by Holder Indemnitees and to the extent arising
out of or in connection with:
 
1.  any misrepresentation, omission of fact or breach of any of the Company’s
representations or warranties contained in this Agreement or the other
Documents, or the annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement or the other Documents;
 
2.  any failure by the Company to perform any of its covenants, agreements,
undertakings or obligations set forth in this Agreement or the other Documents
or any instrument, certificate or agreement entered into or delivered by the
Company pursuant to this Agreement or the other Documents;
 
3.  the purchase of the Debenture, the conversion of the Debenture, the payment
of interest on the Debenture, the issuance of the Warrant Shares, the
consummation of the transactions contemplated by this Agreement and the other
Documents, the use of any of the proceeds of the Purchase Price by the Company,
the purchase or ownership of any or all of the Securities, the performance by
the parties hereto of their respective obligations hereunder and under the
Documents or any claim, litigation, investigation, proceedings or governmental
action relating to any of the foregoing, whether or not Holder is a party
thereto; or
 
4.  resales of the Common Stock by Holder in the manner and as contemplated by
this Agreement and the Registration Rights Agreement.
 
C.  Holder hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the “Company Indemnitees”) from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses
(including the fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with:
 

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1.  any misrepresentation, omission of fact or breach of any of Holder’s
representations or warranties contained in this Agreement or the other
Documents, or the annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered by Holder
pursuant to this Agreement or the other Documents; or
 
2.  any failure by Holder to perform in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Agreement
or the other Documents or any instrument, certificate or agreement entered into
or delivered by Holder pursuant to this Agreement or the other Documents.
 
D.  Promptly after receipt by either party hereto seeking indemnification
pursuant to this Article VIII (an “Indemnified Party”) of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a “Claim”), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Article VIII is being sought (the “Indemnifying Party”) of the commencement
thereof, but the omission so to notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights or defenses by reason of such failure. In connection with any
Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
 
E.  In the event one party hereunder should have a claim for indemnification
that does not involve a claim or demand being asserted by a third party, the
Indemnified Party promptly shall deliver notice of such claim to the
Indemnifying Party. If the Indemnified Party disputes the claim, such dispute
shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
 

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X.           
GOVERNING LAW

 
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California, without regard to the conflicts of law principles of
such state.
 

XI.          
SUBMISSION TO JURISDICTION

 
Each of the parties hereto consents to the exclusive jurisdiction of the federal
courts whose districts encompass any part of the City of San Diego or the state
courts of the State of California sitting in the City of San Diego in connection
with any dispute arising under this Agreement and the other Documents. Each
party hereto hereby irrevocably and unconditionally waives, to the fullest
extent it may effectively do so, any defense of an inconvenient forum or
improper venue to the maintenance of such action or proceeding in any such court
and any right of jurisdiction on account of its place of residence or domicile.
Each party hereto irrevocably and unconditionally consents to the service of any
and all process in any such action or proceeding in such courts by the mailing
of copies of such process by registered or certified mail (return receipt
requested), postage prepaid, at its address specified in Article XVII. Each
party hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
 

    XII.            
WAIVER OF JURY TRIAL

 
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
 

XIII.            
COUNTERPARTS; EXECUTION

 
This Agreement may be executed in counterparts, each of which when so executed
and delivered shall be an original, but both of which counterparts shall
together constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on both parties hereto.
 

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XIV.            
HEADINGS

 
The headings of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.
 

XV.            
SEVERABILITY

 
In the event any one or more of the provisions contained in this Agreement or in
the other Documents should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
 

XVI.            
ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

 
This Agreement and the Documents constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of such parties. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by both parties. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
 

XVII.            
NOTICES

 
Except as may be otherwise provided herein, any notice or other communication or
delivery required or permitted hereunder shall be in writing and shall be
delivered personally, or sent by telecopier machine or by a nationally
recognized overnight courier service, and shall be deemed given when so
delivered personally, or by telecopier machine or overnight courier service as
follows:
 
A.  If to the Company, to:
 
Infinium Labs, Inc.
1191 Second Avenue, 5th Floor
Seattle, Washington 98101
Telephone: 206-393-3000
Facsimile: 206-393-3031
 

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B.  If to Holder, to:
 
Golden Gate Investors, Inc.
7817 Herschel Avenue, Suite 200
La Jolla, California 92037
Telephone: 858-551-8789
Facsimile: 858-551-8779
 
The Company or Holder may change the foregoing address by notice given pursuant
to this Article XVII.
 

XVIII.     
CONFIDENTIALITY

 
Each of the Company and Holder agrees to keep confidential and not to disclose
to or use for the benefit of any third party the terms of this Agreement or any
other information which at any time is communicated by the other party as being
confidential without the prior written approval of the other party; provide,
however, that this provision shall not apply to information which, at the time
of disclosure, is already part of the public domain (except by breach of this
Agreement) and information which is required to be disclosed by law (including,
without limitation, pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act and the Exchange Act).
 

XIX.        
ASSIGNMENT

 
This Agreement shall not be assignable by either of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.

Infinium Labs, Inc.      Golden Gate Investors, Inc.

By: /s/ Greg Koler____________    By: /s/ Travis Huff_______________

Title: President and Chief Executive officer                          Title:
Portfolio Manager___________
 

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SCHEDULE II.A.1
 
The amount, exercise, conversion or subscription price and expiration date for
each outstanding option and other security or agreement to purchase shares of
Common Stock is accurately set forth in the Company’s Commission Filings except
as to:
 
(1) Shares to be issued to Falcon Financial Group pursuant to Section III (O) of
the Securities Purchase Agreement.
 
(2) Greg Koler, the Company’s President and CEO will be granted an aggregate of
5,000,000 restricted shares of the Company's common stock, in accordance with
the following vesting schedule: (i) 1,000,000 shares will be fully vested upon
execution of Mr. Koler’s Employment Agreement and a Stock Vesting Agreement
dated as of January 11, 2006; and (ii) the remaining 4,000,000 shares of common
stock shall vest quarterly over two years, 1/8 per quarter, to the extent Mr.
Koler is employed with the Company at the pertinent vesting date and that the
Company’s shareholders have authorized additional common stock.
 

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