THE TERMS AND
CONDITIONS OF ANY SUCH INDICATION OR ACQUISITION PROPOSAL AS WELL AS THE
IDENTITY OF THE PERSON OR ENTITY MAKING SUCH INDICATION OR ACQUISITION PROPOSAL.
FURTHERMORE, IFL AGREES THAT, UNTIL SUCH TIME AS THIS LETTER AGREEMENT HAS
TERMINATED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 11 HEREOF, NEITHER IT
NOR ANY OF ITS REPRESENTATIVES, OFFICERS, DIRECTORS, AGENTS OR AFFILIATES SHALL
INITIATE, SOLICIT, ENTERTAIN, NEGOTIATE, ACCEPT OR DISCUSS, DIRECTLY OR
INDIRECTLY, ANY PROPOSAL OR OFFER TO RAISE CAPITAL FOR IFL THROUGH THE ISSUANCE
OF DEBT SECURITIES, CAPITALIZED LEASES, PREFERRED OR COMMON INTERESTS OR UNITS
OR ANY SIMILAR INSTRUMENTS EXCEPT IN CONNECTION WITH THE ACQUISITION OR WITH THE
EXPRESS WRITTEN CONSENT OF PALIGENT.
9.
PALIGENT AGREEMENTS. WITHOUT THE PRIOR WRITTEN CONSENT OF IFL
(WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED) PALIGENT SHALL NOT
ENTER INTO ANY AGREEMENT (WRITTEN OR ORAL) OR TRANSACTION OR WAIVE, RELINQUISH,
TERMINATE OR FOREBEAR THE ENFORCEMENT OF ANY RIGHT INCLUDING ANY AGREEMENT
INVOLVING THE SALE, ACQUISITION, LICENSE OR LEASE OF ANY ASSETS.
10.
FINDERS. NEITHER PARTY HERETO DEALT WITH ANY FINDER, BUSINESS
BROKER, OR INVESTMENT BANKER ("FINDER") IN CONNECTION WITH THE PROPOSED
ACQUISITION AND EACH PARTY SHALL BE SOLELY RESPONSIBLE FOR, AND SHALL INDEMNIFY
AND HOLD THE OTHER PARTY HARMLESS FROM, ANY CLAIMS WHICH
4
MAY BE MADE ARISING OUT OF OR IN CONNECTION WITH ITS OWN ACTS MADE OR ALLEGED TO
HAVE BEEN MADE WITH ANY FINDER.
11.
TERMINATION. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,
PALIGENT HAS THE RIGHT IN ITS SOLE DISCRETION FOR ANY REASON WHATSOEVER, OR FOR
NO REASON, WITHOUT PRIOR NOTICE TO IFL, AND WITHOUT LIABILITY TO IFL, TO
TERMINATE THIS LETTER AGREEMENT AND ABANDON ALL DISCUSSIONS, NEGOTIATIONS AND
RELATED ACTIVITIES RESPECTING THE ACQUISITION.
12.
BINDING AND NON-BINDING EFFECT. THIS LETTER AGREEMENT IS BINDING
UPON THE PARTIES TO THE EXTENT SET FORTH HEREIN. THE RIGHTS AND OBLIGATIONS OF
THE PARTIES WITH RESPECT TO THE ACQUISITION SHALL ONLY BE AS SET FORTH HEREIN
AND AS SET FORTH IN THE ACQUISITION AGREEMENT, IF AND WHEN IT IS EXECUTED BY THE
PARTIES THERETO, AND SUBJECT TO THE CONDITIONS SET FORTH THEREIN. IF, DUE TO NO
FAULT OF PALIGENT, THE ACQUISITION OF IFL IS NOT CONSUMMATED WITHIN 270 DAYS OF
THE DATE HEREOF, THE SHARES OF SERIES A PREFERRED STOCK ACQUIRED BY MR. KURTZ
UPON THE EXECUTION OF THIS LETTER AGREEMENT WILL CONSTITUTE 25% OF THE
OUTSTANDING CAPITAL STOCK OF IFL [AFTER GIVING EFFECT TO THE ASSUMED CONVERSION
(TO COMMON STOCK) OF THE 6,777,778 SHARES OF SERIES A PREFERRED STOCK OF IFL
PREVIOUSLY ISSUED AND THE EFFECT OF THE 2 MILLION SHARES OF COMMON STOCK SET
ASIDE BY IFL FOR OPTION GRANTS] WITH NO ADDITIONAL CONSIDERATION PAYABLE BY
MR. KURTZ. THIS LETTER AGREEMENT MAY BE AMENDED, MODIFIED, OR SUPPLEMENTED IN
WRITING BY THE PARTIES.
13.
GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
14.
ARBITRATION. ANY CONTROVERSY OR CLAIM