Unassociated Document


     

    


    


    


    May
      25,
      2006

    


    AJW
      Partners, LLC

    New
      Millennium Capital Partners II, LLC

    AJW
      Offshore, Ltd.

    AJW
      Qualified Partners, LLC

    1044
      Northern Boulevard 

    Roslyn,
      New York 11576

    


    Attn:
      Jonathan L. Schechter,
      General
      Counsel

    


    Re: Innofone.com,
      Incorporated (the “Company”)

    


    Dear
      Jonathan:

    


    This
      letter agreement outlines the terms and conditions pertaining to the Company’s
      repayment (“Repayment”) of all amounts of principal and interest owing and
      outstanding under those certain Callable Secured Convertible Notes (the “Notes”)
      issued on or about August 31, 2005 and October 31, 2005 pursuant to that certain
      Securities Purchase Agreement (the “SPA”) by and between the Company and AJW
      Partners, LLC (“Partners”), New Millennium Capital Partners, II, LLC
      (“Millennium”), AJW Offshore, Ltd. (“Offshore”) and AJW Qualified Partners, LLC
      (“Qualified, with Partners, Millennium and Offshore, collectively, the “NIR
      Group”). The Repayment shall be applied to the outstanding principal and
      interest owing under the Notes and as consideration for the cancellation of
      the
      Stock Purchase Warrants (“Warrants”) issued to the NIR Group, and the
      termination of any and all UCC-1s filed in favor of NIR. Currently, the Company
      owes the NIR Group $3,000,000 in principal and $20,000 in interest under the
      Notes and the Warrants are “out of the money” with an exercise price of $5.00
      per share. 

    


    Further,
      in connection with the SPA, Notes and Warrants, the following ancillary
      documents were executed and/or filed: (1) Guaranty and Pledge Agreement, dated
      August 31, 2005, by and between the Company, Mr. Alex Lightman, the Company’s
      President and Chief Executive Officer, and NIR (“Pledge Agreement”); (2)
      Security Agreement by and between the Company and NIR, dated August 31, 2005
      (“Security Agreement”); and (3) UCC-1 Financing Statements filed by NIR with the
      Secretary of State of Nevada, Document Filing Number 2005036618-3 (the
“UCC-1”).

    


    For
      purposes of this Agreement, the Notes, SPA, Warrants, Pledge Agreement and
      Security Agreement shall be referred to collectively as “Original
      Documents”.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    In
      connection with the Repayment, the Company and NIR agree to execute and deliver
      this letter agreement (the “Agreement”), a new promissory note (the “New
      Notes”), attached hereto as Exhibit B, a new stock purchase warrant (the “New
      Warrants”), attached hereto as Exhibit C, and a new registration rights
      agreement (“New Registration Agreement”), attached hereto as Exhibit D. Further,
      NIR shall file all appropriate UCC-3 Termination Statements (“UCC-3”) necessary
      to terminate any perfected security interest they had obtained pursuant to
      the
      Security Agreement and the UCC-1.

    


    For
      purposes of the Agreement, the Agreement, New Notes, New Warrants and New
      Registration Agreement and the UCC-3 shall be referred to collectively as the
      “New Documents”. 

    


    The
      following outlines the terms and conditions of the Repayment:

    


    I. Cash
      Payment

    


    Upon
      signing of Agreement, the Company shall make the Cash Payment to NIR in the
      amount of $2,635,400, as more fully described on attached Schedule A. The Cash
      Payment shall be applied to the repayment of all amounts of principal and
      interest owing and outstanding under the Notes. If the Cash Payment provided
      herein is not paid within twenty four (24) hours of signing this Agreement,
      the
      Agreement and the other New Documents shall be deemed null and
      void.

    


    II. New
      Notes

    


    Upon
      signing of the Agreement, the Company shall issue to NIR the New Notes in the
      aggregate amount of $1,200,000; the New Notes to be issued in accordance with
      Schedule B attached hereto. The New Notes shall be self-amortizing over a
      one-year time period commencing on July 1, 2006, with each installment payment
      due on the twelve consecutive monthly anniversaries beginning July 1, 2006.
      Further, pursuant to the New Notes, the Company will pay to NIR an aggregate
      of
      $100,000 per month, as more fully described on Schedule B. The New Notes may
      be
      prepaid by the Company at anytime without penalty.

    


    III. New
      Warrants

    


    Upon
      signing of the Agreement, the Company shall issue to NIR the New Warrants
      exercisable into an aggregate of 750,000 shares of the Company’s Common Stock
      (the “Warrant Shares”); the New Warrants shall be issued in accordance with
      Schedule C attached hereto. The New Warrants shall have a term of five years
      and
      an exercise price equal to $1.79 per share. The New Warrants may be exercised
      on
      a cashless basis only in the event that there is no effective registration
      statement covering the Warrant Shares. NIR may exercise the New Warrants by
      utilizing any amounts still owing under the New Notes. The Company may buy
      back
      all of the New Warrants from NIR for an aggregate of $100,000, as more fully
      described on Schedule C, at any time prior to the New Warrants being
      exercised.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    IV. New
      Registration Agreement

    


    Upon
      signing of the Agreement, the Company and NIR shall execute and deliver the
      New
      Registration Agreement providing for the registration of the Warrant Shares
      with
      the Securities and Exchange Commission. The New Registration Agreement provides
      for one piggyback registration right no sooner than six months from the date
      of
      hereof.

    


    V. Agreement
      Not to Short

     

    NIR
      agrees that it will comply
      with the provisions of Section 9 of the Securities Exchange Act of 1934 Act,
      as
      amended, and the rules promulgated thereunder, with respect to transactions
      involving the Company’s Common Stock. Further, NIR agrees not to sell the
      Company's Common Stock short, either directly or indirectly through its
      affiliates, principals or advisors. 

     

     

    VI. Termination
      of Original Documents

     

    The
      Company and NIR mutually agree that the Original Documents shall be terminated
      in all respects, shall be rendered null and void and shall no longer bind NIR
      or
      the Company to any obligations, duties and responsibilities contained therein.
      Further, NIR and the Company mutually agree that the New Documents shall
      supersede the Original Documents in all respects. 

     

    In
      connection with the termination of the Original Documents, NIR shall deliver
      to
      the Company upon execution of the Agreement, the original Notes and Warrants
      issued by the Company on August 31, 2005 and October 31, 2005, to be cancelled
      on the Company’s book and records. Moreover, NIR shall deliver to Mr. Alex
      Lightman his stock certificate representing 3,000,000 shares of the Company’s
      Common Stock that was pledge by Mr. Lightman pursuant to the Pledge
      Agreement.

     

     

    VII. Withdrawal
      of Registration Statement

     

     

    NIR
      acknowledges that upon execution of this Agreement, the Company may file a
      Form
      AW to withdraw the Registration Statement on Form SB-2 (File No. 333-129278)
      currently on file with the Securities and Exchange Commission covering the
      shares of common stock underlying the Notes and the Warrants.

     

     

    	VIII.  	
            Termination
              of UCC Filings

          


     

     

    All
      security interests perfected by NIR on the “Collateral” (as defined in the
      Security Agreement), pursuant to the Original Documents, including the Security
      Agreement, shall be terminated. Accordingly, NIR agrees to file within (2)
      days
      of this Agreement, UCC-3 Termination Statements to terminate the UCC-1 Financing
      Statements were filed pursuant to the Security Agreement. NIR shall deliver
      to
      the Company all filing receipts for such UCC-3 filings upon receipt from the
      Jurisdictions.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    IX. Miscellaneous

     

    (a)
      This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto. Except as specifically
      set
      forth in this Agreement, no provision of this Agreement may be modified or
      amended except by a written agreement specifically referring to this Agreement
      and signed by the parties hereto.

     

    (b) In
      the event that any provision of this Agreement is held to be invalid, prohibited
      or unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other
      jurisdiction.

     

    (c) No
      waiver of any breach or default or any right under this Agreement shall be
      considered valid unless in writing and signed by the party giving such waiver,
      and no such waiver shall be deemed a waiver of any subsequent breach or default
      or right, whether of the same or similar nature or otherwise.

     

    (d) This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (e) Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    (f) This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Collateral which are governed
      by
      a jurisdiction other than the State of New York in which case such law shall
      govern. Each of the parties hereto irrevocably submit to the exclusive
      jurisdiction of any New York State or United States Federal court sitting in
      Manhattan county over any action or proceeding arising out of or relating to
      this Agreement, and the parties hereto hereby irrevocably agree that all claims
      in respect of such action or proceeding may be heard and determined in such
      New
      York State or Federal court. The parties hereto agree that a final judgment
      in
      any such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      The parties hereto further waive any objection to venue in the State of New
      York
      and any objection to an action or proceeding in the State of New York on the
      basis of forum non conveniens.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    (g) EACH
      PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
      OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
      BE
      FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
      INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
      AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
      THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
      BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN
      ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
      WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
      REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
      SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
      FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
      ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
      A
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE
      COURT.

    


     

     (i) This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    


     

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

     

     

    INNOFONE.COM,
      INCORPORATED

     

    By:
      /s/
      Alex Lightman

    Alex
      Lightman

    Chief
      Executive Officer

     

    


     

    AJW
      PARTNERS, LLC

    By:
      SMS
      Group, LLC

     

    By:
      /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

     

    


     

    AJW
      OFFSHORE, LTD.

    By:
      First
      Street Manager II, LLC

     

    By:
      /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

     

    


     

    AJW
      QUALIFIED PARTNERS, LLC

    By:
      AJW
      Manager, LLC

     

    By:
      /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

     

    


     

    NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

    By:
      First
      Street Manager II, LLC

     

    By:
      /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager