Exhibit 10.1


    
      

    

     

    Exhibit
      10.1

     

    SERIES
      A CONVERTIBLE PREFERRED STOCK PURCHASE

     

    AGREEMENT

     

     

     

    Dated
      as of March 3, 2006

     

     

     

    among

     

     

     

    IMPART
      MEDIA GROUP, INC.

     

     

     

    and

     

     

     

    THE
      PURCHASERS LISTED ON EXHIBIT A

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      


      
        	 	 	
                PAGE

              
	 	 	 
	
                ARTICLE
                  I

              	
                PURCHASE
                  AND SALE OF PREFERRED STOCK

              	
                1

              
	 	 	 
	
                Section
                  1.1

              	
                Purchase
                  and Sale of Stock

              	
                1

              
	
                Section
                  1.2

              	
                The
                  Conversion Shares

              	
                1

              
	
                Section
                  1.3

              	
                Purchase
                  Price and Closing

              	
                2

              
	
                Section
                  1.4

              	
                Warrants

              	
                2

              
	 	 	 
	
                ARTICLE
                  II

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                2

              
	 	 	 
	
                Section
                  2.1

              	
                Representations
                  and Warranties of the Company

              	
                2

              
	
                Section
                  2.2

              	
                Representations,
                  Warranties and Covenants of the Purchasers

              	
                14

              
	 	 	 
	
                ARTICLE
                  III

              	
                COVENANTS

              	
                16

              
	 	 	 
	
                Section
                  3.1

              	
                Securities
                  Compliance

              	
                16

              
	
                Section
                  3.2

              	
                Registration
                  and Listing

              	
                17

              
	
                Section
                  3.3

              	
                Inspection
                  Rights

              	
                17

              
	
                Section
                  3.4

              	
                Compliance
                  with Laws

              	
                17

              
	
                Section
                  3.5

              	
                Keeping
                  of Records and Books of Account

              	
                17

              
	
                Section
                  3.6

              	
                Reporting
                  Requirements

              	
                17

              
	
                Section
                  3.7

              	
                Amendments

              	
                18

              
	
                Section
                  3.8

              	
                Other
                  Agreements; Amendments

              	
                18

              
	
                Section
                  3.9

              	
                Intentionally
                  Omitted.

              	
                18

              
	
                Section
                  3.10

              	
                Status
                  of Dividends

              	
                18

              
	
                Section
                  3.11

              	
                Use
                  of Proceeds

              	
                19

              
	
                Section
                  3.12

              	
                Reservation
                  of Shares

              	
                19

              
	
                Section
                  3.13

              	
                Transfer
                  Agent Instructions

              	
                19

              
	
                Section
                  3.14

              	
                Disposition
                  of Assets

              	
                20

              
	
                Section
                  3.15

              	
                Reporting
                  Status

              	
                20

              
	
                Section
                  3.16

              	
                Disclosure
                  of Transaction

              	
                21

              
	
                Section
                  3.17

              	
                Disclosure
                  of Material Information

              	
                21

              
	
                Section
                  3.18

              	
                Pledge
                  of Securities

              	
                21

              
	
                Section
                  3.19

              	
                Form
                  SB-2 Eligibility

              	
                21

              
	
                Section
                  3.20

              	
                Restrictions
                  on Certain Issuances of Securities

              	
                22

              
	
                Section
                  3.21

              	
                Future
                  Financings; Right of First Offer and Refusal.

              	
                22

              
	 	 	 
	
                ARTICLE
                  IV

              	
                CONDITIONS

              	
                24

              
	 	 	 
	
                Section
                  4.1

              	
                Conditions
                  Precedent to the Obligation of the Company to Sell the
                  Shares

              	
                24

              
	
                Section
                  4.2

              	
                Conditions
                  Precedent to the Obligation of the Purchasers to Purchase the
                  Shares

              	
                24

              


      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      
        	
                ARTICLE
                  V

              	
                STOCK
                  CERTIFICATE LEGEND

              	
                26

              
	 	 	 
	
                Section
                  5.1

              	
                Legend

              	
                26

              
	 	 	 
	
                ARTICLE
                  VI

              	
                INDEMNIFICATION

              	
                27

              
	 	 	 
	
                Section
                  6.1

              	
                General
                  Indemnity

              	
                27

              
	
                Section
                  6.2

              	
                Indemnification
                  Procedure

              	
                28

              
	 	 	 
	
                ARTICLE
                  VII

              	
                MISCELLANEOUS

              	
                29

              
	 	 	 
	
                Section
                  7.1

              	
                Fees
                  and Expenses

              	
                29

              
	
                Section
                  7.2

              	
                Specific
                  Enforcement, Consent to Jurisdiction.

              	
                29

              
	
                Section
                  7.3

              	
                Entire
                  Agreement; Amendment

              	
                30

              
	
                Section
                  7.4

              	
                Notices

              	
                30

              
	
                Section
                  7.5

              	
                Waivers

              	
                31

              
	
                Section
                  7.6

              	
                Headings

              	
                31

              
	
                Section
                  7.7

              	
                Successors
                  and Assigns

              	
                31

              
	
                Section
                  7.8

              	
                No
                  Third Party Beneficiaries

              	
                31

              
	
                Section
                  7.9

              	
                Governing
                  Law

              	
                31

              
	
                Section
                  7.10

              	
                Survival

              	
                32

              
	
                Section
                  7.11

              	
                Counterparts

              	
                32

              
	
                Section
                  7.12

              	
                Publicity

              	
                32

              
	
                Section
                  7.13

              	
                Severability

              	
                32

              
	
                Section
                  7.14

              	
                Further
                  Assurances

              	
                32

              


      

    

     

    
      
        
        

      

      
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    SERIES
      A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT 

     

    This
      SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is
      dated as of March 3, 2006 by and among Impart Media Group, Inc., a Nevada
      corporation (the “Company”), and each of the Purchasers of shares of Series A
      Convertible Preferred Stock of the Company whose names are set forth on
Exhibit
      A
      hereto
      (individually, a “Purchaser” and collectively, the “Purchasers”).

    


    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF PREFERRED SHARES

    


    Section
      1.1    Purchase
      and Sale of Stock.
      Upon
      the following terms and conditions, the Company shall issue and sell to the
      Purchasers and each of the Purchasers shall purchase from the Company, the
      number of shares of the Company’s Series A Convertible Preferred Stock, par
      value $.001 per share (the “Preferred Shares”), set forth opposite such
      Purchaser’s name on Exhibit
      A
      hereto
      and Warrants (as defined in Section 1.4 hereof) to purchase the number of shares
      of the Company’s common stock, par value $.001 per share (the “Common Stock”)
      set forth opposite such Purchaser’s name on Exhibit
      A
      hereto.
      The aggregate purchase price for the Preferred Shares and the Warrants (as
      defined in Section 1.4 hereof) shall be $4,500,000. The designation, rights,
      preferences and other terms and provisions of the Series A Convertible Preferred
      Stock are as set forth in the Certificate of Designation of the Relative Rights
      and Preferences of the Series A Convertible Preferred Stock attached hereto
      as
Exhibit
      B
      (the
“Certificate of Designation”) which shall be filed prior to Closing. The Company
      and the Purchasers are executing and delivering this Agreement in accordance
      with and in reliance upon (i) the exemption from registration of the Securities
      under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”)
      afforded by Rule 506 of Regulation D (“Regulation D”) as promulgated by the
      United States Securities and Exchange Commission (the “Commission”), or by
      Section 4(2) of the Securities Act, and (ii) all applicable state securities
      laws and regulations in the several states where Preferred Shares are sold
      by
      the Company.

     

    Section
      1.2    The
      Conversion Shares.
      The
      Company has authorized and has reserved and covenants to continue to reserve,
      free of preemptive rights and other similar contractual rights of stockholders,
      a number of shares of Common Stock equal to one hundred ten percent (110%)
      of
      the number of shares of Common Stock as shall from time to time be sufficient
      to
      effect the conversion of all of the Preferred Shares and exercise of the
      Warrants then outstanding. The Company has authorized and has reserved and
      covenants to continue to reserve, free of preemptive rights and other similar
      contractual rights of stockholders, such number of shares of Preferred Stock
      as
      shall from time to time be sufficient to effect the sale and issuance of the
      Preferred Shares. Any shares of Common Stock issuable upon conversion of the
      Preferred Shares and exercise of the Warrants (and such shares when issued)
      are
      herein referred to as the “Conversion Shares” and the "Warrant Shares",
      respectively. The Preferred Shares, the Conversion Shares and the Warrant Shares
      are sometimes collectively referred to as the “Shares”-.

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    Section
      1.3    Purchase
      Price and Closing.
      The
      Company agrees to issue and sell to the Purchasers and, in consideration of
      and
      in express reliance upon the representations, warranties, covenants, terms
      and
      conditions of this Agreement, the Purchasers, severally but not jointly, agree
      to purchase that number of Preferred Shares and Warrants set forth opposite
      their respective names on Exhibit
      A.
      The
      aggregate purchase price of the Preferred Shares and Warrants being acquired
      by
      each Purchaser is set forth opposite such Purchaser’s name on Exhibit
      A
      (for
      each such Purchaser, the “Purchase Price” and collectively referred to as the
“Purchase Prices”). The closing of the purchase and sale of the Preferred Shares
      and Warrants shall take place at the offices of Kramer Levin Naftalis &
Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036 (the
“Closing”) at 1:00 p.m. (eastern time) or at such other time and place as the
      Purchasers and the Company may agree upon, upon the satisfaction of each of
      the
      conditions set forth in Article IV hereof (the “Closing Date”). Subject to the
      terms and conditions of this Agreement, at the Closing, the Company shall
      deliver or cause to be delivered to each Purchaser (x) a stock certificate
      representing the number of Preferred Shares set forth opposite the name of
      such
      Purchaser on Exhibit
      A
      hereto,
      (y) a Warrant to purchase such number of shares of Common Stock as is set forth
      opposite the name of such Purchaser on Exhibit
      A
      attached
      hereto and (z) any other deliveries as required by Article IV. Funding with
      respect to the Closing shall take place by wire transfer of immediately
      available funds on or prior to the Closing Date.

     

    Section
      1.4    Warrants.
      Upon
      the following terms and conditions, the Purchasers shall be issued Warrants,
      in
      substantially the form attached hereto as Exhibit
      C
      (the
      "Warrants"), to purchase a number of shares of Common Stock equal to one hundred
      percent (100%) of the number of Conversion Shares initially issuable upon
      conversion of such Purchaser’s Preferred Shares purchased, at an exercise price
      per share equal to $1.55 and a term of three (3) years following the Closing
      Date. The number of shares of Common Stock issuable upon exercise of the
      Warrants issuable to each Purchaser is set forth opposite such Purchaser’s name
      on Exhibit
      A
      attached
      hereto.

     

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES

    


    Section
      2.1    Representations
      and Warranties of the Company.
      The
      Company hereby makes the following representations and warranties to the
      Purchasers, except as set forth in the Company’s disclosure schedule delivered
      with this Agreement as follows:

     

    (a)    Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Nevada and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. The Company does not have any
      subsidiaries except as set forth in the Company’s Form 10-KSB for the year ended
      December 31, 2004, including the accompanying financial statements (the “Form
      10-KSB”), or in the Company’s Form 10-QSB for the fiscal quarters ended
      September 30, 2005, June 30, 2005 and March 31, 2005 (collectively, the “Form
      10-QSB”), or on Schedule
      2.1(a)
      hereto.
      The Company and each such subsidiary is duly qualified as a foreign corporation
      to do business and is in good standing in every jurisdiction in which the nature
      of the business conducted or property owned by it makes such qualification
      necessary except for any jurisdiction(s) (alone or in the aggregate) in which
      the failure to be so qualified will not have a Material Adverse Effect (as
      defined in Section 2.1(c) hereof) on the Company.

     

    
      
        
          
          

        

        
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    (b)    Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Registration Rights Agreement attached hereto as
      Exhibit
      D
      (the
“Registration Rights Agreement”), the Escrow Agreement by and among the Company,
      the Purchasers and the escrow agent, dated as of the date hereof, substantially
      in the form of Exhibit
      E
      attached
      hereto (the “Escrow Agreement”), the Irrevocable Transfer Agent Instructions (as
      defined in Section 3.13), the Certificate of Designation, and the Warrants
      (collectively, the “Transaction Documents”) and to issue and sell the Shares and
      the Warrants in accordance with the terms hereof. The execution, delivery and
      performance of the Transaction Documents by the Company and the consummation
      by
      it of the transactions contemplated hereby and thereby have been duly and
      validly authorized by all necessary corporate action, and no further consent
      or
      authorization of the Company or its Board of Directors or stockholders is
      required. This Agreement has been duly executed and delivered by the Company.
      The other Transaction Documents will have been duly executed and delivered
      by
      the Company at the Closing. Each of the Transaction Documents constitutes,
      or
      shall constitute when executed and delivered, a valid and binding obligation
      of
      the Company enforceable against the Company in accordance with its terms, except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor’s
      rights and remedies or by other equitable principles of general application.
      

     

    (c)    Capitalization.
      The
      authorized capital stock of the Company and the shares thereof currently issued
      and outstanding as of the date hereof are set forth on Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Company’s Common Stock and Series A
      Convertible Preferred Stock have been duly and validly authorized and issued,
      are fully paid, non-assessable and free and clear of pre-emptive rights, other
      than the rights of first refusal set forth on Schedule
      2.1(c)
      hereto
      which have been duly waived in writing by the holders thereof in connection
      with
      the transactions contemplated by this Agreement and the other Transaction
      Documents. Except as set forth in this Agreement and the Registration Rights
      Agreement and as set forth on Schedule
      2.1(c)
      hereto,
      no shares of Common Stock are entitled to preemptive rights or registration
      rights and there are no outstanding options, warrants, scrip, rights to
      subscribe to, call or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company. Furthermore, except as set forth in this Agreement and the Registration
      Rights Agreement or on Schedule
      2.1(c),
      there
      are no contracts, commitments, understandings, or arrangements by which the
      Company is or may become bound to issue additional shares of the capital stock
      of the Company or options, securities or rights convertible into shares of
      capital stock of the Company. Except for customary transfer restrictions
      contained in agreements entered into by the Company in order to sell restricted
      securities or as set forth on Schedule
      2.1(c)
      hereto,
      the Company is not a party to any agreement granting registration or
      anti-dilution rights to any person with respect to any of its equity or debt
      securities. The Company is not a party to, and it has no knowledge of, any
      agreement restricting the voting or transfer of any shares of the capital stock
      of the Company. Except as set forth on Schedule
      2.1(c)
      hereto,
      the offer and sale of all capital stock, convertible securities, rights,
      warrants, or options of the Company issued prior to the Closing complied with
      all applicable Federal and state securities laws, and no stockholder has a
      right
      of rescission or claim for damages with respect thereto. The Company has
      furnished or made available to the Purchasers true and correct copies of the
      Company’s Articles of Incorporation as in effect on the date hereof (the
“Articles”), and the Company’s Bylaws as in effect on the date hereof (the
“Bylaws”). For the purposes of this Agreement, “Material Adverse Effect” means
      any material adverse effect on the business, operations, properties, prospects,
      or financial condition of the Company and its subsidiaries and/or any condition,
      circumstance, or situation that would prohibit or otherwise materially interfere
      with the ability of the Company to perform any of its obligations under this
      Agreement in any material respect.

     

    
      
        
          
          

        

        
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    (d)    Issuance
      of Shares.
      The
      Preferred Shares and the Warrants to be issued at the Closing have been duly
      authorized by all necessary corporate action and the Preferred Shares, when
      paid
      for or issued in accordance with the terms hereof, shall be validly issued
      and
      outstanding, fully paid and nonassessable and, in the case of the Preferred
      Shares, entitled to the rights and preferences set forth in the Certificate
      of
      Designation. When the Conversion Shares and the Warrant Shares are issued in
      accordance with the terms of the Certificate of Designation and the Warrants,
      respectively, such shares will be duly authorized by all necessary corporate
      action and validly issued and outstanding, fully paid and nonassessable, and
      the
      holders shall be entitled to all rights accorded to a holder of Common Stock.
      Except as described in Schedule
      2.1(d)
      hereto,
      the issuance and sale of the Preferred Shares and the Warrants hereunder will
      not obligate the Company to issue any shares of Common Stock , Preferred Stock
      or other securities to any other Person (other than the Purchasers) and will
      not
      result in the adjustment of the exercise, conversion, exchange or reset price
      of
      any outstanding security of the Company. 

     

    (e)    No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the performance by the Company of its obligations under the Certificate of
      Designation and the consummation by the Company of the transactions contemplated
      herein and therein do not and will not (i) violate any provision of the
      Company’s Articles or Bylaws, (ii) conflict with, or constitute a default (or an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
      license, lease agreement, instrument or obligation to which the Company is
      a
      party or by which it or its properties or assets are bound, (iii) create or
      impose a lien, mortgage, security interest, charge or encumbrance of any nature
      on any property of the Company under any agreement or any commitment to which
      the Company is a party or by which the Company is bound or by which any of
      its
      respective properties or assets are bound, or (iv) result in a violation of
      any
      federal, state, local or foreign statute, rule, regulation, order, judgment
      or
      decree (including Federal and state securities laws and regulations) applicable
      to the Company or any of its subsidiaries or by which any property or asset
      of
      the Company or any of its subsidiaries are bound or affected, except, in all
      cases other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, defaults, terminations, amendments, accelerations, cancellations
      and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect. The business of the Company and its subsidiaries is not being
      conducted in violation of any laws, ordinances or regulations of any
      governmental entity, except for possible violations which singularly or in
      the
      aggregate do not and will not have a Material Adverse Effect. The Company is
      not
      required under Federal, state or local law, rule or regulation to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under the Transaction Documents, or issue and sell the
      Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares
      in
      accordance with the terms hereof or thereof (other than any filings which may
      be
      required to be made by the Company with the Commission or state securities
      administrators subsequent to the Closing, any registration statement which
      may
      be filed pursuant hereto, and the Certificate of Designation); provided
      that,
      for purposes of the representation made in this sentence, the Company is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Purchasers herein.

     

    
      
        
          
          

        

        
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    (f)    Commission
      Documents, Financial Statements.
      The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), and, since October 31,
      2004, the Company has timely filed all reports, schedules, forms, statements
      and
      other documents required to be filed by it with the Commission pursuant to
      the
      reporting requirements of the Exchange Act, including material filed pursuant
      to
      Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including
      filings incorporated by reference therein being referred to herein as the
“Commission Documents”). The Company has delivered or made available to each of
      the Purchasers true and complete copies of the Commission Documents filed with
      the Commission since April 30, 2004. The Company has not provided to the
      Purchasers any material non-public information or other information which,
      according to applicable law, rule or regulation, was required to have been
      disclosed publicly by the Company but which has not been so disclosed, other
      than with respect to the transactions contemplated by this Agreement and the
      information, if any, disclosed on Schedule
      2.1(i)
      hereto.
      At the times of their respective filings, the Form 10-KSB and the Form 10-QSB
      complied in all material respects with the requirements of the Exchange Act
      and
      the rules and regulations of the Commission promulgated thereunder and other
      federal, state and local laws, rules and regulations applicable to such
      documents, and, as of their respective dates, none of the Form 10-KSB and the
      Form 10-QSB contained 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 Documents comply as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the
      Commission or other applicable rules and regulations with respect thereto.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles (“GAAP”) applied on a consistent basis
      during the periods involved (except (i) as may be otherwise indicated in such
      financial statements or the notes thereto or (ii) in the case of unaudited
      interim statements, to the extent they may not include footnotes or may be
      condensed or summary statements), and fairly present in all material respects
      the financial position of the Company and its subsidiaries as of the dates
      thereof and the results of operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments).

     

    
      
        
          
          

        

        
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    (g)    Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership. For the purposes of this Agreement, “subsidiary” shall mean any
      corporation or other entity of which at least a majority of the securities
      or
      other ownership interest having ordinary voting power (absolutely or
      contingently) for the election of directors or other persons performing similar
      functions are at the time owned directly or indirectly by the Company and/or
      any
      of its other subsidiaries. All of the outstanding shares of capital stock of
      each subsidiary have been duly authorized and validly issued, and are fully
      paid
      and nonassessable. There are no outstanding preemptive, conversion or other
      rights, options, warrants or agreements granted or issued by or binding upon
      any
      subsidiary for the purchase or acquisition of any shares of capital stock of
      any
      subsidiary or any other securities convertible into, exchangeable for or
      evidencing the rights to subscribe for any shares of such capital stock. Neither
      the Company nor any subsidiary is subject to any obligation (contingent or
      otherwise) to repurchase or otherwise acquire or retire any shares of the
      capital stock of any subsidiary or any convertible securities, rights, warrants
      or options of the type described in the preceding sentence. Neither the Company
      nor any subsidiary is party to, nor has any knowledge of, any agreement
      restricting the voting or transfer of any shares of the capital stock of any
      subsidiary.

     

    (h)    No
      Material Adverse Change.
      Except
      as disclosed in any Commission Document, since December 31, 2004, the Company
      has not experienced or suffered any Material Adverse Effect.

     

    (i)    
No
      Undisclosed Liabilities.
      Except
      as set forth on Schedule
      2.1(i)
      hereto
      or as disclosed in any Commission Document, neither the Company nor any of
      its
      subsidiaries has any liabilities, obligations, claims or losses (whether
      liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
      or otherwise) other than those incurred in the ordinary course of the Company’s
      or its subsidiaries respective businesses since December 31, 2004 and which,
      individually or in the aggregate, do not or would not have a Material Adverse
      Effect on the Company or its subsidiaries.

     

    (j)    
No
      Undisclosed Events or Circumstances.
      Except
      as set forth on Schedule
      2.1(j)
      hereto
      or as disclosed in any Commission Document, no event or circumstance has
      occurred or exists with respect to the Company or its subsidiaries or their
      respective businesses, properties, prospects, operations or financial condition,
      which, under applicable law, rule or regulation, requires public disclosure
      or
      announcement by the Company but which has not been so publicly announced or
      disclosed.

     

    (k)    Indebtedness.
      The
      Form 10-KSB, Form 10-QSB or Schedule
      2.1(k)
      hereto
      sets forth as of a recent date all outstanding secured and unsecured
      Indebtedness of the Company or any subsidiary, or for which the Company or
      any
      subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess
      of
      $100,000 (other than trade accounts payable incurred in the ordinary course
      of
      business), (b) all guaranties, endorsements and other contingent obligations
      in
      respect of Indebtedness of others, whether or not the same are or should be
      reflected in the Company’s balance sheet (or the notes thereto), except
      guaranties by endorsement of negotiable instruments for deposit or collection
      or
      similar transactions in the ordinary course of business; and (c) the present
      value of any lease payments in excess of $25,000 due under leases required
      to be
      capitalized in accordance with GAAP. Except as set forth on Schedule
      2.1(k),
      neither
      the Company nor any subsidiary is in default with respect to any
      Indebtedness.

     

    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

    


    (l)    
Title
      to Assets.
      Each of
      the Company and the subsidiaries has good and marketable title to all of its
      real and personal property reflected in the Form 10-KSB, free and clear of
      any
      mortgages, pledges, charges, liens, security interests or other encumbrances,
      except for those disclosed in the Form 10-KSB, Form 10-QSB or on Schedule
      2.1(l)
      hereto
      or such that, individually or in the aggregate, do not cause a Material Adverse
      Effect. All said leases of the Company and each of its subsidiaries are valid
      and subsisting and in full force and effect.

     

    (m)    Actions
      Pending.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or any other proceeding pending or, to the knowledge
      of
      the Company, threatened against the Company or any subsidiary which questions
      the validity of this Agreement or any of the other Transaction Documents or
      the
      transactions contemplated hereby or thereby or any action taken or to be taken
      pursuant hereto or thereto. Except as set forth in the Form 10-KSB, Form 10-QSB
      or on Schedule
      2.1(m)
      hereto,
      there is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or any other proceeding pending or, to the knowledge
      of
      the Company, threatened, against or involving the Company, any subsidiary or
      any
      of their respective properties or assets. Except as set forth in the Form
      10-KSB, Form 10-QSB or Schedule
      2.1(m)
      hereto,
      there are no outstanding orders, judgments, injunctions, awards or decrees
      of
      any court, arbitrator or governmental or regulatory body against the Company
      or
      any subsidiary or any officers or directors of the Company or subsidiary in
      their capacities as such.

     

    (n)    Compliance
      with Law.
      The
      business of the Company and the subsidiaries has been and is presently being
      conducted in accordance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances, except as set forth in
      the
      Form 10-KSB, Form 10-QSB, or such that, individually or in the aggregate, do
      not
      cause a Material Adverse Effect. The Company and each of its subsidiaries have
      all franchises, permits, licenses, consents and other governmental or regulatory
      authorizations and approvals necessary for the conduct of its business as now
      being conducted by it unless the failure to possess such franchises, permits,
      licenses, consents and other governmental or regulatory authorizations and
      approvals, individually or in the aggregate, could not reasonably be expected
      to
      have a Material Adverse Effect.

     

    (o)    Taxes.
      The
      Company and each of the subsidiaries has accurately prepared and filed all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the subsidiaries for all current
      taxes and other charges to which the Company or any subsidiary is subject and
      which are not currently due and payable. None of the federal income tax returns
      of the Company or any subsidiary have been audited by the Internal Revenue
      Service. The Company has no knowledge of any additional assessments, adjustments
      or contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any subsidiary for any
      period, nor of any basis for any such assessment, adjustment or
      contingency.

     

    (p)    Certain
      Fees.
      Except
      as set forth in this Agreement or on Schedule
      2.1(p)
      hereto,
      no brokers, finders or financial advisory fees or commissions will be payable
      by
      the Company or any subsidiary or any Purchaser with respect to the transactions
      contemplated by this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    (q)    Disclosure.
      Neither
      this Agreement or the Schedules hereto nor any other documents, certificates
      or
      instruments furnished to the Purchasers by or on behalf of the Company or any
      subsidiary in connection with the transactions contemplated by this Agreement
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, in the light
      of the circumstances under which they were made herein or therein, not
      misleading.

     

    (r)    Operation
      of Business.
      The
      Company and each of the subsidiaries owns or possesses all patents, trademarks,
      domain names (whether or not registered) and any patentable improvements or
      copyrightable derivative works thereof, websites and intellectual property
      rights relating thereto, service marks, trade names, copyrights, licenses and
      authorizations as set forth in the Commission Documents and on Schedule
      2.1(r)
      hereto,
      and all rights with respect to the foregoing, which are necessary for the
      conduct of its business as now conducted without any conflict with the rights
      of
      others.

     

    (s)    Environmental
      Compliance.
      The
      Company and each of its subsidiaries have obtained all material approvals,
      authorization, certificates, consents, licenses, orders and permits or other
      similar authorizations of all governmental authorities, or from any other
      person, that are required under any Environmental Laws. The Form 10-KSB or
      Form
      10-QSB describes all material permits, licenses and other authorizations issued
      under any Environmental Laws to the Company or its subsidiaries. “Environmental
      Laws” shall mean all applicable laws relating to the protection of the
      environment including, without limitation, all requirements pertaining to
      reporting, licensing, permitting, controlling, investigating or remediating
      emissions, discharges, releases or threatened releases of hazardous substances,
      chemical substances, pollutants, contaminants or toxic substances, materials
      or
      wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
      groundwater or land, or relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of hazardous
      substances, chemical substances, pollutants, contaminants or toxic substances,
      material or wastes, whether solid, liquid or gaseous in nature. The Company
      has
      all necessary governmental approvals required under all Environmental Laws
      and
      used in its business or in the business of any of its subsidiaries. The Company
      and each of its subsidiaries are also in compliance with all other limitations,
      restrictions, conditions, standards, requirements, schedules and timetables
      required or imposed under all Environmental Laws. Except for such instances
      as
      would not individually or in the aggregate have a Material Adverse Effect,
      there
      are no past or present events, conditions, circumstances, incidents, actions
      or
      omissions relating to or in any way affecting the Company or its subsidiaries
      that violate or may violate any Environmental Law after the Closing Date or
      that
      may give rise to any environmental liability, or otherwise form the basis of
      any
      claim, action, demand, suit, proceeding, hearing, study or investigation (i)
      under any Environmental Law, or (ii) based on or related to the manufacture,
      processing, distribution, use, treatment, storage (including without limitation
      underground storage tanks), disposal, transport or handling, or the emission,
      discharge, release or threatened release of any hazardous substance.


     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    (t)    Books
      and Record Internal Accounting Controls.
      The
      books and records of the Company and its subsidiaries accurately reflect in
      all
      material respects the information relating to the business of the Company and
      the subsidiaries, the location and collection of their assets, and the nature
      of
      all transactions giving rise to the obligations or accounts receivable of the
      Company or any subsidiary. The Company and each of its subsidiaries maintain
      a
      system of internal accounting controls sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with management’s
      general or specific authorizations, (ii) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with GAAP and to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate actions is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
      designed such disclosure controls and procedures to ensure that material
      information relating to the Company is made known to the certifying officers
      by
      others within those entities, particularly during the period in which the
      Company's most recently filed period report under the Exchange Act, as the
      case
      may be, is being prepared. The Company's certifying officers have evaluated
      the
      effectiveness of the Company's disclosure controls and procedures as of the
      end
      of the most recent periodic reporting period under the Exchange Act (such date,
      the "Evaluation Date").  The Company presented in its most recently filed
      periodic report under the Exchange Act the conclusions of the certifying
      officers about the effectiveness of the disclosure controls and procedures
      based
      on their evaluations as of the Evaluation Date.  Since the Evaluation Date,
      except with respect to the remediation of the material weakness in internal
      control over financial reporting and the ineffectiveness of disclosure controls
      and procedures as described in the Commission Documents, there have been no
      significant changes in the Company's internal control over financial reporting
      (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) or,
      to
      the Company's knowledge, in other factors that could significantly affect the
      Company's internal control over financial reporting.

     

    (u)    Material
      Agreements.
      Except
      as set forth in the Commission Documents or on Schedule
      2.1(u)
      hereto,
      neither the Company nor any subsidiary is a party to any written or oral
      contract, instrument, agreement, commitment, obligation, plan or arrangement,
      a
      copy of which would be required to be filed with the Commission as an exhibit
      to
      a registration statement on Form S-3 or applicable form (collectively, “Material
      Agreements”) if the Company or any subsidiary were registering securities under
      the Securities Act. Except as set forth on Schedule
      2.1(u)
      or in
      the Commission Documents, the Company and each of its subsidiaries has in all
      material respects performed all the obligations required to be performed by
      them
      to date under the foregoing agreements, have received no notice of default
      and
      are not in default under any Material Agreement now in effect, the result of
      which could cause a Material Adverse Effect. All Material Agreements are in
      full
      force and effect on the date hereof and except as disclosed on Schedule
      2.1(u)
      or set
      forth in the Commission Documents, the Company has not received any notice
      of
      the intention of any party to terminate any Material Agreement. Except as set
      forth on Schedule
      2.1(u)
      or in
      the Commission Documents, no written or oral contract, instrument, agreement,
      commitment, obligation, plan or arrangement of the Company or of any subsidiary
      limits or shall limit the payment of dividends on the Company’s Preferred
      Shares, other Preferred Stock, if any, or its Common Stock.

     

    (v)    Transactions
      with Affiliates.
      Except
      as set forth in the Commission Documents or on Schedule
      2.1(v)
      hereto,
      there are no loans, leases, agreements, contracts, royalty agreements,
      management contracts or arrangements or other continuing transactions between
      (a) the Company or any subsidiary on the one hand, and (b) on the other hand,
      any officer, employee, consultant or director of the Company, or any of its
      subsidiaries, or any person owning any capital stock of the Company or any
      subsidiary or any member of the immediate family of such officer, employee,
      consultant, director or stockholder or any corporation or other entity
      controlled by such officer, employee, consultant, director or stockholder,
      or a
      member of the immediate family of such officer, employee, consultant, director
      or stockholder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (w)    Securities
      Act of 1933.
      Based
      in material part upon the representations herein of the Purchasers, the Company
      has complied and will comply with all applicable federal and state securities
      laws in connection with the offer, issuance and sale of the Shares and the
      Warrants hereunder. Neither the Company nor anyone acting on its behalf,
      directly or indirectly, has or will sell, offer to sell or solicit offers to
      buy
      any of the Shares, the Warrants or similar securities to, or solicit offers
      with
      respect thereto from, or enter into any preliminary conversations or
      negotiations relating thereto with, any person, or has taken or will take any
      action so as to bring the issuance and sale of any of the Shares and the
      Warrants under the registration provisions of the Securities Act and applicable
      state securities laws, and neither the Company nor any of its affiliates, nor
      any person acting on its or their behalf, has engaged in any form of general
      solicitation or general advertising (within the meaning of Regulation D under
      the Securities Act) in connection with the offer or sale of any of the Shares
      and the Warrants.

     

    (x)    Governmental
      Approvals.
      Except
      for the filing of any notice prior or subsequent to the Closing Date that may
      be
      required under applicable state and/or Federal securities laws (which if
      required, shall be filed on a timely basis), including the filing of a Form
      D
      and a registration statement or statements pursuant to the Registration Rights
      Agreement, and the filing of the Certificate of Designation with the Secretary
      of State for the State of Nevada, no authorization, consent, approval, license,
      exemption of, filing or registration with any court or governmental department,
      commission, board, bureau, agency or instrumentality, domestic or foreign,
      is or
      will be necessary for, or in connection with, the execution or delivery of
      the
      Preferred Shares and the Warrants, or for the performance by the Company of
      its
      obligations under the Transaction Documents.

     

    (y)    Employees.
      Neither
      the Company nor any subsidiary has any collective bargaining arrangements or
      agreements covering any of its employees, except as set forth in the Form
      10-KSB, Form 10-QSB or on Schedule
      2.1(y)
      hereto.
      Except as set forth in the Form 10-KSB, Form 10-QSB or on Schedule
      2.1(y)
      hereto,
      neither the Company nor any subsidiary has any employment contract, agreement
      regarding proprietary information, non-competition agreement, non-solicitation
      agreement, confidentiality agreement, or any other similar contract or
      restrictive covenant, relating to the right of any officer, employee or
      consultant to be employed or engaged by the Company or such subsidiary. Since
      December 31, 2004 , no officer, consultant or key employee of the Company or
      any
      subsidiary whose termination, either individually or in the aggregate, could
      have a Material Adverse Effect, has terminated or, to the knowledge of the
      Company, has any present intention of terminating his or her employment or
      engagement with the Company or any subsidiary.

     

    (z)    Absence
      of Certain Developments.
      Except
      as provided on Schedule
      2.1(z)
      hereto
      or as disclosed in the Commission Documents, since December 31, 2004, neither
      the Company nor any subsidiary has:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (i)    
issued
      any stock, bonds or other corporate securities or any rights, options or
      warrants with respect thereto;

     

    (ii)    borrowed
      any amount or incurred or become subject to any liabilities (absolute or
      contingent) except current liabilities incurred in the ordinary course of
      business which are comparable in nature and amount to the current liabilities
      incurred in the ordinary course of business during the comparable portion of
      its
      prior fiscal year, as adjusted to reflect the current nature and volume of
      the
      Company’s or such subsidiary’s business;

     

    (iii)   discharged
      or satisfied any lien or encumbrance or paid any obligation or liability
      (absolute or contingent), other than current liabilities paid in the ordinary
      course of business;

     

    (iv)   declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock;

     

    (v)    sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, except in the ordinary course of business;

     

    (vi)   sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights, or
      disclosed any proprietary confidential information to any person except to
      customers in the ordinary course of business or to the Purchasers or their
      representatives;

     

    (vii)         
      suffered
      any substantial losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii)        
      made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    (ix)          
      made
      capital expenditures or commitments therefor that aggregate in excess of
      $100,000;

     

    (x)    entered
      into any other transaction other than in the ordinary course of business, or
      entered into any other material transaction, whether or not in the ordinary
      course of business;

     

    (xi)   made
      charitable contributions or pledges in excess of $25,000;

     

    (xii)         
      suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (xiii)         experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment;

     

    (xiv)        
      effected
      any two or more events of the foregoing kind which in the aggregate would be
      material to the Company or its subsidiaries; or

     

    (xv)         
      entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    (aa)        
      Public
      Utility Holding Company Act and Investment Company Act Status.
      The
      Company is not a “holding company” or a “public utility company” as such terms
      are defined in the Public Utility Holding Company Act of 1935, as amended.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (bb)        
      ERISA.
      No
      liability to the Pension Benefit Guaranty Corporation has been incurred with
      respect to any Plan by the Company or any of its subsidiaries which is or would
      be materially adverse to the Company and its subsidiaries. The execution and
      delivery of this Agreement and the issuance and sale of the Preferred Shares
      will not involve any transaction which is subject to the prohibitions of Section
      406 of ERISA or in connection with which a tax could be imposed pursuant to
      Section 4975 of the Internal Revenue Code of 1986, as amended, provided that,
      if
      any of the Purchasers, or any person or entity that owns a beneficial interest
      in any of the Purchasers, is an “employee pension benefit plan” (within the
      meaning of Section 3(2) of ERISA) with respect to which the Company is a “party
      in interest” (within the meaning of Section 3(14) of ERISA), the requirements of
      Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
      this
      Section 2.1(ac), the term “Plan” shall mean an “employee pension benefit plan”
(as defined in Section 3 of ERISA) which is or has been established or
      maintained, or to which contributions are or have been made, by the Company
      or
      any subsidiary or by any trade or business, whether or not incorporated, which,
      together with the Company or any subsidiary, is under common control, as
      described in Section 414(b) or (c) of the Code.

     

    (cc)        
      Dilutive
      Effect.
      The
      Company understands and acknowledges that its obligation to issue Conversion
      Shares upon conversion of the Preferred Shares in accordance with this Agreement
      and the Certificate of Designation and its obligations to issue the Warrant
      Shares upon the exercise of the Warrants in accordance with this Agreement
      and
      the Warrants, is, in each case, absolute and unconditional regardless of the
      dilutive effect that such issuance may have on the ownership interest of
      other
      stockholders of the Company.

     

    (dd)        
      No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Shares pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the Securities Act which would
      prevent the Company from selling the Shares pursuant to Rule 506 under the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions, nor will the Company or any of its affiliates or subsidiaries take
      any action or steps that would cause the offering of the Shares to be integrated
      with other offerings.
      The
      Company does not have any registration statement pending before the Commission
      or currently under the Commission’s review and except as set forth on
Schedule
      2.1(dd)
      hereto,
      since July 1,
      2005,
      the Company has not offered or sold any of its equity securities or debt
      securities convertible into shares of Common Stock.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (ee)        
      Sarbanes-Oxley
      Act.
      The
      Company is in compliance with the applicable provisions of the Sarbanes-Oxley
      Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations
      promulgated thereunder, that are effective, and intends to comply with other
      applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations
      promulgated thereunder, upon the effectiveness of such provisions.

     

    (ff)        
      Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase Securities pursuant to this Agreement has been made by such Purchaser
      independently of any other purchase and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company or of its Subsidiaries which may have
      made or given by any other Purchaser or by any agent or employee of any other
      Purchaser, and no Purchaser or any of its agents or employees shall have any
      liability to any Purchaser (or any other person) relating to or arising from
      any
      such information, materials, statements or opinions. The Company acknowledges
      that nothing contained herein, or in any Transaction Document, and no action
      taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute
      the Purchasers as a partnership, an association, a joint venture or any other
      kind of entity, or create a presumption that the Purchasers are in any way
      acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Documents. The Company acknowledges
      that each Purchaser shall be entitled to independently protect and enforce
      its
      rights, including without limitation, the rights arising out of this Agreement
      or out of the other Transaction Documents, and it shall not be necessary for
      any
      other Purchaser to be joined as an additional party in any proceeding for such
      purpose. The Company acknowledges that for reasons of administrative convenience
      only, the Transaction Documents have been prepared by counsel for the placement
      agent and such counsel does not represent the Purchasers and the Purchasers
      have
      retained their own individual counsel with respect to the transactions
      contemplated hereby.  The Company acknowledges that it has elected to
      provide all Purchasers with the same terms and Transaction Documents for the
      convenience of the Company and not because it was required or requested to
      do so
      by the Purchasers. The Company acknowledges that such procedure with respect
      to
      the Transaction Documents in no way creates a presumption that the Purchasers
      are in any way acting in concert or as a group with respect to the Transaction
      Documents or the transactions contemplated hereby or thereby.

     

    (gg)        
      DTC
      Status.
      The
      Company’s transfer agent is a participant in and the Common Stock is eligible
      for transfer pursuant to the Depository Trust Company Automated Securities
      Transfer Program. The name, address, telephone number, fax number, contact
      person and email address of the Company’s transfer agent is set forth on
Schedule
      2.1(gg)
      hereto.

     

    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

    


    (hh)        
      Investment
      Company Act.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company controlled by an “investment company”,
      within the meaning of the Investment Company Act of 1940, as amended.


     

    


    Section
      2.2    Representations,
      Warranties and Covenants of the Purchasers.
      Each of
      the Purchasers hereby makes the following representations, warranties and
      covenants to the Company with respect solely to itself and not with respect
      to
      any other Purchaser:

     

    (a)    Organization
      and Standing of the Purchasers.
      If the
      Purchaser is an entity, such Purchaser is a corporation or partnership duly
      incorporated or organized, validly existing and in good standing under the
      laws
      of the jurisdiction of its incorporation or organization.

     

    (b)    Authorization
      and Power.
      Each
      Purchaser has the requisite power and authority to enter into and perform this
      Agreement and to purchase the Preferred Shares and Warrants being sold to it
      hereunder. The execution, delivery and performance of this Agreement and the
      Registration Rights Agreement by such Purchaser and the consummation by it
      of
      the transactions contemplated hereby and thereby have been duly authorized
      by
      all necessary corporate or partnership action, and no further consent or
      authorization of such Purchaser or its Board of Directors, stockholders, or
      partners, as the case may be, is required. Each of this Agreement and the
      Registration Rights Agreement has been duly authorized, executed and delivered
      by such Purchaser and constitutes, or shall constitute when executed and
      delivered, a valid and binding obligation of the Purchaser enforceable against
      the Purchaser in accordance with the terms thereof, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor’s
      rights and remedies or by other equitable principles of general
      application.

     

    (c)    No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the Registration
      Rights Agreement and the consummation by such Purchaser of the transactions
      contemplated hereby and thereby or relating hereto do not and will not (i)
      result in a violation of such Purchaser’s charter documents or bylaws or other
      organizational documents or (ii) conflict with, or constitute a default (or
      an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of any agreement, indenture or instrument or obligation to which
      such Purchaser is a party or by which its properties or assets are bound, or
      result in a violation of any law, rule, or regulation, or any order, judgment
      or
      decree of any court or governmental agency applicable to such Purchaser or
      its
      properties (except for such conflicts, defaults and violations as would not,
      individually or in the aggregate, have a material adverse effect on such
      Purchaser). Such Purchaser is not required to obtain any consent, authorization
      or order of, or make any filing or registration with, any court or governmental
      agency in order for it to execute, deliver or perform any of its obligations
      under this Agreement or the Registration Rights Agreement or to purchase the
      Preferred Shares or acquire the Warrants in accordance with the terms hereof,
      provided that for purposes of the representation made in this sentence, such
      Purchaser is assuming and relying upon the accuracy of the relevant
      representations and agreements of the Company herein.

     

    
      
        
          
          

        

        
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    (d)    Acquisition
      for Investment.
      Each
      Purchaser is acquiring the Preferred Shares and the Warrants solely for its
      own
      account for the purpose of investment and not with a view to or for sale in
      connection with distribution. Each Purchaser does not have a present intention
      to sell the Preferred Shares or the Warrants, nor a present arrangement (whether
      or not legally binding) or intention to effect any distribution of the Preferred
      Shares or the Warrants to or through any person or entity; provided,
      however,
      that by
      making the representations herein and subject to Section 2.2(h) below, such
      Purchaser does not agree to hold the Shares or the Warrants for any minimum
      or
      other specific term and reserves the right to dispose of the Shares or the
      Warrants at any time in accordance with Federal and state securities laws
      applicable to such disposition. Each Purchaser acknowledges that it is able
      to
      bear the financial risks associated with an investment in the Preferred Shares
      and the Warrants and that it has been given full access to such records of
      the
      Company and the subsidiaries and to the officers of the Company and the
      subsidiaries and received such information as it has deemed necessary or
      appropriate to conduct its due diligence investigation and has sufficient
      knowledge and experience in investing in companies similar to the Company in
      terms of the Company’s stage of development so as to be able to evaluate the
      risks and merits of its investment in the Company.

     

    (e)    Status
      of Purchasers.
      Such
      Purchaser is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act. Such Purchaser is not required to be registered as
      a
      broker-dealer under Section 15 of the Exchange Act and such Purchaser is not
      a
      broker-dealer.

     

    (f)    Opportunities
      for Additional Information.
      Each
      Purchaser acknowledges that such Purchaser has had the opportunity to ask
      questions of and receive answers from, or obtain additional information from,
      the executive officers of the Company concerning the financial and other affairs
      of the Company, and to the extent deemed necessary in light of such Purchaser’s
      personal knowledge of the Company’s affairs, such Purchaser has asked such
      questions and received answers to the full satisfaction of such Purchaser,
      and
      such Purchaser desires to invest in the Company. Neither such inquiries nor
      any
      other due diligence investigation conducted by the Purchasers shall modify,
      amend or affect the Purchasers’ right to rely on the Company’s representations
      and warranties contained in this Agreement.

     

    (g)    No
      General Solicitation.
      Each
      Purchaser acknowledges that the Preferred Shares and the Warrants were not
      offered to such Purchaser by means of any form of general or public solicitation
      or general advertising, or publicly disseminated advertisements or sales
      literature, including (i) any advertisement, article, notice or other
      communication published in any newspaper, magazine, or similar media, or
      broadcast over television or radio, or (ii) any seminar or meeting to which
      such
      Purchaser was invited by any of the foregoing means of
      communications.

     

    (h)    Rule
      144.
      Such
      Purchaser understands that the Shares must be held indefinitely unless such
      Shares are registered under the Securities Act or an exemption from registration
      is available. Such Purchaser acknowledges that such Purchaser is familiar with
      Rule 144 of the rules and regulations of the Commission, as amended, promulgated
      pursuant to the Securities Act (“Rule 144”), and that such person has been
      advised that Rule 144 permits resales only under certain circumstances. Such
      Purchaser understands that to the extent that Rule 144 is not available, such
      Purchaser will be unable to sell any Shares without either registration under
      the Securities Act or the existence of another exemption from such registration
      requirement.

     

    
      
        
        

      

      
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    (i)    
General.
      Such
      Purchaser understands that the Shares are being offered and sold in reliance
      on
      a transactional exemption from the registration requirement of Federal and
      state
      securities laws and the Company is relying upon the truth and accuracy of the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Purchaser set forth herein in order to determine the applicability of
      such
      exemptions and the suitability of such Purchaser to acquire the
      Shares.

     

    (j)    
Independent
      Investment.
      Except
      as may be disclosed in any filings with the Commission by the Purchasers under
      Section 13 and/or Section 16 of the Exchange Act, no Purchaser has agreed to
      act
      with any other Purchaser for the purpose of acquiring, holding, voting or
      disposing of the Shares purchased hereunder for purposes of Section 13(d) under
      the Exchange Act, and each Purchaser is acting independently with respect to
      its
      investment in the Shares.

     

    (k)    Short
      Sales.
      Each
      Purchaser covenants that neither it nor any affiliates acting on its behalf
      or
      pursuant to any understanding with it will execute
      any
      Short Sales (as
      defined below) during the period after the date
      that
such
      Purchaser first received a term sheet from the Company or any other person
      or
      entity setting forth the material terms of the transactions contemplated
      hereunder until the date that
      the
      transactions contemplated by this Agreement are first publicly announced as
      described in Section 3.16 hereof. For purposes hereof, “Short
      Sales”
shall
      include all “short sales” as defined in Rule 200 of Regulation SHO under the
      Exchange Act.

     

    (l)    
Confidentiality.
      The
      Purchaser agrees that it will not disclose, and will not include in any public
      announcement, the name of the Company, unless expressly agreed to by the Company
      or unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

     

    ARTICLE
      III

     

    COVENANTS

     

    The
      Company covenants with each of the Purchasers as follows, which covenants are
      for the benefit of the Purchasers and their permitted assignees (as defined
      herein).

     

    Section
      3.1    Securities
      Compliance.
      The
      Company shall notify the Commission in accordance with their rules and
      regulations, of the transactions contemplated by any of the Transaction
      Documents, including filing a Form D with respect to the Preferred Shares,
      Warrants, Conversion Shares and Warrant Shares as required under Regulation
      D,
      and shall take all other necessary action and proceedings as may be required
      and
      permitted by applicable law, rule and regulation, for the legal and valid
      issuance of the Preferred Shares, the Warrants, the Conversion Shares and the
      Warrant Shares to the Purchasers or subsequent holders. 

     

    
      
        
        

      

      
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    Section
      3.2    Registration
      and Listing.
      The
      Company will cause its Common Stock to continue to be registered under Sections
      12(b) or 12(g) of the Exchange Act, will comply in all respects with its
      reporting and filing obligations under the Exchange Act, will comply with all
      requirements related to any registration statement filed pursuant to this
      Agreement or the Registration Rights Agreement, and will not take any action
      or
      file any document (whether or not permitted by the Securities Act or the rules
      promulgated thereunder) to terminate or suspend such registration or to
      terminate or suspend its reporting and filing obligations under the Exchange
      Act
      or Securities Act, except as permitted herein. The Company will take all action
      necessary to continue the listing or trading of its Common Stock on the OTC
      Bulletin Board or other exchange or market on which the Common Stock is
      trading. 

     

    Section
      3.3    Inspection
      Rights.
      The
      Company shall permit, during normal business hours and upon reasonable request
      and reasonable notice, each Purchaser or any employees, agents or
      representatives thereof, so long as such Purchaser shall be obligated hereunder
      to purchase the Preferred Shares or shall beneficially own any Preferred Shares,
      or shall own Conversion Shares which, in the aggregate, represent more than
      two
      percent (2%) of the total combined voting power of all voting securities then
      outstanding, for purposes reasonably related to such Purchaser’s interests as a
      stockholder to examine and make reasonable copies of and extracts from the
      records and books of account of, and visit and inspect the properties, assets,
      operations and business of the Company and any subsidiary (but only to the
      extent not contractually required of the Company or any subsidiary to be kept
      confidential), and to discuss the affairs, finances and accounts of the Company
      and any subsidiary with any of its officers, consultants, directors, and key
      employees. 

     

    Section
      3.4    Compliance
      with Laws.
      The
      Company shall comply, and cause each subsidiary to comply, with all applicable
      laws, rules, regulations and orders, the noncompliance of which could have
      a
      Material Adverse Effect.

     

    Section
      3.5    Keeping
      of Records and Books of Account.
      The
      Company shall keep and cause each subsidiary to keep adequate records and books
      of account, in which complete entries will be made in accordance with GAAP
      consistently applied, reflecting all financial transactions of the Company
      and
      its subsidiaries, and in which, for each fiscal year, all proper reserves for
      depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
      purposes in connection with its business shall be made.

     

    Section
      3.6    Reporting
      Requirements.
      If the
      Commission ceases making periodic reports filed under Section 13 of the Exchange
      Act available via the Internet, then at a Purchaser’s request the Company shall
      furnish the following to such Purchaser so long as such Purchaser shall be
      obligated hereunder to purchase the Preferred Shares or shall beneficially
      own
      any Preferred Shares, or shall own Conversion Shares which, in the aggregate,
      represent more than 2% of the total combined voting power of all voting
      securities then outstanding:

     

    (a)    Quarterly
      Reports filed with the Commission on Form 10-QSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    (b)    Annual
      Reports filed with the Commission on Form 10-KSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission; and

     

    (c)    Copies
      of
      all notices and information, including without limitation notices and proxy
      statements in connection with any meetings, that are provided to holders of
      shares of Common Stock, contemporaneously with the delivery of such notices
      or
      information to such holders of Common Stock.

     

    Section
      3.7    Amendments.
      The
      Company shall not, without the prior written consent of the holders of at least
      seventy-five percent (75%) of the Preferred Shares then outstanding, amend
      or
      waive any provision of the Articles or Bylaws of the Company in any way that
      would adversely affect the liquidation preferences, dividends rights, conversion
      rights, voting rights or redemption rights of the Preferred Shares; provided,
      however,
      that
      any creation and issuance of another series of Junior Stock (as defined in
      the
      Certificate of Designation) or any other class or series of equity securities
      which by its terms shall rank on parity with the Preferred Shares shall not
      be
      deemed to materially and adversely affect such rights, preferences or
      privileges.

     

    Section
      3.8    Other
      Agreements; Amendments.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company or
      any
      subsidiary under any Transaction Document; provided,
      however,
      that
      the foregoing clause shall in no way restrict the Company from entering into
      any
      senior secured financing agreement or instrument with Laurus Master Fund, Ltd.
      (“Laurus”), including without limitation, any supplement or modification to, or
      amendment or substitution of, the Company’s existing credit facility with Laurus
      (a “Laurus Facility”). The Company shall not amend or waive any provision of the
      Articles or Bylaws of the Company in any way that would adversely affect the
      exercise rights, voting rights, conversion rights or redemption rights of the
      holders of the Preferred Shares.

     

    Section
      3.9    Intentionally
      Omitted.

     

    
      
        
        

      

      
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    Section
      3.10   Status
      of Dividends.
      The
      Company covenants and agrees that (i) no Federal income tax return or claim
      for
      refund of Federal income tax or other submission to the Internal Revenue Service
      will adversely affect the Preferred Shares, any other series of its Preferred
      Stock, or the Common Stock, and any deduction shall not operate to jeopardize
      the availability to Purchasers of the dividends received deduction provided
      by
      Section 243(a)(1) of the Code or any successor provision, (ii) in no report
      to
      shareholders or to any governmental body having jurisdiction over the Company
      or
      otherwise will it treat the Preferred Shares other than as equity capital or
      the
      dividends paid thereon other than as dividends paid on equity capital unless
      required to do so by a governmental body having jurisdiction over the accounts
      of the Company or by a change in generally accepted accounting principles
      required as a result of action by an authoritative accounting standards setting
      body, and (iii) other than pursuant to this Agreement or the Certificate of
      Designation, it will take no action which would result in the dividends paid
      by
      the Company on the Preferred Shares out of the Company’s current or accumulated
      earnings and profits being ineligible for the dividends received deduction
      provided by Section 243(a)(1) of the Code. The preceding sentence shall not
      be
      deemed to prevent the Company from designating the Preferred Stock as
“Convertible Preferred Stock” in its annual and quarterly financial statements
      in accordance with its prior practice concerning other series of preferred
      stock
      of the Company. Notwithstanding the foregoing, the Company shall not be required
      to restate or modify its tax returns for periods prior to the Closing Date.
      In
      the event that the Purchasers have reasonable cause to believe that dividends
      paid by the Company on the Preferred Shares out of the Company’s current or
      accumulated earnings and profits will not be treated as eligible for the
      dividends received deduction provided by Section 243(a)(1) of the Code, or
      any
      successor provision, the Company will, at the reasonable request of the
      Purchasers of 51% of the outstanding Preferred Shares, join with the Purchasers
      in the submission to the Service of a request for a ruling that dividends paid
      on the Shares will be so eligible for Federal income tax purposes, at the
      Purchasers expense. In addition, the Company will reasonably cooperate with
      the
      Purchasers (at Purchasers’ expense) in any litigation, appeal or other
      proceeding challenging or contesting any ruling, technical advice, finding
      or
      determination that earnings and profits are not eligible for the dividends
      received deduction provided by Section 243(a)(1) of the Code, or any successor
      provision to the extent that the position to be taken in any such litigation,
      appeal, or other proceeding is not contrary to any provision of the Code or
      incurred in connection with any such submission, litigation, appeal or other
      proceeding. Notwithstanding the foregoing, nothing herein contained shall be
      deemed to preclude the Company from claiming a deduction with respect to such
      dividends if (i) the Code shall hereafter be amended, or final Treasury
      regulations thereunder are issued or modified, to provide that dividends on
      the
      Preferred Shares or Conversion Shares should not be treated as dividends for
      Federal income tax purposes or that a deduction with respect to all or a portion
      of the dividends on the Shares is allowable for Federal income tax purposes,
      or
      (ii) in the absence of such an amendment, issuance or modification and after
      a
      submission of a request for ruling or technical advice, the service shall rule
      or advise that dividends on the shares should not be treated as dividends for
      Federal income tax purposes. If the Service determines that the Preferred Shares
      or Conversion Shares constitute debt, the Company may file protective claims
      for
      refund.

     

    Section
      3.11   Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Preferred Shares will be used by the Company
      for
      working capital and general corporate purposes and not to redeem any Common
      Stock or securities convertible, exercisable or exchangeable into Common Stock
      or to settle any outstanding litigation except as set forth on Schedule
      2.1(m);
      provided,
      however,
      that
      nothing in this Section 3.11 shall prohibit the Company from using all or a
      portion of the net proceeds for the acquisitions of assets or capital stock
      of
      any other entity. 

     

    Section
      3.12    Reservation
      of Shares.
      So long
      as any of the Preferred Shares or Warrants remain outstanding, the Company
      shall
      take all action necessary to at all times have authorized, and reserved for
      the
      purpose of issuance, no less than one hundred ten percent (110%) the aggregate
      number of shares of Common Stock needed to provide for the issuance of the
      Conversion Shares and the Warrant Shares.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    Section
      3.13   Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Conversion Shares and the
      Warrant Shares in such amounts as specified from time to time by each Purchaser
      to the Company upon conversion of the Preferred Shares or exercise of the
      Warrants in the form of Exhibit
      F
      attached
      hereto (the “Irrevocable Transfer Agent Instructions”). All such certificates
      shall bear the restrictive legend specified in Section 5.1 of this Agreement.
      The Company warrants that no instruction other than the Irrevocable Transfer
      Agent Instructions referred to in this Section 3.13 will be given by the Company
      to its transfer agent and that the Shares shall otherwise be freely transferable
      on the books and records of the Company as and to the extent provided in this
      Agreement and the Registration Rights Agreement. Nothing in this Section 3.13
      shall affect in any way each Purchaser’s obligations and agreements set forth in
      Section 5.1 to comply with all applicable prospectus delivery requirements,
      if
      any, upon resale of the Shares. If, prior to the registration statement covering
      the Shares being declared effective, a Purchaser provides the Company with
      an
      opinion of counsel, in a generally acceptable form, to the effect that a public
      sale, assignment or transfer of the Shares may be made without registration
      under the Securities Act or a Purchaser provides the Company with reasonable
      assurances that the Shares can be sold pursuant to Rule 144 without any
      restriction as to the number of securities acquired as of a particular date
      that
      can then be immediately sold, the Company shall permit the transfer, and, in
      the
      case of the Conversion Shares and the Warrant Shares, promptly instruct its
      transfer agent to issue one or more certificates in such name and in such
      denominations as specified by such Purchaser and without any restrictive legend.
      The Company acknowledges that a breach by it of its obligations under this
      Section 3.13 will cause irreparable harm to the Purchasers by vitiating the
      intent and purpose of the transaction contemplated hereby. Accordingly, the
      Company acknowledges that the remedy at law for a breach of its obligations
      under this Section 3.13 will be inadequate and agrees, in the event of a
      breach or threatened breach by the Company of the provisions of this Section
      3.13, that the Purchasers shall be entitled, in addition to all other available
      remedies, to an order and/or injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    Section
      3.14   Disposition
      of Assets.
      So long
      as at least thirty-five percent (35%) of the original Liquidation Preference
      Amount of the Preferred Shares remain outstanding, neither the Company nor
      any
      Subsidiary shall sell, transfer or otherwise dispose of any of its properties,
      assets and rights including, without limitation, its software and intellectual
      property, to any person except for sales to customers in the ordinary course
      of
      business or with the prior written consent of the holders of a majority of
      the
      Preferred Shares then outstanding.
      Notwithstanding the foregoing sentence, no consent of the Purchasers shall
      be
      required with respect to any such sale, transfer or other disposition by the
      Company or any Subsidiary if such sale, transfer or other disposition is made
      pursuant to an exercise by Laurus of any of its rights, or the performance
      by
      the Company or any Subsidiary of any their respective obligations, under a
      Laurus Facility. 

     

    Section
      3.15   Reporting
      Status. So
      long
      as a Purchaser beneficially owns any of the Securities, the Company shall timely
      file all reports required to be filed with the Commission pursuant to the
      Exchange Act, and the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would permit such termination.

     

    
      
        
        

      

      
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    Section
      3.16   Disclosure
      of Transaction.
      The
      Company shall issue a press release describing the material terms of the
      transactions contemplated hereby (the “Press Release”) as soon as practicable
      after the Closing but in no event later than one hour after the Closing;
provided,
      however,
      that if
      the Closing occurs after 4:00 P.M. Eastern Time on any Trading Day, the Company
      shall issue the Press Release no later than 9:00 A.M. Eastern Time on the first
      Trading Day following the Closing Date. The Company shall also file with the
      Commission a Current Report on Form 8-K (the “Form 8-K”) describing the material
      terms of the transactions contemplated hereby (and attaching as exhibits thereto
      this Agreement, the Registration Rights Agreement, the Certificate of
      Designation, the form of each Warrant and the Press Release) as soon as
      practicable following the Closing Date but in no event more than two (2) Trading
      Days following the Closing Date, which Press Release and Form 8-K shall be
      subject to prior review and comment by counsel to the placement agent. "Trading
      Day" means any day during which the OTC Bulletin Board (or other principal
      exchange on which the Common Stock is traded) shall be open for
      trading. 

     

    Section
      3.17   Disclosure
      of Material Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf has provided or will provide any Purchaser or its agents or counsel
      with
      any information that the Company believes constitutes material non-public
      information, unless prior to disclosure of such information the Company
      identifies such information as being material, non-public information and
      provides the Purchasers or their respective agents or counsel, as applicable,
      with the opportunity to accept or refuse to accept such material, non-public
      information for review and any Purchaser wishing to obtain such information
      shall have executed a written agreement regarding the confidentiality and use
      of
      such information.  The Company understands and confirms that each Purchaser
      shall be relying on the foregoing representations in effecting transactions
      in
      securities of the Company.
      It is
      expressly agreed by each Purchaser that any disclosure made to such Purchaser
      pursuant to the covenants of the Company hereunder or under any other
      Transaction Document shall not be deemed a breach of the provisions of this
      Section 3.17.

     

    Section
      3.18   Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities may be pledged by a
      Purchaser in connection with a bona fide
      margin
      agreement or other loan or financing arrangement that is secured by the Common
      Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale
      or
      assignment of the Common Stock hereunder, and no Purchaser effecting a pledge
      of
      Common Stock shall be required to provide the Company with any notice thereof
      or
      otherwise make any delivery to the Company pursuant to this Agreement or any
      other Transaction Document; provided that a Purchaser and its pledgee shall
      be
      required to comply with the provisions of Article V hereof in order to effect
      a
      sale, transfer or assignment of Common Stock to such pledgee. At the Purchasers'
      expense, the Company hereby agrees to execute and deliver such documentation
      as
      a pledgee of the Common Stock may reasonably request in connection with a pledge
      of the Common Stock to such pledgee by a Purchaser.

     

    Section
      3.19   Form
      SB-2 Eligibility. The
      Company currently meets, and will take all necessary action to continue to
      meet,
      the "registrant eligibility" and transaction requirements set forth in the
      general instructions to Form SB-2 applicable to "resale" registrations on
      Form SB-2 during the Effectiveness Period (as defined in the Registration
      Rights Agreement) and the Company shall file all reports required to be filed
      by
      the Company with the Commission in a timely manner so as to maintain such
      eligibility for the use of Form SB-2.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    Section
      3.20   Intentionally
      Omitted.

     

    Section
      3.2    Future
      Financings; Right of First Offer and Refusal. 

     

    (a)    For
      a
      period of one (1) year following the Closing Date, the Company covenants and
      agrees to promptly notify (in no event later than five (5) Trading Days after
      making or receiving an applicable offer) in writing (a "Rights
      Notice")
      the
      Purchasers of the terms and conditions of any proposed offer or sale to, or
      exchange with (or other type of distribution to) any third party (a
“Subsequent
      Financing”),
      of
      Common Stock or any securities convertible, exercisable or exchangeable into
      Common Stock, including convertible debt securities (collectively, the
      "Financing
      Securities").
      The
      Rights Notice shall describe, in reasonable detail, the proposed Subsequent
      Financing, the names and investment amounts of all investors participating
      in
      the Subsequent Financing, the proposed closing date of the Subsequent Financing,
      which shall be within twenty (20) calendar days from the date of the Rights
      Notice, and all of the terms and conditions thereof and proposed definitive
      documentation to be entered into in connection therewith. The Rights Notice
      shall provide each Purchaser an option (the “Rights
      Option”)
      during
      the seven (7) Trading Days following delivery of the Rights Notice (the
“Option
      Period”)
      to
      inform the Company whether such Purchaser will purchase up to its pro rata
      portion of the securities being offered in such Subsequent Financing on the
      same, absolute terms and conditions as contemplated by such Subsequent
      Financing. Each Purchaser shall have an additional three (3) Trading Days to
      fund the purchase of the securities being offered in such Subsequent Financing.
      If any Purchaser elects not to participate in such Subsequent Financing, the
      other participating Purchasers may participate in such non-participating
      Purchaser’s share on a pro-rata basis so long as, with respect to any such
      participating Purchaser, such participation in the aggregate does not exceed
      the
      total Purchase Price of such participating Purchasers hereunder. For purposes
      of
      this Section, all references to “pro rata” means, for any Purchaser electing to
      participate in such Subsequent Financing, the percentage obtained by dividing
      (x) the total number of Preferred Shares purchased by such Purchaser at the
      Closing by (y) the total number of Preferred Shares purchased by all of the
      participating Purchasers at the Closing. Delivery of any Rights Notice
      constitutes a representation and warranty by the Company that there are no
      other
      material terms and conditions, arrangements, agreements or otherwise except
      for
      those disclosed in the Rights Notice, to provide additional compensation to
      any
      party participating in any proposed Subsequent Financing, including, but not
      limited to, additional compensation based on changes in the Purchase Price
      or
      any type of reset or adjustment of a purchase or conversion price or to issue
      additional securities at any time after the closing date of a Subsequent
      Financing. If the Company does not receive notice of exercise of the Rights
      Option from the Purchasers within the Option Period, the Company shall have
      the
      right to close the Subsequent Financing on the scheduled closing date with
      a
      third party; provided
      that all
      of the material terms and conditions of the closing are substantially the same
      as those provided to the Purchasers in the Rights Notice. If the closing of
      the
      proposed Subsequent Financing does not occur within fifteen (15) days following
      that date, any closing of the contemplated Subsequent Financing or any other
      Subsequent Financing shall be subject to all of the provisions of this Section
      3.21(a), including, without limitation, the delivery of a new Rights Notice.
      The
      provisions of this Section 3.21(a) shall not apply to issuances of securities
      in
      a Permitted Financing.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    (b)    Notwithstanding
      anything to the contrary contained in this Section 3.21(a), to the extent that
      the Financing Securities are secured debt securities, the terms and conditions
      of this Section 3.21(a) shall be subject to and subordinate to any right of
      first refusal of Laurus under any Laurus Facility with respect to such secured
      debt securities (a “Laurus Senior Right of First Refusal”). For so long as
      Laurus has a Laurus Senior Right of First Refusal, paragraph (a) above shall
      be
      modified to provide that the Company shall deliver the Rights Notice described
      in paragraph (a) above to the Purchasers not later than five (5) Trading Days
      after the earlier of the (i) the expiration date of Laurus’s option period to
      exercise the Laurus Senior Right of First Refusal or (ii) the date on which
      Laurus provides notice to the Company of Laurus’ waiver of the Laurus Senior
      Right of First Refusal. 

     

    (c)    For
      purposes of this Agreement, a Permitted Financing (as defined hereinafter)
      shall
      not be considered a Subsequent Financing. A "Permitted Financing" shall mean
      (i)
      securities issued (other than for cash) in connection with a merger,
      acquisition, or consolidation, (ii) securities issued pursuant to a bona fide
      firm underwritten public offering of the Company’s securities generating gross
      proceeds to the Company of not less than $20 million in which the price per
      share is at least $4.00 (subject to appropriate adjustment in the event of
      any
      stock dividend, stock split, stock distribution or combination with respect
      to
      the Common Stock), (iii) securities issued pursuant to the conversion or
      exercise of convertible or exercisable securities issued or outstanding on
      or
      prior to the date hereof or issued pursuant to this Agreement and the
      Certificate of Designation, (iv) the Warrant Shares, (v) securities issued
      in
      connection with bona fide strategic license agreements or other partnering
      arrangements so long as such issuances are not for the primary purpose of
      raising capital, (vi) Common Stock issued or options to purchase Common Stock
      granted or issued pursuant to the Company’s stock option plans as they now exist
      and employee stock purchase plans as they now exist, (vii) any warrants or
      shares of Common Stock issuable upon exercise of such warrants issued to the
      placement agent and its designees for the transactions contemplated by this
      Agreement and (viii) the
      payment of any dividends in shares of Common Stock pursuant to the Certificate
      of Designation. 

     

    (d)    For
      a
      period of two (2) years following the Closing Date, if the Company enters into
      any Subsequent Financing having material terms more favorable than the material
      terms governing the Preferred Shares, then the Purchasers shall have the right
      to benefit from such more favorable terms or, in their sole discretion, may
      exchange the Preferred Shares, valued at the Liquidation Preference Amount
      (as
      defined in the Certificate of Designation), together with accrued but unpaid
      dividends (which dividend payments shall be payable, at the sole option of
      the
      Purchasers, in cash or in the form of the new securities to be issued in the
      Subsequent Financing), for the securities issued or to be issued in the
      Subsequent Financing. The Company covenants and agrees to promptly notify in
      writing the Purchasers of the terms and conditions of any such proposed
      Subsequent Financing. The provisions of this Section 3.21(c) shall not apply
      to
      issuances of securities in a Permitted Financing or the issuance of secured
      debt
      securities issued to Laurus pursuant to an exercise of a Laurus Senior Right
      of
      First Refusal. 

     

    ARTICLE
      IV 


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


     

    CONDITIONS

    


    Section
      4.1    Conditions
      Precedent to the Obligation of the Company to Sell the Shares.
      The
      obligation hereunder of the Company to issue and sell the Preferred Shares
      and
      the Warrants to the Purchasers is subject to the satisfaction or waiver, at
      or
      before the Closing, of each of the conditions set forth below. These conditions
      are for the Company’s sole benefit and may be waived by the Company at any time
      in its sole discretion.

     

    (a)    Accuracy
      of Each Purchaser’s Representations and Warranties.
      The
      representations and warranties of each Purchaser in this Agreement shall be
      true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made at that time, except for (i) representations and
      warranties that are expressly made as of a particular date, which shall be
      true
      and correct in all material respects as of such date and (ii) representations
      and warranties qualified as to materiality which shall be true and correct
      in
      all respects as of the date when made and as of the Closing Date.

     

    (b)    Performance
      by the Purchasers.
      Each
      Purchaser shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by such Purchaser at or prior to the
      Closing.

     

    (c)    No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement. 

     

    (d)    Delivery
      of Purchase Price.
      The
      Purchase Price for the Preferred Shares and Warrants has been delivered to
      the
      Escrow Agent by each Purchaser at the Closing Date.

     

    (e)    Delivery
      of Transaction Documents.
      The
      Transaction Documents shall have been duly executed and delivered by the
      Purchasers and, with respect to the Escrow Agreement, the escrow agent, to
      the
      Company.

     

    Section
      4.2    Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Shares.
      The
      obligation hereunder of each Purchaser to acquire and pay for the Preferred
      Shares and the Warrants is subject to the satisfaction or waiver, at or before
      the Closing, of each of the conditions set forth below. These conditions are
      for
      each Purchaser’s sole benefit and may be waived by such Purchaser at any time in
      its sole discretion.

     

    (a)    Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement and the
      Registration Rights Agreement shall be true and correct in all respects as
      of
      the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that are expressly made as of a
      particular date), which shall be true and correct in all material respects
      as of
      such date.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    (b)    Performance
      by the Company.
      The
      Company shall have performed, satisfied and complied in all respects with all
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by the Company at or prior to the
      Closing.

     

    (c)    No
      Suspension, Etc.
      Trading
      in the Company’s Common Stock shall not have been suspended by the Commission or
      the OTC Bulletin Board, and, at any time prior to the Closing Date, trading
      in
      securities generally as reported by Bloomberg Financial Markets (“Bloomberg”)
      shall not have been suspended or limited, or minimum prices shall not have
      been
      established on securities whose trades are reported by Bloomberg, or on the
      New
      York Stock Exchange, nor shall a banking moratorium have been declared either
      by
      the United States or New York State authorities.

     

    (d)    No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (e)    No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any subsidiary seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (f)    Certificate
      of Designation of Rights and Preferences.
      Prior
      to the Closing, the Certificate of Designation in the form of Exhibit
      C
      attached
      hereto shall have been filed with the Secretary of State of Nevada.

     

    (g)    Opinion
      of Counsel, Etc.
      At the
      Closing, the Purchasers shall have received an opinion of counsel to the
      Company, dated the date of the Closing, in the form of Exhibit
      G
      hereto,
      and such other certificates and documents as the Purchasers or its counsel
      shall
      reasonably require incident to the Closing.

     

    (h)    Registration
      Rights Agreement.
      At the
      Closing, the Company shall have executed and delivered the Registration Rights
      Agreement to each Purchaser.

     

    (i)    
Certificates.
      The
      Company shall have executed and delivered to the Purchasers the certificates
      (in
      such denominations as such Purchaser shall request) for the Preferred Shares
      and
      Warrants being acquired by such Purchaser at the Closing (in such denominations
      as such Purchaser shall request).

     

    (j)    
Resolutions.
      The
      Board of Directors of the Company shall have adopted resolutions consistent
      with
      Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the
      "Resolutions").

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    (k)    Reservation
      of Shares.
      As of
      the Closing Date, the Company shall have reserved out of its authorized and
      unissued Common Stock, solely for the purpose of effecting the conversion of
      the
      Preferred Shares and the exercise of the Warrants, a number of shares of Common
      Stock equal to one hundred ten percent (110%) of the aggregate number of
      Conversion Shares issuable upon conversion of the Preferred Shares and Warrant
      Shares issuable upon exercise of the Warrants.

     

    (l)    
Transfer
      Agent Instructions.
      The
      Irrevocable Transfer Agent Instructions, in the form of Exhibit
      F
      attached
      hereto, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (m)    Escrow
      Agreement.
      At the
      Closing, the Company and the escrow agent shall have executed and delivered
      the
      Escrow Agreement to each Purchaser.

     

    (n)    Secretary’s
      Certificate.
      The
      Company shall have delivered to such Purchaser a secretary’s certificate, dated
      as of the Closing Date, as to (i) the Resolutions, (ii) the Articles, (iii)
      the
      Bylaws, (iv) the Certificate of Designation, each as in effect at the Closing,
      and (v) the authority and incumbency of the officers of the Company executing
      the Transaction Documents and any other documents required to be executed or
      delivered in connection therewith.

     

    (o)    Officer’s
      Certificate.
      The
      Company shall have delivered to the Purchasers a certificate of an executive
      officer of the Company, dated as of the Closing Date, confirming the accuracy
      of
      the Company’s representations, warranties and covenants as of such Closing Date
      and confirming the compliance by the Company with the conditions precedent
      set
      forth in this Section 4.2 as of the Closing Date.

     

    (p)    Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred at or before the Closing Date.
      

     

     

    ARTICLE
      V

     

    STOCK
      CERTIFICATE LEGEND

    


    Section
      5.1    Legend.
      Each
      certificate representing the Preferred Shares and the Warrants, and, if
      appropriate, securities issued upon conversion thereof, shall be stamped or
      otherwise imprinted with a legend substantially in the following form (in
      addition to any legend required by applicable state securities or “blue sky”
laws):

     

    THESE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR IMPART MEDIA GROUP, INC. SHALL HAVE RECEIVED AN OPINION
      OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
      UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    The
      Company agrees to reissue certificates representing any of the Conversion Shares
      and the Warrant Shares, without the legend set forth above if at such time,
      prior to making any transfer of any such securities, such holder thereof shall
      give written notice to the Company describing the manner and terms of such
      transfer and removal as the Company may reasonably request. Such proposed
      transfer and removal will not be effected until: (a) either (i) the Company
      has
      received an opinion of counsel reasonably satisfactory to the Company, to the
      effect that the registration of the Conversion Shares or the Warrant Shares
      under the Securities Act is not required in connection with such proposed
      transfer, (ii) a registration statement under the Securities Act covering such
      proposed disposition has been filed by the Company with the Commission and
      has
      become effective under the Securities Act, (iii) the Company has received other
      evidence reasonably satisfactory to the Company that such registration and
      qualification under the Securities Act and state securities laws are not
      required, or (iv) the holder provides the Company with reasonable assurances
      that such security can be sold pursuant to Rule 144 under the Securities Act.
      The Company will respond to any such notice from a holder within three (3)
      business days. In the case of any proposed transfer under this Section 5.1,
      the
      Company will use reasonable efforts to comply with any such applicable state
      securities or "blue sky" laws, but shall in no event be required, (x) to qualify
      to do business in any state where it is not then qualified, (y) to take any
      action that would subject it to tax or to the general service of process in
      any
      state where it is not then subject, or (z) to comply with state securities
      or
“blue sky” laws of any state for which registration by coordination is
      unavailable to the Company. The restrictions on transfer contained in this
      Section 5.1 shall be in addition to, and not by way of limitation of, any other
      restrictions on transfer contained in any other section of this Agreement.
      Whenever
      a
      certificate representing the Conversion Shares or Warrant Shares is required
      to
      be issued to a Purchaser without a legend, in lieu of delivering physical
      certificates representing the Conversion Shares or Warrant Shares (provided
      that a registration statement under the Securities Act providing for the resale
      of the Warrant Shares and Conversion Shares is then in effect and such Purchaser
      complies with all applicable securities laws in connection with the sale,
      including, without limitation, the prospectus delivery requirements),
      the
      Company shall cause its transfer agent to electronically transmit the Conversion
      Shares or Warrant Shares to a Purchaser by crediting the account of such
      Purchaser's Prime Broker with the Depository Trust Company through its Deposit
      Withdrawal Agent Commission system (to the extent not inconsistent with any
      provisions of this Agreement).

     

    ARTICLE
      VI

     

    INDEMNIFICATION

    


    Section
      6.1    General
      Indemnity.
      The
      Company agrees to indemnify and hold harmless the Purchasers (and their
      respective directors, officers, affiliates, agents, successors and assigns)
      from
      and against any and all losses, liabilities, deficiencies, costs, damages and
      expenses (including, without limitation, reasonable attorneys’ fees, charges and
      disbursements) incurred by the Purchasers as a result of any inaccuracy in
      or
      breach of the representations, warranties or covenants made by the Company
      herein.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    Section
      6.2    Indemnification
      Procedure.
      Any
      party entitled to indemnification under this Article VI (an “indemnified party”)
      will give written notice to the indemnifying party of any matters giving rise
      to
      a claim for indemnification; provided, that the failure of any party entitled
      to
      indemnification hereunder to give notice as provided herein shall not relieve
      the indemnifying party of its obligations under this Article VI except to the
      extent that the indemnifying party is actually prejudiced by such failure to
      give notice. In case any action, proceeding or claim is brought against an
      indemnified party in respect of which indemnification is sought hereunder,
      the
      indemnifying party shall be entitled to participate in and, unless in the
      reasonable judgment of the indemnified party a conflict of interest between
      it
      and the indemnifying party may exist with respect of such action, proceeding
      or
      claim, to assume the defense thereof with counsel reasonably satisfactory to
      the
      indemnified party. In the event that the indemnifying party advises an
      indemnified party that it will contest such a claim for indemnification
      hereunder, or fails, within thirty (30) days of receipt of any indemnification
      notice to notify, in writing, such person of its election to defend, settle
      or
      compromise, at its sole cost and expense, any action, proceeding or claim (or
      discontinues its defense at any time after it commences such defense), then
      the
      indemnified party may, at its option, defend, settle or otherwise compromise
      or
      pay such action or claim. In any event, unless and until the indemnifying party
      elects in writing to assume and does so assume the defense of any such claim,
      proceeding or action, the indemnified party’s costs and expenses arising out of
      the defense, settlement or compromise of any such action, claim or proceeding
      shall be losses subject to indemnification hereunder. The indemnified party
      shall cooperate fully with the indemnifying party in connection with any
      negotiation or defense of any such action or claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the indemnified party which relates to such action or claim. The indemnifying
      party shall keep the indemnified party fully apprised at all times as to the
      status of the defense or any settlement negotiations with respect thereto.
      If
      the indemnifying party elects to defend any such action or claim, then the
      indemnified party shall be entitled to participate in such defense with counsel
      of its choice at its sole cost and expense. The indemnifying party shall not
      be
      liable for any settlement of any action, claim or proceeding effected without
      its prior written consent. Notwithstanding anything in this Article VI to the
      contrary, the indemnifying party shall not, without the indemnified party’s
      prior written consent, settle or compromise any claim or consent to entry of
      any
      judgment in respect thereof which imposes any future obligation on the
      indemnified party or which does not include, as an unconditional term thereof,
      the giving by the claimant or the plaintiff to the indemnified party of a
      release from all liability in respect of such claim. The indemnification
      required by this Article VI shall be made by periodic payments of the amount
      thereof during the course of investigation or defense, as and when bills are
      received or expense, loss, damage or liability is incurred, so long as the
      indemnified party irrevocably agrees to refund such moneys if it is ultimately
      determined by a court of competent jurisdiction that such party was not entitled
      to indemnification. The indemnity agreements contained herein shall be in
      addition to (a) any cause of action or similar rights of the indemnified party
      against the indemnifying party or others, and (b) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

     

    MISCELLANEOUS

    


    Section
      7.1    Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement, the Registration Rights Agreement
      or
      the Certificate of Designation, each party shall pay the fees and expenses
      of
      its advisors, counsel, accountants and other experts, if any, and all other
      expenses, incurred by such party incident to the negotiation, preparation,
      execution, delivery and performance of this Agreement, provided
      that the
      Company shall pay all actual attorneys' fees and expenses (including
      disbursements and out-of-pocket expenses) incurred by the Purchasers in
      connection with (i) the preparation, negotiation, execution and delivery of
      this
      Agreement, the Certificate of Designation, the Warrants, the Registration Rights
      Agreement and the transactions contemplated thereunder, which payment shall
      be
      made at Closing (unless this Agreement is terminated in accordance with its
      terms, in which case such payment shall be made upon termination of this
      Agreement) and shall not exceed $17,500, (ii) the filing and declaration of
      effectiveness by the Commission of the Registration Statement (as defined in
      the
      Registration Rights Agreement) and (iii) any amendments, modifications or
      waivers of this Agreement or any of the other Transaction Documents. In
      addition, the Company shall pay all reasonable fees and expenses incurred by
      the
      Purchasers in connection with the enforcement of this Agreement or any of the
      other Transaction Documents, including, without limitation, all reasonable
      attorneys' fees and expenses. The Company shall pay all stamp or other similar
      taxes and duties levied in connection with issuance of the Preferred Shares
      pursuant hereto.
      The
      Company shall also pay all actual attorneys' fees and expenses (including
      disbursements and out-of-pocket expenses) of Lowenstein Sandler P.C. incurred
      by
      Enable Capital Management, which payment shall be made at Closing (unless this
      Agreement is terminated in accordance with its terms, in which case such payment
      shall be made upon termination of this Agreement) and shall not exceed
      $10,000.

     

    Section
      7.2    Specific
      Enforcement, Consent to Jurisdiction. 

     

    (a)    The
      Company and the Purchasers acknowledge and agree that irreparable damage would
      occur in the event that certain of the provisions of this Agreement, the
      Certificate of Designation or the Registration Rights Agreement were not
      performed in accordance with their specific terms or were otherwise breached.
      It
      is accordingly agreed that the parties shall be entitled to an injunction or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      or
      the Registration Rights Agreement and to enforce specifically the terms and
      provisions hereof or thereof, this being in addition to any other remedy to
      which any of them may be entitled by law or equity.

     

    (b)    Each
      of
      the Company and the Purchasers (i) hereby irrevocably submits to the
      jurisdiction of the United States District Court sitting in the Southern
      District of New York and the courts of the State of New York located in New
      York
      county for the purposes of any suit, action or proceeding arising out of or
      relating to this Agreement or any of the other Transaction Documents or the
      transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
      not to assert in any such suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of such court, that the suit, action
      or
      proceeding is brought in an inconvenient forum or that the venue of the suit,
      action or proceeding is improper. Each of the Company and the Purchasers
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address in effect for notices to
      it
      under this Agreement and agrees that such service shall constitute good and
      sufficient service of process and notice thereof. Nothing in this Section 7.2
      shall affect or limit any right to serve process in any other manner permitted
      by law.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    Section
      7.3    Entire
      Agreement; Amendment.
      This
      Agreement and the Transaction Documents contains the entire understanding and
      agreement of the parties with respect to the matters covered hereby and, except
      as specifically set forth herein or in the Transaction Documents or the
      Certificate of Designation, neither the Company nor any of the Purchasers makes
      any representations, warranty, covenant or undertaking with respect to such
      matters and they supersede all prior understandings and agreements with respect
      to said subject matter, all of which are merged herein. No provision of this
      Agreement may be waived or amended other than by a written instrument signed
      by
      the Company and the holders of at least seventy-five percent (75%) of the
      Preferred Shares then outstanding, and no provision hereof may be waived other
      than by an a written instrument signed by the Company in instances when
      enforcement of any such amendment or waiver is sought against the Company and
      by
      the holders of at least seventy-five percent (75%) of the Preferred Shares
      then
      outstanding in instances when enforcement of any such amendment or waiver is
      sought against the Purchasers. No such amendment shall be effective to the
      extent that it applies to less than all of the holders of the Preferred Shares
      then outstanding. No consideration shall be offered or paid to any person to
      amend or consent to a waiver or modification of any provision of any of the
      Transaction Documents or the Certificate of Designation unless the same
      consideration is also offered to all of the parties to the Transaction Documents
      or holders of Preferred Shares, as the case may be.

     

    Section
      7.4    Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery, telecopy or facsimile at the address or number designated below (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the second business day following the date of mailing
      by express courier service, fully prepaid, addressed to such address, or upon
      actual receipt of such mailing, whichever shall first occur. The addresses
      for
      such communications shall be:

     

    
      	
              If
                to the Company:

            	 	
              Impart
                Media Group, Inc. 

              1300
                North Northlake Way

              Seattle,
                Washington 98103

              Attention:
                Chief Executive Officer

              Tel.
                No.: (206) 633-1852 

              Fax
                No.: (206) 633-2768

            
	 	 	 
	
              with
                copies (which shall not constitute notice) to:

            	 	
              Pryor
                Cashman Sherman & Flynn LLP

              410
                Park Avenue, 10th
                Floor

              New
                York, New York 10022

              Attention:
                Eric M. Hellige

              Tel.
                No.: (212) 326-0846

              Fax
                No.: (212) 326-0806

            


    

    
       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      
 

    
      	 	 	 
	
              If
                to any Purchaser:

            	
               

            	
              At
                the address of such Purchaser set forth on Exhibit
                A
                to
                this Agreement, with copies to Purchaser’s counsel as set forth on
                Exhibit
                A
                or
                as specified in writing by such:

            
	 	 	 
	
              with
                copies (which shall not constitute notice) to:

            	 	
              Kramer
                Levin Naftalis & Frankel LLP

              1177
                Avenue of the Americas

              New
                York, New York 10036

              Attention:
                Christopher S. Auguste

              Tel
                No.: (212) 715-9100

              Fax
                No.: (212) 715-8000

            


    

     

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other party
      hereto.

     

    Section
      7.5    Waivers.
      No
      waiver by either party of any default with respect to any provision, condition
      or requirement of this Agreement shall be deemed to be a continuing waiver
      in
      the future or a waiver of any other provisions, condition or requirement hereof,
      nor shall any delay or omission of any party to exercise any right hereunder
      in
      any manner impair the exercise of any such right accruing to it
      thereafter.

     

    Section
      7.6    Headings.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    Section
      7.7    Successors
      and Assigns; Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns.  This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company or the Purchasers, as applicable; provided,
      however,
      that a
      Purchaser may assign its rights and delegate its duties hereunder in whole
      or in
      part to an affiliate of such Purchaser which shall be an “accredited investor”
as defined in Rule 501(a) of Regulation D, as amended, under the Securities
      Act,
      and which shall agree in writing to be bound by the terms and conditions of
      this
      Agreement.

     

    Section
      7.8    No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    Section
      7.9    Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    
      
        
        

      

      
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    Section
      7.10   Survival.
      The
      representations and warranties of the Company and the Purchasers contained
      in
      Article II shall survive the execution and delivery hereof and the Closing
      until
      the date two (2) years from the Closing Date, and the agreements and covenants
      set forth in Articles I, III, VI and VII of this Agreement shall survive the
      execution and delivery hereof and the Closing hereunder until the Purchasers
      in
      the aggregate beneficially own (determined in accordance with Rule 13d-3 under
      the Exchange Act) less than 10% of the total combined voting power of all voting
      securities then outstanding, provided, that Sections 3.1, 3.2, 3.4, 3.5, 3.8,
      3.9, 3.10, 3.12, 3.13, 3.14, 3.15. 3.17, 3.18, 3.19, 3.20 and 3.21 shall not
      expire until the Registration Statement required by Section 2 of the
      Registration Rights Agreement is no longer required to be effective under the
      terms and conditions of Registration Rights Agreement (or, in the case of any
      of
      the foregoing Sections which pertain to the Preferred Shares and/or the
      Warrants, then such Sections shall expire once there are no further Preferred
      Shares or Warrants outstanding, as applicable) (the “Survival
      Period”).
      Expiration of the Survival Period shall not affect the rights of any Purchaser
      under Article VI hereof in respect of any specific claim for indemnification
      made in writing by such Purchaser and received by the Company prior to such
      expiration.

     

    Section
      7.11   Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same instrument and shall become effective
      when counterparts have been signed by each party and delivered to the other
      parties hereto, it being understood that all parties need not sign the same
      counterpart. In the event any signature is delivered by facsimile transmission,
      the party using such means of delivery shall cause four additional executed
      signature pages to be physically delivered to the other parties within five
      days
      of the execution and delivery hereof.

     

    Section
      7.12   Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the name of the Purchasers without the consent of the Purchasers
      unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

    Section
      7.13   Severability.
      The
      provisions of this Agreement, the Certificate of Designation and the
      Registration Rights Agreement are severable and, in the event that any court
      of
      competent jurisdiction shall determine that any one or more of the provisions
      or
      part of the provisions contained in this Agreement, the Certificate of
      Designation or the Registration Rights Agreement shall, for any reason, be
      held
      to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provision or part
      of a
      provision of this Agreement, the Certificate of Designation or the Registration
      Rights Agreement shall be reformed and construed as if such invalid or illegal
      or unenforceable provision, or part of such provision, had never been contained
      herein, so that such provisions would be valid, legal and enforceable to the
      maximum extent possible.

     

    Section
      7.14   Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of any Purchaser or
      the
      Company, each of the Company and the Purchasers shall execute and deliver such
      instrument, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement, the Preferred Shares, the Conversion Shares, the
      Warrants, the Warrant Shares, the Certificate of Designation, and the
      Registration Rights Agreement.

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officer as of the date first above
      written.

     

     

    
      	 	
              IMPART
                MEDIA GROUP, INC.

            
	 	 
	 	 
	 	
              By:
                /s/Joseph
                Martinez

            
	 	
              Name:
                Joseph Martinez

            
	 	
              Title:
                Chief Financial Officer

            
	 	 
	 	 
	 	
              PURCHASER:

            
	 	 
	 	
              Enable
                Growth Partners LP

            
	 	 
	 	 
	 	
              By:
                /s/Brendan
                O’Neil

            
	 	
              Name:
                Brendan O’Neil

            
	 	
              Title:
                Principal and Portfolio Manager

            
	 	 
	 	
              Enable
                Opportunity Partners LP

            
	 	 
	 	 
	 	
              By:
                /s/Brendan
                O’Neil

            
	 	
              Name:
                Brendan O’Neil

            
	 	
              Title:
                Principal and Portfolio Manager

            
	 	 
	 	 
	 	
              Pierce
                Diversified Strategy Master Fund LLC

            
	 	 
	 	 
	 	
              By:
                /s/Brendan
                O’Neil

            
	 	
              Name:
                Brendan O’Neil

            
	 	
              Title:
                Principal and Portfolio Manager

            


    

     

    
      
        
        

      

      
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              Gryphon
                Master Fund, L.P.

            
	 	 
	 	 
	 	
              By:/s/E.B.
                Lyon, IV

            
	 	
              Name:
                E.B. Lyon, IV

            
	 	
              Title:
                Authorized Agent

            
	 	 
	 	 
	 	
              GSSF
                Master Fund, LP

            
	 	 
	 	 
	 	
              By:
                /s/E.B.
                Lyon, IV

            
	 	
              Name:
                E.B. Lyon, IV

            
	 	
              Title:
                Authorized Agent

            
	 	 
	 	 
	 	
              Hudson
                Bay Fund LP

            
	 	 
	 	 
	 	
              By:
                /s/Yoav
                Roth

            
	 	
              Name:
                Yoav Roth

            
	 	
              Title:
                Portfolio Manager

            


    

     

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