EXHIBIT 10.1
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SECURITIES SUBJECT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE OWNER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES, OR INTEREST THEREIN, MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

                                IMPROVENET, INC.

                       COMMON STOCK SUBSCRIPTION AGREEMENT

                                  JUNE 23, 2004


To: Board of Directors of ImproveNet, Inc.

Gentlemen:

1.   SUBSCRIPTION.
     (a) Each of the undersigned (each, a "SUBSCRIBER" and collectively, the
"SUBSCRIBERS") hereby severally subscribes to purchase the number of shares of
common stock, par value $0.001 per share of ImproveNet, Inc., a Delaware
corporation with its principal office located at 10799 N. 90th Street, Suite
200, Scottsdale, AZ 85260 (the "COMPANY") directly from the Company (the "NEW
ISSUE SHARES") and directly from current common stockholders of the Company (the
"TRANSFER SHARES") identified as Hayjour Family Limited Partnership, Jeffrey I.
Rassas, General Partner; Farsi Family Trust, Homayoon J. Farsi, Trustee; and
Ahmad Family Trust, Naser Ahmad, Trustee (the "AFFILIATE SHAREHOLDERS"),
indicated on Schedule 1 hereto, and a Common Stock Purchase Warrant issued by
the Company to each Subscriber (the "WARRANTS") to purchase, for a three (3)
year period, the number of shares of the common stock, $0.001 par value, of the
Company indicated on Schedule 1 hereto (the "WARRANT SHARES") exercisable at
$0.15 per share, on the terms and subject to the conditions set forth in this
Agreement. The form of the Warrant is attached hereto as EXHIBIT A. This
subscription offer may be rejected with respect to a Subscriber, for any reason
including without limitation, if (i) such Subscriber does not meet the
suitability standards for the offering, or (ii) this Subscription Agreement is
received by the Company after June 23, 2004 or such later date as established by
the Company in its sole discretion. Each Subscriber hereby subscribes for that
number of shares of common stock set forth on Schedule 1 hereto at $0.10 per
share, for a total purchase price as set forth on Schedule 1 hereto, payable in
full by checks or wire transfers made payable respectively to the several names
of the Company and the designated Affiliate Shareholders upon delivery of this
Subscription Agreement to the Company. The New Issue Shares, the Transfer
Shares, the Warrants and the Warrant Shares are collectively referred to as the
"SECURITIES".

     (b) The Subscriber should return two (2) executed, completed copies of this
Agreement

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(INITIALING THE APPROPRIATE REPRESENTATION BY SUBSCRIBER IN SECTION 3(A) OF THIS
AGREEMENT) to the Company at its address set forth above, accompanied by the
Subscriber's four (4) separate checks in the amounts of the purchase prices set
forth on Schedule 1 hereto payable to the order of the Company and each
Affiliate Shareholders, respectively, or via wire transfer to an account
established in the several names of the Company and each Affiliate Shareholder.
Execution copies of this Agreement are enclosed.

     (c) The Company and the Affiliate Shareholders expect to hold the closing
(the "CLOSING") promptly after receipt of the subscription for the New Issue
Shares and Warrants and the Transfer Shares and funds for the purchases. Upon
the Closing:

     (i)  the Company shall cause issuance to each Subscriber of a certificate
          for the New Issue Shares and a Warrant for the amounts set forth on
          Schedule 1, and shall deliver to each Subscriber a fully executed copy
          of this Subscription Agreement. If the Company does not accept this
          subscription from a Subscriber, in whole or in part, it will promptly
          refund to such Subscriber, without deduction therefrom, any
          subscription payment received from such Subscriber that was not
          accepted by the Company.
     (ii) Each Affiliate Shareholder shall deliver a certificate for the
          Transfer Shares duly endorsed for transfer to the Subscribers for the
          amounts set forth on Schedule 1.

     (d) THE COMPANY STRONGLY ADVISES THE SUBSCRIBERS TO REVIEW THE COMPANY'S
BUSINESS, PROPERTIES AND AFFAIRS BEFORE ENTERING INTO THIS AGREEMENT OR
SUBSCRIBING FOR THE SECURITIES.

     (e) EACH SUBSCRIBER UNDERSTANDS THAT THE COMPANY IS A DEVELOPMENT STAGE
COMPANY WITHOUT SIGNIFICANT OPERATING HISTORY, REVENUES OR INCOME, THAT AN
INVESTMENT IN THE SECURITIES OF THE COMPANY IS OF A SPECULATIVE NATURE INVOLVING
A HIGH DEGREE OF RISK, AND THAT THERE IS NO ASSURANCE THAT THE COMPANY WILL BE
ABLE TO IMPLEMENT ITS BUSINESS PLAN, ACHIEVE ITS BUSINESS OBJECTIVES AS
PRESENTED TO THE SUBSCRIBERS, OR ACHIEVE ANY LEVEL OF OPERATING REVENUES OR
INCOME SUFFICIENT TO ENABLE THE COMPANY TO CONTINUE AS A GOING CONCERN.


2.   CONDITIONS. This subscription is made subject to the following terms and
conditions:

     (a) The Company and the Affiliate Shareholders may accept or reject this
subscription in whole or in part. If the Company does not accept this
subscription, it shall be deemed rejected in whole.

     (b) The Company and the Affiliate Shareholders shall have executed and
delivered this Agreement, and all the representations and warranties set forth
herein shall have been true and correct when made and as of the Closing.

     (c) The conversion of the $400,000 of convertible promissory notes issued
by the Company into shares of the Company's common stock on the terms and
conditions set forth in the convertible promissory notes and unsecured
convertible promissory note subscription agreements, as amended and restated,
immediately prior to and contingent upon the Closing, except for the convertible
promissory notes held by Hayjour Family Limited Partnership, Jeffrey I. Rassas
General Partner, Farsi Family Trust, Homayoon J. Farsi, Trustee, and Ahmad
Family Trust, Naser Ahmad, Trustee which shall be paid in full in lieu of
conversion.


3.   ACCREDITED INVESTOR. Each Subscriber acknowledges, represents and warrants
that it is an Accredited Investor, as such term is defined in Regulation D, Rule
501, promulgated under the Act.

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     (a) Specifically, each Subscriber is:

                         INITIAL EACH ITEM THAT APPLIES:

  ___ (i) A Bank defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 (the "INVESTMENT COMPANY
ACT") or a business development company as defined in Section 2(a)(48) of the
Investment Company Act of 1940; a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets greater than $5 million; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 ("ERISA"), if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which is either a Bank, savings and loan association, insurance company, or a
registered investment advisor, or if the employee benefit plan has total assets
greater than $5 million or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors.

  ___ (ii) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.

  ___ (iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets greater than $5,000,000.

  ___ (iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds $1 million.
(California and Massachusetts residents: please see Section 3(b) below.)

  ___ (v) A natural person who had an individual income greater than $200,000 in
each of the two most recent years or joint income with that person's spouse
greater than $300,0000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year. (California and
Massachusetts residents: please see Section 4(b) below.)

  ___ (vi) I am a director, executive officer, or general partner of the
Company. (Executive officer means the CEO; the president; and vice-president in
charge of a principal business unit, division, or function, such as sales,
administration or finance; or any other person or persons who perform(s) similar
policymaking functions for the Company).

  ___ (vii) A trust, with total assets greater than $5 million not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) (I.E., a
person who has such knowledge and experience in financial and business matters
that he can evaluate the merits and risks of the prospective investment.)


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  ___ (viii) An entity in which all of the equity owners are accredited
investors. (If this alternative is checked, the Subscriber must identify each
equity owner and provide statements signed by each demonstrating how each is
qualified as an accredited investor.)

     (b) For Massachusetts individuals: If the Subscriber is a Massachusetts
resident, his or her investment in the Company will not exceed 25% of his or her
joint net worth with his or her spouse (exclusive of principal residence and its
furnishings).

     (c) If a natural person, the Subscriber is: a bona fide resident of the
State contained in the address set forth on the signature page of this Agreement
as the Subscriber's home address; at least 21 years of age; and legally
competent to execute this Agreement. If an entity, the Subscriber is duly
authorized to execute this Agreement and this Agreement constitutes the legal,
valid and binding obligation of the Subscriber enforceable against the
Subscriber according to its terms.


4.   REPRESENTATIONS AND WARRANTIES OF SUBSCRIBING PURCHASERS. The Subscribers
severally represent and warrant as follows:

     (a)  The Subscriber has received, read carefully and is familiar with
          o    this Agreement,
          o    the Fourth Amended and Restated Certificate of Incorporation and
               Bylaws of the Company,
          o    the various reports (on Forms 10-KSB, 10-QSB and 8-K) filed with
               the Securities Exchange Commission including the audited and
               unaudited financial statements, and
          o    other materials delivered therewith.

Respecting the Company, its business, plans and financial condition, the terms
of this offering and any other matters relating to this offering: the Subscriber
has received all materials which have been requested by the Subscriber; has had
a reasonable opportunity to ask questions of the Company and its
representatives; and the Company has answered all inquiries that the Subscriber
or the Subscriber's representatives have put to it. The Subscriber has had
access to all additional information necessary to verify the accuracy of the
information set forth in this Agreement and any other materials furnished
herewith, and has taken all the steps necessary to evaluate the merits and risks
of an investment as proposed hereunder.

     (b) The Subscriber is experienced in evaluating and investing in newly
organized technology companies such as the Company. The Subscriber has such
knowledge and experience in financial and business matters to enable the
Subscriber to evaluate the merits and risks of an investment in the Securities
and to make an informed investment decision with respect thereto.

     (c) THE SUBSCRIBER ACKNOWLEDGES AND UNDERSTANDS THE VARIOUS RISKS OF AN
INVESTMENT IN THE SECURITIES AS PROPOSED HEREIN INCLUDING THE RISKS SPECIFICALLY
SET FORTH ON EXHIBIT B ATTACHED HERETO AND CAN AFFORD TO BEAR SUCH RISKS,
INCLUDING, WITHOUT LIMITATION, THE RISKS OF LOSING ITS ENTIRE INVESTMENT. The
Subscriber acknowledges, agrees and recognizes that, except as expressly
provided in Section 5 hereof, neither the Company nor any of its Affiliates or
agents or consultants have made any representation or warranty concerning the
Company's financial results, upon which the Subscriber is relying in making its
investment. The Subscriber further acknowledges, agrees and recognizes that any
cost estimates, projections, pro forma financial

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statements or other predictions contained or referred to in this Agreement or in
the information provided to the Subscriber or any of Subscriber's agents or
representatives were prepared for internal planning purposes only and are not
and shall not be deemed to be representations or warranties of the Company, or
any of their affiliates or agents or consultants. The Subscriber is investing
solely based upon the Subscriber's own independent analysis of the Company's
business and the historical financial information provided.

     (d) The Subscriber is aware that none of the Securities have been
registered under the Act, that the Securities will be issued on the basis of the
statutory exemption provided by Section 4(2) of the Act or Regulation D
promulgated thereunder or another exemption under the Act, or both, relating to
transactions by an issuer not involving any public offering and under similar
exemptions under certain state securities laws, that this transaction has not
been reviewed by, passed on or submitted to any Federal or state agency or
self-regulatory organization where an exemption is being relied upon, and that
the Company's reliance thereon is based in part upon the representations made by
the Subscriber in this Agreement. The Subscriber acknowledges that the
Subscriber has been informed by the Company, or is otherwise familiar with, the
nature of the limitations imposed by the Act (and applicable state securities
laws) and the rules and regulations thereunder on the transfer of securities. In
particular, the Subscriber agrees that no sale, assignment or transfer of any of
the Securities shall be valid or effective, and the Company shall not be
required to give any effect to such sale, assignment or transfer, unless (i)
such sale, assignment or transfer is registered under the Act (and applicable
state securities laws), it being understood that the Securities are not
currently registered for sale and that the Company has no obligation or
intention to so register the Securities, except as contemplated hereunder or
(ii) any of the Securities are sold, assigned or transferred in accordance with
all the requirements and limitations of Rule 144 under the Act, it being
understood that Rule 144 is not available at the present time for the sale of
the Securities, or (iii) such sale, assignment or transfer is otherwise exempt
from the registration under the Act (and applicable state securities laws). The
Subscriber further understands that an opinion of counsel and other documents
may be required to transfer the Securities. The Subscriber acknowledges that the
certificates evidencing the Securities shall bear the following, or a
substantially similar legend, and such other legends as may be required by state
blue-sky laws:

     "The securities represented by this certificate have not been registered
     under the Securities Act of 1933 (the "ACT"), or any state securities laws
     and neither such securities nor any interest therein may be offered, sold,
     pledged, assigned or otherwise transferred unless (1) a registration
     statement with respect thereto is effective under the Act and any
     applicable state securities laws, or (2) the Company receives an opinion of
     counsel to the holder of such securities, which counsel and opinion are
     reasonably satisfactory to the Company, that such securities may be
     offered, sold, pledged, assigned or transferred in the manner contemplated
     without an effective registration statement under the Act or applicable
     state securities laws."

Assuming that the Subscribers' Securities are transferable without restriction
under the Act and other applicable securities laws, (i) the Securities will be
reissued to Subscribers without legends, and (ii) the Company will not make any
notation on its records or give instructions to any transfer agent of the
Company to restrict transfers of the Securities.

     (e) The Subscriber is acquiring the Securities for investment for its own
account and not with the view to, or for resale in connection with, any
distribution thereof. The Subscriber understands

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that the Securities have not been registered under the Act, as amended, or any
applicable state securities laws by reason of specified exemptions from the
registration provisions of the Act and applicable state securities laws which
depend upon, among other things, the bona fide nature of the Subscriber's
investment intent as expressed herein. The Subscriber hereby consents and agrees
that the Company may imprint on the Securities an appropriate legend or
notification to the effect that the Securities may be transferred only in
compliance with applicable securities laws. The Subscriber further consents and
agrees that the Company may give appropriate "stop order" instructions in this
regard to any transfer agent for the Securities.

     (f) The Subscriber acknowledges that each of the Securities must be held
indefinitely unless such Security is subsequently registered under the Act and
applicable state securities laws or an exemption from such registration is
available. The Subscriber has been advised or is aware of the provisions of Rule
144 promulgated under the Act, which permit limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions and
that such Rule may not become available for resale of the Securities.

     (g) The Subscriber acknowledges that a limited trading market for the
Company's Common Stock and no trading market for the Securities presently exist
and it is uncertain that a more active market for the Common Stock or the
Securities will develop in the future, and that the Subscriber may find it
impossible to liquidate the investment at a time when it may be desirable to do
so, or at any other time.

     (h) The Subscriber is acquiring the Securities for the Subscriber's own
account for investment and not with a view to the sale or distribution thereof
or the granting of any participation therein, and has no present intention of
distributing or selling to others any of such interest or granting
participations therein.

     (i) The Subscriber is not subscribing for the Securities because of or
following any advertisement, article, notice or other communication published in
any newspaper, magazine or internet site or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
or a subscription by a person other than a representative of the Company.

     (j) The Subscriber is not relying on the Company with respect to the tax
and other economic considerations of an investment in the Securities.

     (k) The Subscriber acknowledges that the representations, warranties and
agreements made by the Subscriber herein shall survive the execution and
delivery of this Agreement.

     (l) All action (if any) on the part of the Subscriber necessary for the
authorization, execution, delivery and performance by the Subscriber of this
Agreement has been taken, and this Agreement constitutes a valid and binding
obligation of the Subscriber, enforceable in accordance with its terms.


5.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants as follows:

     (a) DUE INCORPORATION. The Company: (i) is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation; (ii)
has all requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a material adverse

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effect on the financial condition, operations or business of the Company taken
as a whole.

     (b) SUBSIDIARIES. The Company has no subsidiaries and conducts its business
solely through the Company.

     (c) NO CONFLICTS. None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated or the compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of the Company, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Company is a party or by which it is bound or to which it is subject,
or constitute a default under any such agreement or instrument, or result in the
creation or imposition of any lien upon any of the revenues or assets of the
Company pursuant to the terms of any such agreement or instrument.

     (d) AUTHORITY. The Company has all necessary corporate power and authority
to execute, deliver and perform its obligations under this Agreement; the
execution, delivery and performance by the Company of this Agreement has been
duly authorized by all necessary corporate action on its part; and the New Issue
Shares, the Warrants and Warrant Shares have been, and will be, validly issued,
fully paid and non-assessable when issued in accordance with this Agreement,
free and clear of all liens and encumbrances.

     (e) ENFORCEABILITY. This Agreement has been duly executed and delivered on
behalf of the Company and constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms.

     (f) CONSENTS. No authorizations, approvals or consents of, and no filings
or registrations with, any governmental or regulatory authority or agency or any
other person or entity are necessary for the execution, delivery or performance
by the Company of this Agreement or for the issuance of the New Issue Shares,
the Warrant or the Warrant Shares.

     (g) NO JUDGMENTS. The Company is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition, injunction or decree of any
court or other governmental body which would prevent the execution or delivery
of this Agreement or the issuance, conveyance and sale of the New Issue Shares,
the Warrant or the Warrant Shares pursuant to the terms hereof.

     (h) NO LITIGATION. There are no actions, investigations, demands, suits or
proceedings pending or threatened against or affecting the Company, or affecting
the rights of the Company to enter into this agreement or consummate the
transactions contemplated hereby.

     (i) COMPLIANCE WITH LAWS. The Company has complied with all applicable
laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of governmental entities.

     (j) TAXES. The Company has correctly prepared and filed all tax returns or
reports that are required to have been filed in any jurisdiction, and has timely
paid in full all taxes due and payable with respect thereto.

     (k) EXEMPTION FROM REGISTRATION. In reliance on the investment
representations made by the Subscribers contained herein, the offer, issuance,
sale and delivery of the Securities are exempt from the registration
requirements of the Act and all applicable state securities laws.

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     (l) SEC DOCUMENTS. A copy of the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 (the "2003 10-K") and each report, schedule,
effective registration statement and definitive proxy statement filed by the
Company with the Securities and Exchange Commission (the "COMMISSION") since
December 31, 2003, (as the documents may have been amended since the time of
their filing, the "COMMISSION DOCUMENTS") has been made available to the
Subscribers either by physical delivery or via the Commission's EDGAR System. As
of their respective filing dates, each Commission Document complied in all
material respects with the requirements of the Act or the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), as applicable, and the rules and
regulations of the Commission thereunder applicable to the Commission Documents,
and no Commission Document contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements included in the Commission
Documents were prepared in accordance with United States generally accepted
accounting principles ("GAAP"), applied consistently with the past practices of
the Company (except as may be indicated in the notes thereto), and as of their
respective dates, fairly present, in all material respects, the consolidated
financial position of the Company and the results of its operations as of the
time and for the periods indicated therein and complied as to form in all
material respects with then applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto.

     (m) Since December 31, 2003, except as disclosed in the Commission
Documents filed subsequent to that date, there has not been any material adverse
change in the business, financial condition or operating results of the Company.

     (n) The Company has not since December 31, 2003, received notice (written
or oral) from any stock exchange or market on which its common stock is or has
been listed (or on which it has been quoted) to the effect that it is not in
compliance with the continuing listing or maintenance requirements of such
exchange or market.

     (o) AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists of 100,000,000 shares of common stock ("COMMON STOCK") and 5,000,000
shares of preferred stock ("PREFERRED STOCK"). As of the date hereof, without
giving effect to the issuance of the New Issue Shares, there are issued and
outstanding 39,460,315 shares of Common Stock and no shares of Preferred Stock.
All such issued and outstanding shares have been duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in the
Commission Documents and the grant of 1,900,016 nonstatutory options under the
Company's 1999 Equity Incentive Plan in the second quarter of 2004 specifically
disclosed to Subscribers under a Confidentiality and Non-Disclosure Agreement
dated March 25, 2004, there are no outstanding rights, options, warrants,
conversion rights, preemptive rights, rights of first refusal or similar rights
for the purchase or acquisition from the Company of any securities of the
Company. All outstanding shares have been issued in compliance with state and
federal securities laws. There are no agreements to which the Company is a party
or, to the knowledge of the Company, to which any stockholder of the Company is
a party, with respect to the voting or transfer of the capital stock of the
Company.

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     (p) The Company acknowledges that the representations, warranties and
agreements made by the Company herein shall survive the execution and delivery
of this Agreement.

     (q) Each Affiliate Shareholder, severally and not jointly, represents and
warrants that such Affiliate Shareholder has all requisite power, authority and
legal capacity to execute and deliver this Agreement and to consummate the
transactions contemplated thereby. Each Affiliate Shareholder is the record and
beneficial owner of its respective Transfer Shares free and clear of any and all
liens or encumbrances, and has the power and authority to sell, transfer and
assign the Transfer Shares to the Subscribers with such delivery to convey good
and marketable title to such Transfer Shares, free and clear of any and all
liens and encumbrances. This Agreement has been duly executed and delivered on
behalf of each Affiliate Shareholder and constitutes the valid and binding
obligation of such Affiliate Shareholder, enforceable in accordance with its
terms. None of the execution and delivery of this Agreement, the consummation of
the transactions herein contemplated or the compliance with the terms and
provisions hereof will conflict with or result in a breach of, or require any
consent under, any organizational document applicable to such Affiliate
Shareholder, or any applicable law or regulation, or any order, writ, injunction
or decree of any court or governmental authority or agency, or any agreement or
instrument to which such Affiliate Shareholder is a party or by which it is
bound or to which it is subject, or constitute a default under any such
agreement or instrument. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency or any other person or entity are necessary for the execution, delivery
or performance by such Affiliate Shareholder of this Agreement or for the sale
and transfer of the Transfer Shares.


6.   COVENANTS OF SUBSCRIBERS AND THE COMPANY. Subscribers and the Company
covenant as follows:

     (a) REGISTRATION RIGHTS. The Company shall prepare, and, on or prior to
sixty (60) days from the date of Closing (the "FILING DATE"), file with the
Commission a registration statement (the "REGISTRATION STATEMENT") on Form S-3
(or, if Form S-3 is not then available, on Form SB-2 or such form of
Registration Statement as is then available to effect a registration of the New
Issue Shares, the Transfer Shares and the Warrant Shares (collectively, the
"REGISTRABLE SECURITIES")) covering the resale of the New Issue Shares, the
Transfer Shares, and the Warrant Shares, which Registration Statement, to the
extent allowable under the Act and the rules and regulations promulgated
thereunder (including Rule 416), shall state that such Registration Statement
also covers the shares underlying the Warrants. The number of shares of Common
Stock initially included in such Registration Statement shall be no less than an
amount equal to the total number of New Issue Shares, Transfer Shares and
Warrant Shares, without regard to any limitation, if any, on Subscriber's
ability to exercise the Warrants. The Company, in its sole discretion may
include other selling shareholders in the Registration Statement to the extent
it does not reduce the number of New Issue Shares, Transfer Shares or Warrant
Shares being registered by the Subscribers. The Company will cause the
Registration Statement to become effective on or before November 1, 2004 (the
"EFFECTIVENESS DATE"); provided that, if (1) the Registration Statement is not
filed by the Filing Date, (2) the Registration Statement is not declared
effective by the Effectiveness Date, or (3) prior to the time that the
Registrable Securities may be resold

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pursuant to Rule 144, the Registration Statement shall cease to be available for
use by the Subscribers due to the fault of the Company (including, without
limitation, by reason of a stop order, a material misstatement or omission in
such Registration Statement or the information contained in such Registration
Statement having become outdated), then the Company shall pay to each Subscriber
an amount equal to one percent (1%) of the purchase price paid for the New Issue
Shares. Thereafter, for every 30 days that pass during which any of the events
described in clauses (1), (2), and (3) above is continuing (the "BLACKOUT
PERIOD"), the Company shall pay to each Subscriber an additional amount equal to
one percent (1%) of the purchase price paid for the New Issue Shares. Each such
payment shall be due within five (5) days of the end of each calendar month of
the Blackout Period until the termination of the Blackout Period and within five
(5) days after such termination. Such payments shall be in partial compensation
to the Subscribers, and shall not constitute the Subscribers' exclusive remedy
for such events. The Blackout Period shall terminate upon (x) the filing of the
Registration Statement in the case of clause (1) above; and (y) the
effectiveness of the Registration Statement in the case of clauses (2) and (3)
above. In addition to the foregoing, in the event that the Registration
Statement has not been declared effective on or before March 1, 2005 or was
declared effective and subsequently ceased to be available for use by the
Subscribers due to the fault of the Company (including, without limitation, by
reason of a stop order, a material misstatement or omission in such registration
statement or the information contained in such registration statement having
become outdated) and has not been declared effective again by March 1, 2005, the
Subscribers shall have the right in their sole discretion to rescind all
transactions hereunder and receive from the Company, the full purchase price
paid by the Subscribers for the New Issue Shares . The Company shall make such
payment in cash by wire transfer within thirty (30) days after receipt of
written demand for recission by the Subscribers. Notwithstanding anything to the
contrary contained in this Agreement, provided that a registration statement
covering the Registrable Securities has been filed and declared effective, no
amounts shall be due and payable to the Subscribers as a result of blackout
periods imposed by the Company due to the Company being involved in a
confidential proposed transaction involving a merger or acquisition, purchase or
sale of assets, contractual agreement or negotiations therefor, or an imminent
public announcement of an updated or new product or technology; provided,
however, that such blackout periods shall not exceed 30 trading days in the
aggregate per year nor more than 20 consecutive calendar days.

     (b) If at any time prior to the two year anniversary of the date the
Subscribers acquire the Registrable Securities, the Company or any shareholder
of the Company proposes to register any of its common stock or any securities
convertible into common stock under the Act (other than pursuant to an offering
of securities in connection with an employee benefit, share dividend, share
ownership or dividend reinvestment plan) and (i) the Registrable Securities are
not then covered by an effective registration statement, and (ii) the
registration form to be used may be used by the Company for the registration of
the Registrable Securities, the Company shall give prompt written notice to the
Subscribers of its intention to effect such a registration (each a "PIGGYBACK
NOTICE") and, shall include in such registration all Registrable Securities with
respect to which the Company has received written request from the Subscribers
for inclusion therein within ten (10) days after the date of sending the
Piggyback Notice (the "PIGGYBACK REGISTRATION") to the Subscribers.

                                       10
<PAGE>
     (c) In connection with any registration, the Company will, as expeditiously
as possible:

         (i) prepare and file with the Commission a registration statement with
respect to such securities and cause such registration statement to become and
remain effective until the earlier of (A) two (2) years from the Effectiveness
Date, (B) the date when the Subscribers may sell the Securities under Rule
144(k), or (C) the date by which the Subscribers have disposed of all of the
Securities ;

         (ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement until the
such time as all of such securities have been disposed of;

         (iii) furnish to the Subscribers such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents, as the
Subscribers may reasonably request;

         (iv) register or qualify the securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions
within the United States and Puerto Rico as the Subscribers shall reasonably
request (provided, however, that it shall not be obligated to qualify as a
foreign corporation to do business under the laws of any jurisdiction in which
it is not then qualified or to file any general consent to service or process),
and do such other reasonable acts and things as may be required of it to enable
the Subscribers to consummate the disposition in such jurisdiction of the
securities covered by such registration statement;

         (v) notify the Subscribers at any time when the registration statement
contains an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and at the request of
the Subscribers, prepare and furnish to such person(s) such reasonable number of
copies of any amendment or supplement to the registration statement as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such registration statement shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing;

         (vi) keep the Subscribers informed of the Company's best estimate of
the earliest date on which the offering documents will become effective, and
promptly notify the Subscribers of (A) the effectiveness of such offering
documents, (B) a request by the Commission for an amendment or supplement to
such offering documents, (C) the issuance by the Commission of an order
suspending the effectiveness of the offering documents, or of the threat of any
proceeding for that purpose, and (D) the suspension of the qualification of any
securities to be included in the offering documents for sale in any jurisdiction
or the initiation or threat of any proceeding for that purpose; and

         (vii) cause all Registrable Securities registered hereunder to be
listed on each securities exchange on which similar securities issued by the
Company are then listed,

                                       11
<PAGE>
     (d) all registrations (piggyback or otherwise) made by the Subscribers will
be made solely at the Company's expense, other than the underwriters',
broker-dealers' and placement agents' selling discounts, commissions and fees
relating to the sale of the Subscribers' securities, which shall be paid by the
Subscribers.

     (e) In the event of any registration of any Registrable Securities under
the Act pursuant to this Agreement, the Company shall indemnify and hold
harmless the holder of such Registrable Securities, such holder's directors and
officers, and each other person who participated in the offering of such
Registrable Securities and each other person, if any, who controls such holder
or such participating person within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or any
such director or officer or participating person or controlling person may
become subject under the Act or any other statute or at common law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or any alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such securities were registered under the
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, (ii) any omission or any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any other violation of any
applicable securities laws, and in each of the foregoing circumstances shall
reimburse such holder or such director, officer or participating person or
controlling person for any legal or any other expenses reasonably incurred by
such holder or such director, officer or participating person or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any actual or alleged untrue statement
or actual or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder or
such director, officer or participating person or controlling person, and shall
survive the transfer of such securities by such holder.

     (f) In the event of any registration of any Registrable Securities under
the Act pursuant to this Agreement, each holder of Registrable Securities, by
acceptance hereof, agrees to indemnify and hold harmless the Company, its
directors and officers and each other person, if any, who controls the Company
within the meaning of the Act and any other holder against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such
director or officer or any such person may become subject under the Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or any alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such securities were registered under the Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or (ii) any omission or any alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in either case only to the extent that such untrue statement or
omission is (A) made in reliance on and in conformity with any information
furnished in writing by such holder

                                       12
<PAGE>
to the Company concerning such holder specifically for inclusion in the offering
documents relating to such offering, and (B) is not corrected by such holder and
distributed to the purchasers of shares within a reasonable period of time.
Notwithstanding the provisions of this paragraph, no holder shall be required to
indemnify any person pursuant to this paragraph or to contribute pursuant to
paragraph (g) below in an amount in excess of the amount of the aggregate net
proceeds received by such holder in connection with any such registration under
the Act.

     (g) If the indemnification provided for above from the indemnifying party
is unavailable to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this paragraph were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

     (h) In order to permit the Subscribers to sell the Registrable Securities,
if they so desire, pursuant to any applicable resale exemption under applicable
securities laws and regulations, the Company shall:

         (i) comply with all rules and regulations of the Commission in
connection with use of any such resale exemption;

         (ii) make and keep available adequate and current public information
regarding the Company;

         (iii) file with the Commission in a timely manner, all reports and
other documents required to be filed under the Act, the Exchange Act, or other
applicable securities laws and regulations;

     (i) to the extent not made publicly available, furnish to Subscriber
Kinderhook Partners, LP under the Confidentiality and Non-Disclosure Agreement
dated March 24, 2004 and for so long as such Subscriber owns at least 50% of the
New Issue Shares (A) within 30 days after the end of each fiscal quarter, an
unaudited consolidated balance sheet of the Company and its subsidiaries,

                                       13
<PAGE>
and unaudited consolidated statements of income and cash flows of the Company
and its subsidiaries, for such period, for the current fiscal year to date and
(B) within 60 days after the end of each fiscal year, audited financial
statements consisting of a consolidated balance sheet of the Company and its
subsidiaries, as of the end of such year and consolidated statements of income,
stockholders' equity and cash flows for such year, in each case prepared in
accordance with GAAP.

     (j) All rights of the Subscribers under this Section shall inure to the
benefit of their successors and assigns, including any transferee who obtains
Registrable Securities in compliance with all applicable laws.

     (k) The Company shall cause shareholders (i) Hayjour Family Limited
Partnership, Jeffrey I. Rassas General Partner, (ii) Farsi Family Trust,
Homayoon J. Farsi, Trustee, and (iii) Ahmad Family Trust, Naser Ahmad, Trustee
to execute and deliver a lock-up agreement substantially in the form attached as
EXHIBIT C.


7.   INVESTMENT INTENT AND INDEMNITY. Each Subscriber hereby expressly covenants
not to offer for sale or sell any of the Securities, or any interest therein,
except in compliance with the Act, as amended, and other applicable securities
laws and regulations, including those of the State of Arizona, or pursuant to
any available exemption therefrom. Each Subscriber understands and agrees that
transfer of any of the Securities shall not be effected except upon a
satisfactory demonstration by such Subscriber to counsel for the Company that
such transfer is to be effected in compliance with applicable securities laws
and regulations or pursuant to applicable exemptions therefrom. Each Subscriber
hereby agrees to indemnify the Company, together with its officers and
directors, for and against any and all liabilities, losses, damages and expenses
(including reasonable attorney fees) arising (directly or indirectly) from or in
connection with any disposition of the Securities, or any interest therein, in
violation of (or allegedly in violation of) applicable securities laws or
regulations, including all such expenses incurred in connection with the defense
against any such claim.


8.   COMPANY AND SHAREHOLDER AFFILIATE INDEMNITY. The Company and each
Shareholder Affiliate shall severally indemnify, defend and hold harmless each
Subscriber from and against all liabilities, losses, and damages, together with
all reasonable costs and expenses related thereto (including, without
limitation, reasonable legal fees and expenses) based upon or arising out of any
inaccuracy or breach by such party of any representation and warranty or
covenant contained herein.


9.   CONDITIONS. The effectiveness of this Agreement and the consummation of the
transactions contemplated hereby are conditioned upon the receipt by each
Subscriber and its counsel of the following documents, in form and substance
satisfactory to each Subscriber and its counsel:

     (a) One copy of this Agreement, countersigned on behalf of the Company; and
     (b) Instructions to the Company's transfer agent duly authorized and
         executed on behalf of the Company directing the issuance of a stock
         certificate representing the New Issue Shares, the Transfer Shares and
         issuance by the Company of the Warrants.
     (c) Evidence of the conversion of all of the $400,000 of convertible
         promissory notes into shares of the Company's common stock on the terms
         and conditions set forth in the

                                       14
<PAGE>
         convertible promissory notes and unsecured convertible promissory note
         subscription agreements, as amended and restated, immediately prior to
         and contingent upon the Closing, except for the convertible promissory
         notes held by Hayjour Family Limited Partnership, Jeffrey I. Rassas
         General Partner, Farsi Family Trust, Homayoon J. Farsi, Trustee, and
         Ahmad Family Trust, Naser Ahmad, Trustee which shall be paid in full in
         lieu of conversion.


10.  GENERAL.

     (a) NOTICE. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered by facsimile transmission to
whom it is to be given, if to the Company, at the address set forth on the first
page hereof, if to a Subscriber, at the address set forth on the signature page
hereof, or in either case, to such other address or facsimile number as the
party shall have furnished in writing in accordance with the provisions of this
Section. Notice to the estate of any party shall be sufficient if addressed to
the party as provided in this Section. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party address which shall be deemed given at the
time of receipt thereof. Any notice given by other means permitted by this
Section shall be deemed given at the time of receipt thereof.

     (b) BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, the successors and assigns of the Company,
and each Affiliate Shareholder, and the successors, assigns, heirs and personal
representatives of each Subscriber. The Subscribers shall be permitted to
transfer the Securities to any party provided such transfer complies with
applicable securities laws.

     (c) HEADINGS. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.

     (d) CHOICE OF LAW; JURISDICTION; VENUE. This Agreement has been negotiated
and shall be consummated in the State of Arizona and shall be governed by and
construed in accordance with the laws of the State of Arizona, without regard to
its principles of conflicts of law. The parties hereto irrevocably consent to
the non-exclusive jurisdiction of the courts of the State of Arizona and of any
Federal court located in such state in connection with any action or proceeding
arising out of or relating to this Agreement, any document or instrument
delivered pursuant to, in connection with or simultaneously with this Agreement,
or a breach of this Agreement or any such document or instrument. In any such
action or proceeding, each party hereto waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 10.

     (e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (f) ENTIRE AGREEMENT; ORAL MODIFICATION. This Agreement represents the
entire agreement of the parties with respect to the subject matter hereof, and
all agreements entered into prior hereto are revoked and superseded by this
Agreement, and no representations, warranties, inducements or oral agreements
have been made by any of the parties except as expressly set forth herein and
therein. This Agreement may not be changed, modified or rescinded except in
writing, signed by all parties hereto, and any attempt at oral modification of
this Agreement shall be void and of no effect.

                                       15
<PAGE>
     (g) SUBSCRIPTION TERMINATION. In the event any part of this subscription is
not accepted for any reason by the Company, or in the event that the offering is
terminated for any reason without issuance of all of the Securities, the related
funds received from the Subscriber will be returned as provided in Section 10(i)
below.

     (h) In the event suit is brought (or arbitration instituted) or an attorney
is retained by any party to this Agreement to enforce the terms of this
Agreement or to collect any moneys due hereunder, or to collect money damages
for breach hereof, the prevailing party shall be entitled to recover, in
addition to any other remedy, reimbursement for reasonable attorney fees, court
costs, costs of investigation and other related expenses incurred in connection
therewith.

     (i) In the event that the Company elects not to accept this subscription
for any reason, each of the Company and each Affiliate Shareholder shall return
to the Subscriber any funds advanced by the Subscriber in payment of the
subscription price, together with interest at the money market rate paid on the
Company's account at Home National Bank, Scottsdale, Arizona, from the date that
such funds are received by the Company or such Affiliate Shareholder, as the
case may be, in immediately available funds.

     (j) Each of the Company, each Affiliate Shareholder and each Subscriber
agrees to provide such information and to execute and deliver such documents as
may be reasonably necessary to effect the transactions contemplated hereunder or
helpful to comply with any and all laws and regulations to which this
transaction is subject.

     (k) The Company agrees to pay the expenses of the Subscribers (including
their attorneys' fees), not to exceed $5,000, in connection with the
negotiation, execution and delivery of this Agreement.

     (l) So long as Kinderhook owns at least 50% of the New Issue Shares
initially purchased hereunder, the Company shall use its best efforts so that
Kinderhook may, at its discretion, appoint a representative to be on the
Company's board of directors.



                   [THE FOLLOWING 3 PAGES ARE SIGNATURE PAGES]






                                       16
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year this Subscription has been accepted by the Company as set forth below.


SUBSCRIBING PURCHASERS:                           AGGREGATE PURCHASE PRICE OF
                                                  SHARES BEING PURCHASED:

KINDERHOOK PARTNERS, LP, A                        $969,000.00
DELAWARE LIMITED PARTNERSHIP
    [TYPED NAME]

By:  /s/ Tushar Shah
     ------------------------------
         [SIGNATURE]

Name: Tushar Shah
     ------------------------------

Title: Partner
     ------------------------------

     /s/ Vinodray R. Shah                         $31,000.00
     ------------------------------
     DR. VINODRAY R. SHAH


                                                  $150,000.00
     ------------------------------
     DKCP 5, L.P., A NEW YORK
     LIMITED PARTNERSHIP


By:  /s/ Daniel Kaufman
     ------------------------------
         [SIGNATURE]

Name: Daniel Kaufman
     ------------------------------

Title: General Partner
     ------------------------------

     /s/ Timothy M. Riley                         $50,000.00
     ------------------------------
         TIMOTHY M. RILEY

IMPORTANT: SUBSCRIBER MUST INITIAL THE APPROPRIATE REPRESENTATION IN SECTION
3(a) ABOVE BEFORE THE COMPANY WILL CONSIDER THIS SUBSCRIPTION

Social Security Number/Taxpayer Identification Number:

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

                                       17
<PAGE>

Address:
         ---------------------------------------------------------------

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

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

Telephone:                         Fax:
           --------------------         --------------------------------

E-mail:
        -----------------------


If the Shares will be held as joint tenants, tenants in common, or community
property, please complete the following:

------------------------------------------------------------------------
Print Name of spouse or other co-subscriber

------------------------------------------------------------------------
Signature of spouse or other co-subscriber

------------------------------------------------------------------------
Social Security Number of co-subscriber

------------------------------------------------------------------------
VERY IMPORTANT: Print exact title in which Shares will be held and should
be issued by the Company upon acceptance of this Subscription Agreement

ACCEPTED BY COMPANY:

IMPROVENET, INC.,
a Delaware corporation


By: /s/ Jeffrey I. Rassas
   --------------------------------
Name: Jeffrey I. Rassas
     ------------------------------
Title: CEO
      -----------------------------
Date: 6/23/04
     ------------------------------


                                       18
<PAGE>

ACCEPTED BY AFFILIATE SHAREHOLDERS:

HAYJOUR FAMILY LIMITED PARTNERSHIP,
An Arizona Limited Partnership

By: /s/ Jeffrey I. Rassas and Debi Rassas
   --------------------------------
Name: Jeffrey I. Rassas and Debi Rassas
     ------------------------------
Title: General Partner
      -----------------------------
Date: 6/23/04
     ------------------------------




FARSI FAMILY TRUST

By: /s/ Homayoon J. Farsi
   --------------------------------
Name: Homayoon J. Farsi
     ------------------------------
Title: Trustee
      -----------------------------
Date: 6/23/04
     ------------------------------



AHMAD FAMILY TRUST

By: /a/ Naser Ahmad
   --------------------------------
Name: Naser Ahmad
     ------------------------------
Title: Trustee
      -----------------------------
Date: 6/23/04
     ------------------------------




                                       19
<PAGE>
                                    EXHIBIT A
                                 FORM OF WARRANT

The securities evidenced by this Warrant have not been registered under the
Securities Act of 1933, as amended or applicable state securities laws, and no
interest may be sold, distributed, assigned, offered, pledged or otherwise
transferred unless (a) there is an effective registration statement under such
act and applicable state securities laws covering any such transaction involving
said securities, (b) the Company receives an opinion of legal counsel for the
holder of the securities satisfactory to the Company stating that such
transaction is exempt from registration, or (c) the Company otherwise satisfies
itself that such transaction is exempt from registration.


ISSUED: June 23, 2004                                        WARRANT TO PURCHASE
Void After June 23, 2007                                     COMMON STOCK


                                IMPROVENET, INC.

                                     WARRANT

         THIS IS TO CERTIFY that, subject to these terms and conditions,
__________________or such person to whom this Warrant is transferred (the
"HOLDER"), is entitled to exercise this Warrant to purchase _______________
fully paid and nonassessable shares of IMPROVENET, INC., a Delaware corporation
(the "COMPANY"), Common Stock (the "WARRANT SHARES") at a price per share of
$0.15 (the "EXERCISE PRICE").


         1.       METHOD OF EXERCISE

         This Warrant may be exercised by the Holder, at any time after
issuance, but not later than June 23, 2007 (the "EXERCISE PERIOD"), in whole or
in part, by delivering to the Company at ImproveNet, Inc., 10799 N. 90th Street,
Suite 200, Scottsdale, Arizona 85260 (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company) (a) this Warrant certificate,
(b) a certified or cashier's check payable to the Company, or canceled
indebtedness of the Company to the Holder, or payment by wire transfer, in the
amount of the Exercise Price multiplied by the number of shares for which this
Warrant is being exercised (the "PURCHASE PRICE"), and (c) the Notice of
Exercise attached as Exhibit A duly completed and executed by the Holder.


                                       20
<PAGE>
         2.       DELIVERY OF STOCK CERTIFICATES; NO FRACTIONAL SHARES

                  2.1 Delivery of Stock Certificates. Within 10 days after the
payment of the Purchase Price following the exercise of this Warrant (in whole
or in part), the Company at its expense shall issue in the name of and deliver
to the Holder (a) a certificate or certificates for the number of fully paid and
nonassessable Warrant Shares to which the Holder shall be entitled upon such
exercise, and (b) a new Warrant in substantially the same form to purchase up to
that number of Warrant Shares, if any, as to which this Warrant has not been
exercised if this Warrant has not expired. The Holder shall for all purposes be
deemed to have become the holder of record of such Warrant Shares on the date
this Warrant was exercised (the date the Holder has fully complied with the
requirements of Section 1), irrespective of the date of delivery of the
certificate or certificates representing the Warrant Shares; PROVIDED that, if
the date such exercise is made is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
record of such Warrant Shares at the close of business on the next succeeding
date on which the stock transfer books are open.

                  2.2 No fractional shares. No fractional shares shall be issued
upon the exercise of this Warrant. In lieu of fractional shares, the Company
shall pay the Holder a sum in cash equal to the fair market value of the
fractional shares (as determined by the Company's Board of Directors) on the
date of exercise.


         3.       COVENANTS AS TO WARRANT SHARES

         The Company covenants that at all times during the Exercise Period
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of Warrant Shares as is necessary for exercise in full of this
Warrant and, from time to time, it will take all steps necessary to amend the
Articles of Incorporation to provide sufficient reserves of Warrant Shares.


         4.       ADJUSTMENTS; TERMINATION OF WARRANT UPON CERTAIN EVENTS

                  4.1      Effect of Reorganization.

                           (A)      REORGANIZATION - NO CHANGE IN CONTROL

         Upon the merger, consolidation, acquisition of all or substantially all
of the property or stock, liquidation or other reorganization of the Company
with ImproveNet, Inc. during the Exercise Period (collectively, the
"REORGANIZATION"), as a result of which the shareholders of the Company receive
cash, stock or other property in exchange for their Warrant Shares and the
holders of the Company's voting equity securities immediately prior to such
Reorganization together own a majority interest of the voting equity securities
of the successor corporation following such Reorganization, lawful provision
shall be made so that the Holder shall thereafter be entitled to receive, upon
exercise of this Warrant, the number of shares of securities of the successor
corporation resulting from such Reorganization, to which a holder of the Warrant
Shares issuable upon exercise of this Warrant would have been entitled in such
Reorganization if this Warrant had been exercised immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interest

                                       21
<PAGE>
of the Holder after the Reorganization to the end that the provisions of this
Warrant (including adjustments of the Exercise Price and the number and type of
securities purchasable pursuant to the terms of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares deliverable after that event upon the exercise of this Warrant.

                           (B)      REORGANIZATION - CHANGE IN CONTROL;
                                    TERMINATION OF WARRANT

         Upon Reorganization during the Exercise Period, as a result of which
the shareholders of the Company receive cash, stock or other property in
exchange for their Warrant Shares and the holders of the Company's voting equity
securities immediately prior to such Reorganization together own less than a
majority interest of the voting equity securities of the successor corporation
following such Reorganization, the Holder shall be given notice of such proposed
action as provided in Section 7. The Holder may attend the meeting of the
Company's shareholders at which such action is considered and voted upon. If the
proposed action is approved according to applicable law by the shareholders of
all corporations or other entities that are parties to the proposed action, the
Holder shall be so notified in writing by the Company by registered or certified
mail at least 10 days before its effectiveness. Notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall become
forever null and void to the extent not exercised on or before 5:00 p.m.,
Mountain time, on the seventh day following the delivery of such notice;
provided that if the Reorganization does not close, this Warrant shall not
terminate and the Exercise Period shall continue as stated in this Warrant.

                  4.2      Adjustments for Stock Splits, Dividends.

         If the Company shall subdivide the number of outstanding shares of the
same class as the Warrant Shares into a greater number of shares or if the
Company shall pay dividends in cash or in shares of capital stock of the Company
to holders of the same class as the Warrant Shares, then the Exercise Price in
effect before such dividend or subdivision shall be proportionately reduced and
the number of Warrant Shares at that time issuable pursuant to the exercise of
this Warrant shall be proportionately increased; and, conversely, if the Company
shall contract the number of outstanding shares of the same class as the Warrant
Shares by combining such shares into a smaller number of shares, then the
Exercise Price in effect before such combination shall be proportionately
increased and the number Warrant Shares at that time issuable pursuant to the
exercise or conversion of this Warrant shall be proportionately decreased. Each
adjustment in the number of Warrant Shares issuable shall be to the nearest
whole share.

                  4.3      Certificate as to Adjustments.

         In the case of any adjustment in the Exercise Price or number and type
of securities issuable upon exercise of this Warrant, the Company will promptly
give written notice to the Holder in the form of a certificate, certified and
confirmed by an officer of the Company, setting forth the adjustment in
reasonable detail.


                                       22
<PAGE>
         5.       SECURITIES LAWS RESTRICTIONS; LEGEND ON WARRANT SHARES

                  5.1 Securities Laws Restrictions. This Warrant and the
securities issuable upon exercise have not been registered under the Securities
Act of 1933, as amended, or applicable state securities laws, and no interest
may be sold, distributed, assigned, offered, pledged or otherwise transferred
unless (a) there is an effective registration statement under such Act and
applicable state securities laws covering any such transaction involving said
securities, (b) the Company receives an opinion of legal counsel for the holder
of the securities satisfactory to the Company stating that such transaction is
exempt from registration, or (c) the Company otherwise satisfies itself that
such transaction is exempt from registration.

                  5.2 Legend. A legend setting forth or referring to the above
restrictions shall be placed on this Warrant, any replacement and any
certificate representing the Warrant Shares, and a stop transfer order shall be
placed on the books of the Company and with any transfer agent until such
securities may be legally sold or otherwise transferred. If the Warrant Shares
become transferable without restriction, (i) the Warrant will be reissued
without any legend, and (ii) the Company will not make any notation on its
records or give instructions to any transfer agent of the Company to restrict
transfers of the Warrant.


         6.       EXCHANGE OF WARRANT; LOST OR DAMAGED WARRANT CERTIFICATE

         This Warrant is exchangeable upon its surrender by the Holder at the
office of the Company. Upon receipt by the Company of satisfactory evidence of
the loss, theft, destruction or damage of this Warrant and either (in the case
of loss, theft or destruction) reasonable indemnification or (in the case of
damage) the surrender of this Warrant for cancellation, the Company will execute
and deliver to the Holder, without charge, but with adequate indemnity, a new
Warrant of like denomination.


         7.       NOTICES OF RECORD DATE, ETC.

         In the event of:

                           (a) any taking by the Company of a record of the
holders of Warrant Shares for the purpose of determining the holders who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right;

                           (b) any reorganization of the Company, any
reclassification or recapitalization of the capital structure of the Company, or
any transfer of all or substantially all the assets of the Company to, or
consolidation or merger of, the Company with or into any person;

                           (c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

                                       23
<PAGE>
                           (d) any proposed issue or grant by the Company to the
holders of Warrant Shares of any shares of any class or any other securities, or
any right or warrant to subscribe for, purchase or otherwise acquire any units
of any class or any other securities;

                           (e) the initial public offering of the Company's
shares; or

                           (f) any other event as to which the Company is
required to give notice to any holders of Warrant Shares,

then and in each such event the Company will mail to the Holder a notice
specifying (i) the date on which any such record is to be taken, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as to which the holders of record of
Warrant Shares or securities into which the Warrant Shares are convertible shall
be entitled to exchange their shares for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, (iii)
the amount and character of any stock or other securities, or rights or
warrants, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made, and (iv) in reasonable detail, the facts, including
the proposed date, concerning any other such event.


         8.       INVESTMENT INTENT

         By accepting this Warrant, the Holder represents that it is acquiring
this Warrant for investment and not with a view to, or for sale in connection
with, any distribution thereof.


         9.       MISCELLANEOUS

                  9.1      Holder as Owner.

         The Company may deem and treat the holder of record of this Warrant as
the absolute owner for all purposes regardless of any notice to the contrary.

                  9.2      No Shareholder Rights.

         This Warrant shall not entitle the Holder to any voting rights or any
other rights as a shareholder of the Company or to any other rights except the
rights stated herein; and no dividend or interest shall be payable or shall
accrue in respect of this Warrant or the Warrant Shares, until this Warrant is
exercised.

                  9.3      Notices.

         Unless otherwise provided, any notice under this Warrant shall be given
in writing and shall be deemed effectively given (a) upon personal delivery to
the party to be notified, (b) upon

                                       24
<PAGE>
confirmation of receipt by fax by the party to be notified, (c) one business day
after deposit with a reputable overnight courier, prepaid for overnight delivery
and addressed as set forth in (d), or (d) three days after deposit with the
United States Post Office, postage prepaid, registered or certified with return
receipt requested and addressed to the party to be notified at the address
indicated below, or at such other address as such party may designate by 5 days
advance written notice to the other party given in the foregoing manner.

         If to the Holder:


         If to the Company:   ImproveNet, Inc.
                              10799 N. 90th Street, Suite 200
                              Scottsdale, Arizona 85260
                              Attn: Chief Executive Officer
                              Fax: 480-346-3000


                  9.4      Amendments and Waivers.

         Any term of this Warrant may be amended and the observance of any term
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of Warrants to purchase a majority of the Warrant Shares. Any
amendment or waiver effected in accordance with this Section 9.4 shall be
binding on each future Holder and the Company.

                  9.5      Governing Law; Jurisdiction; Venue.

         This Warrant shall be governed by and construed under the laws of the
state of Arizona without regard to principles of conflicts of law.

                  9.6      Successors and Assigns; Transfer.

         The terms and conditions of this Warrant shall inure to the benefit of
and be binding on the respective successors and assigns of the parties.

                  9.7      Further Assurances. The Company shall not, by
amendment of its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but shall at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may be
necessary or appropriate in order to protect the exercise rights of the Holder
against impairment. Each of the parties shall execute such documents and perform
such further acts (including, without limitation, obtaining any consents,
exemptions, authorizations or other actions by, or giving any notices to, or
making any filings with, any governmental authority or any other person, and
otherwise fulfilling, or causing

                                       25
<PAGE>
the fulfillment of, the various obligations made herein, as may be reasonably
required or desirable to carry out or to perform the provisions of this Warrant
and to consummate and make effective as promptly as possible the transactions
contemplated by this Warrant.

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                                IMPROVENET, INC.


                                                By:
                                                    ----------------------------
                                                Name: Jeffrey I. Rassas
                                                Title: CEO



































                                       26
<PAGE>
                                    EXHIBIT A
                               NOTICE OF EXERCISE


To: ImproveNet, Inc.

         The undersigned hereby irrevocably elects to purchase ___________
shares of Common Stock of ImproveNet, Inc. (the "COMPANY"), issuable upon the
exercise of the attached Warrant and requests that certificates for such shares
be issued in the name of and delivered to the address of the undersigned stated
below and, if said number of shares shall not be all the shares that may be
purchased pursuant to the attached Warrant, that a new Warrant evidencing the
right to purchase the balance of such shares be registered in the name of, and
delivered to, the undersigned at the address stated below. The undersigned
agrees with and represents to the Company that said shares are acquired for the
account of the undersigned for investment and not with a view to, or for sale in
connection with, any distribution or public offering within the meaning of the
Securities Act of 1933, as amended.

         Payment enclosed in the amount of $______________.

         Dated: ________________


         Name of Holder of Warrant: ____________________________________________
                                                 (Please print)

         Address: ______________________________________________________________


         Signature:_____________________________________________________________

<PAGE>
                                   ASSIGNMENT

         For value received the undersigned sells, assigns and transfers to the
transferee named below the attached Warrant, together with all right, title and
interest, and does irrevocably constitute and appoint the transfer agent of
ImproveNet, Inc. (the "COMPANY") as the undersigned's attorney, to transfer said
Warrant on the books of the Company, with full power of substitution in the
premises.



         Dated: __________________________


         Name of Holder of Warrant: ____________________________________________
                                                  (Please print)

         Address: ______________________________________________________________


         Signature of Holder of Warrant: _______________________________________


         Name of Transferee:____________________________________________________
                                                  (Please print)

         Address of Transferee: ________________________________________________


         Signature of Transferee: ______________________________________________

<PAGE>
                                    EXHIBIT B

                                  RISK FACTORS

AN INVESTMENT IN THE NEW ISSUE SHARES ISSUED BY IMPROVENET, INC. (THE "COMPANY")
OFFERED HEREBY AND THE TRANSFER SHARES SOLD BY THE AFFILIATE
SHAREHOLDERS(COLLECTIVELY THE "SHARES" IN THIS EXHIBIT B) INVOLVE A HIGH DEGREE
OF RISK AND UNCERTAINTY, INCLUDING, BUT NOT LIMITED TO, THE RISK FACTORS SET
FORTH BELOW. IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS MEMORANDUM
AND INCORPORATED HEREIN BY REFERENCE, PROSPECTIVE INVESTORS SHOULD CAREFULLY
CONSIDER THE FOLLOWING INFORMATION IN EVALUATING THE COMPANY AND ITS BUSINESS
BEFORE PURCHASING ANY OF THE UNITS OR SHARES OFFERED HEREBY.

RISKS OF THE COMPANY

SEE RISK FACTORS SET FORTH IN THE COMPANY'S PUBLIC FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-QSB AND FORM 10-KSB.

RISKS OF THE SHARES

THIS OFFERING IS A BEST EFFORTS OFFERING. The Shares are being offered on a
"best efforts" basis. Accordingly there can be no assurances that many Shares,
or any Shares will be sold. There can be no assurances that the proceeds derived
will be sufficient to provide working capital to sustain let alone grow
operations or to improve implementation of the Company's plans. No assurances
can be made that the Company will ever be able to raise or internally generate
sufficient funds to maintain its operations.

THE SHARES ARE ILLIQUID AND OUR COMMON STOCK AT THIS TIME LACKS A LIQUID PUBLIC
TRADING MARKET. The Shares are publicly tradable but the market is highly
illiquid. The market trading activity of the Company's common stock may also
cease, so no assurances can be given or made that an investor in the Shares will
ever be able to sell the Shares or recoup any of the investment made in the
Shares.

FURTHER DILUTION OF INVESTOR HOLDINGS IS POSSIBLE. Investors are subject to
further dilution if the Company sells additional shares of common stock in the
future, or grants additional options or warrants to acquire any such stock. The
Shares are not protected by anti-dilution provisions. The Company is authorized
to issue up to 100,000,000 shares of its common stock. Future issuance could
have a seriously dilutive effect on the convertibility of the Shares. The
Company may issue some of its common stock for services in the future, further
diluting the book value of its common stock.

THE SHARES OF COMMON STOCK HAVE LIMITED TRANSFERABILITY AND A RISK OF LOSS.
Transferability of the Shares is restricted and subject to applicable federal
and state securities laws. The Shares therefore must be considered long-term
investments subject to a complete risk of loss of any investment made in the
Shares.
<PAGE>

FORWARD-LOOKING STATEMENTS. The future plans, including prospective initiatives
as provided to the Subscribers are forward-looking statements based on the
Company's current views and various assumptions and predictions that involve
inherent risks and uncertainties. There can be no assurance that the plans will
in fact be executed as presented if at all, or that the projections or their
underlying assumptions will prove to be accurate and the Subscribers are
cautioned not to place undue reliance on the future plans, or any other
forward-looking statements made by the Company. The Company's actual results may
differ materially from such statements. The Company undertakes no obligation to
update, review or revise any forward-looking statements to reflect any change in
the Company's expectations or any change in events, conditions, circumstances or
assumptions on which any such statements are based.


<PAGE>
                      EXHIBIT C: FORM OF LOCK-UP AGREEMENT

                                LOCK-UP AGREEMENT

                                 June ____, 2004

ImproveNet, Inc.
10799 N. 90th Street, Suite 200
Scottsdale, Arizona 85260

Kinderhook Partners, LP
1 Executive Drive, Suite 160
Fort Lee, NJ 07024-3304

Dr. Vinodray R. Shah
50 Hilltop Road
Longmeadow, MA 01106

DKCP 5, L.P.
C/o Dan Kaufman
135 W. 70th Street, Apt. PH-BC
New York, NY 10023

Timothy M. Riley
265 East 66th Street, Apt. 17E
New York, NY 10021


Gentlemen:

         The undersigned understands that ImproveNet, Inc., a Delaware
corporation ("IMPV") has entered into a Common Stock Subscription Agreement
dated June 14, 2004 (the "Subscription Agreement") with Kinderhook Partners, LP,
a Delaware limited partnership ("Kinderhook"), Dr. Vinodray R. Shah ("Shah"),
DKCP 5, L.P. ("Kaufman") and Timothy M. Riley ("Riley" and collectively, with
Kinderhook, Shah and Kaufman, the "Investors")) pursuant to which the Investors
will acquire shares of Common Stock of IMPV and warrants to purchase shares of
Common Stock of IMPV on terms and conditions as set forth in the Subscription
Agreement (the "Subscription").

         In consideration of the Investors entering into the Subscription
Agreement and consummating the contemplated Subscription, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
undersigned hereby confirms, covenants and agrees for the benefit of IMPV and
the Investors that for a period of two (2) years from the effective date of the
Registration Statement (as defined in the Subscription Agreement), the
undersigned will not offer, sell, contract to sell, grant any option to sell,
transfer or otherwise dispose of, directly or indirectly, shares of Common Stock
of IMPV ("IMPV Common Stock") in an amount in excess of 1,000,000 shares of IMPV
Common Stock ; provided, however, that
<PAGE>

the amount of IMPV Common Stock not subject to the foregoing lock-up
restrictions described herein shall be increased to 2,000,000 shares of IMPV
Common Stock in the event the undersigned is terminated without cause from
employment with IMPV. Any disposition of shares of Common Stock of IMPV
permitted under this letter agreement will be subject to the limitations imposed
pursuant to Rule 144 of the Securities Act of 1933, as amended, as applicable.

         The undersigned acknowledges and agrees that the covenants and
agreements set forth herein supersede, to the extent of the subject matter
hereof, the provisions of any agreements or instruments defining the rights of
the undersigned with respect to any shares of IMPV Common Stock beneficially
owned or controlled by the undersigned.

                                             Very truly yours,



                                             _________________________________

                                             Entity Name:_____________________

                                             Title: __________________________

                                             Address: ________________________

                                                      ________________________




                                             _________________________________

                                             Individual Name: ________________

                                             Address: ________________________

                                             _________________________________

<PAGE>
                                   Schedule 1

                           ImproveNet New Issue Shares


Subscriber                 Purchase Price        # of Shares           Warrants
----------                 --------------        -----------           --------

Kinderhook Partners, LP    $   847,875.00          8,478,750          6,460,000

Dr. Vinodray R. Shah       $    27,125.00            271,250            206,667

DKCP 5, LP                 $   131,250.00          1,312,500          1,000,000

Tim Riley                  $    43,750.00            437,500            333,333

Total                      $ 1,050,000.00         10,500,000          8,000,000







                    Affiliate Shareholders Transferred Shares
       (Figures are for each of the three selling Affiliate Shareholders)


Subscriber                 Purchase Price        # of Shares
----------                 --------------        -----------

Kinderhook Partners, LP    $    40,375.00            403,750

Dr. Vinodray R. Shah       $     1,291.67             12,917

DKCP 5, LP                 $     6,250.00             62,500

Tim Riley                  $     2,083.33             20,833

Total for Each Selling
Affiliate Shareholder      $    50,000.00            500,000