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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