Document:

ANNEX I
                                                                              TO
                                                   SECURITIES PURCHASE AGREEMENT
                                                   [PROTOTYPE FOR EACH ISSUANCE]

                                FORM OF DEBENTURE

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER  EVIDENCE  ACCEPTABLE  TO THE  COMPANY  THAT SUCH
REGISTRATION IS NOT REQUIRED.

No. 04-03- (1)                                                     US $_________

                              INFINIUM LABS, INC.

         8% CONVERTIBLE DEBENTURE SERIES 04-03 DUE DECEMBER ___, 2005(2)

      THIS DEBENTURE is one of a duly  authorized  issue of up to $_______(3) in
Debentures of INFINIUM  LABS,  INC., a corporation  organized and existing under
the  laws  of the   State  of  Delaware  (the  "Company")  designated  as its 8%
Convertible Debentures Series 04-03.

      FOR VALUE RECEIVED, the Company promises to pay to,  the registered holder
hereof  (the  "Holder"),  the  principal  sum of and 00/100  Dollars  (US $ ) on
December ___, 2005(2)(the  "Maturity Date") and to pay interest on the principal
sum  outstanding  from  time to time in  arrears  at the  rate of 8% per  annum,
accruing from December,  2004(4), the date of initial issuance of this Debenture
(the "Issue Date"), on the date (each, an "Interest Payment Date") which is the

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(1)   Insert unique Debenture number for each issuance.
(2)   Insert date which is the first anniversary of the Closing Date.
(3)   Insert Total Purchase Price
(4)   Insert the Closing Date.

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earlier of (i) a Conversion  Date (as defined  below) or (ii) the Maturity Date,
as the case may be.  Accrual of  interest  shall  commence on the Issue Date and
shall  continue to accrue on a daily basis until  payment  and/or  conversion in
full of the  principal  sum has  been  made or  duly  provided  for.  Additional
provisions  regarding the payment of interest are provided in Section 4(D) below
(the terms of which shall govern as if this  sentence  were not included in this
Debenture).

      This  Debenture  is being issued  pursuant to the terms of the  Securities
Purchase  Agreement,  dated as of December  23, 2004 (the  "Securities  Purchase
Agreement"), to which the Company and the Holder (or the Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.

      This Debenture is subject to the following additional provisions:

      1.    The Debentures will initially be issued in denominations  determined
by the Company, but are exchangeable for an equal aggregate principal  amount of
Debentures of different  denominations,  as  reasonably  requested by the Holder
surrendering  the same. No service charge will be made for such  registration or
transfer or exchange.

      2.    The  Company  shall be entitled  to  withhold  from all  payments of
principal  of, and  interest  on,  this  Debenture  any  amounts  required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

      3.    This Debenture has been issued subject to investment representations
of the original  purchaser  hereof and may be  transferred  or exchanged only in
compliance  with the Securities  Act of 1933, as amended (the "Act"),  and other
applicable  state and foreign  securities  laws and the terms of the  Securities
Purchase  Agreement.   The Holder  shall  deliver  prior  written  notice to the
Company of any  proposed  transfer  of this  Debenture.  In no event  shall such
transfer by a Holder be for less than  $50,000 of  principal  of the  Debentures
held  by the  Holder  or  the  remaining  outstanding  balance  of the  Holder's
Debentures,  whichever is less.  In the event of any  proposed  transfer of this
Debenture,  the Company may require, prior to issuance of a new Debenture in the
name of such other person,  that it receive reasonable  transfer  documentation,
including  legal opinions,   that is  sufficient  to evidence that such proposed
transfer complies with the Act and other applicable state and foreign securities
laws  and  the  terms  of the  Securities   Purchase   Agreement.  Prior  to due
presentment  for  transfer of this  Debenture,  the Company and any agent of the
Company may treat the person in whose name this Debenture is duly  registered on
the  Company's  Debenture  Register  as the  owner  hereof  for the  purpose  of
receiving payment as herein provided and for all other purposes,  whether or not
this  Debenture be overdue,  and neither the Company nor any such agent shall be
affected by notice to the contrary.

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      4.    A.    (i)   At any  time  on or  after  the  Commencement  Date  (as
defined  below)  and  prior  to the  time  this  Debenture  is  paid  in full in
accordance with its terms (including  without limitation after the Maturity Date
and after the occurrence of an Event of Default,  as defined below),  the Holder
of  this  Debenture  is  entitled,  at its  option,  subject  to  the  following
provisions of this Section 4, to convert this  Debenture at any time into shares
of Common  Stock,  $0.0001  par value  ("Common  Stock"),  of the Company of the
Company at the Conversion Price (as defined below) per share.

                  (ii)  The term "Conversion  Price" means  seventy-five percent
(75%; the "Current  Percentage") of the lowest Closing Price during the five (5)
Trading Days ending on the Trading Day immediately  before the Conversion  Date;
provided,  however,  that in no event will the Conversion Price be (x) more than
$0.266667 (the "Maximum  Conversion Price") or (y) until the earliest of (I) the
date which is the four (4) months  after the Closing  Date,  (II) the date after
the Closing  Date on which the Company  files a  registration  statement on Form
S-8, or (III) the date on which the Company first issues a Mandatory  Conversion
Notice (as defined below), lower than $0.106667 (the "Minimum Conversion Price")
(as each such amount may be adjusted from time to time as provided herein).

                  (iii) The term  "Commencement  Date"  means the earlier of (i)
the date  which is  sixty-five  (65)  days  after the  Issue  Date,  or (ii) the
Effective Date.

            B.    Conversion  shall be  effectuated  either by  delivery  to the
Company or by  facsimile  transmission  (as  provided in Section 12 hereof) of a
completed  and duly  executed  Notice of  Conversion  (as defined  below) to the
address or facsimile  number provided in the Notice of Exercise (as such address
or  facsimile  number  may  be  revised  by  notice  given  by  the  Company  as
contemplated  by  the  Section  headed  "NOTICES"  in  the  Securities  Purchase
Agreement).  The notice of conversion ("Notice of Conversion") shall be executed
by the Holder of this  Debenture and shall  evidence such Holder's  intention to
convert this Debenture or a specified  portion hereof in the form annexed hereto
as Exhibit A. If paid in Common Stock as contemplated  hereby,  interest accrued
or accruing from the Issue Date to the relevant  Interest  Payment Date shall be
paid in Common Stock at the  Conversion  Price  applicable  as  of such Interest
Payment  Date.  No  fractional  shares  of  Common  Stock or scrip  representing
fractions  of  shares  will be issued on  conversion,  but the  number of shares
issuable  shall be rounded to the nearest whole share.  The date on which Notice
of Conversion is given (the "Conversion Date") shall be deemed to be the date on
which the Holder faxes or otherwise  delivers  the Notice of  Conversion  to the
Company so that it is received by the Company on or before such specified date,

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provided that, if such conversion would convert the entire  remaining  principal
of this  Debenture,  the  Holder  shall  deliver  to the  Company  the  original
Debentures  being  converted  no later than five (5)  Trading  Days  thereafter.
Facsimile  delivery of the Notice of Conversion shall be accepted by the Company
by hand, mail or courier delivery at the address  specified in said Exhibit A or
at the  facsimile  number  specified  in said Exhibit A (each of such address or
facsimile  number  may be  changed  by notice  given to the Holder in the manner
provided in the Securities Purchase Agreement). Certificates representing Common
Stock upon  conversion  ("Conversion  Certificates")  will be  delivered  to the
Holder at the address  specified in the Notice of  Conversion  (which may be the
Holder's  address  for  notices  as  contemplated  by  the  Securities  Purchase
Agreement or a different  address),  via express courier, by electronic transfer
or  otherwise,  within  three (3) Trading  Days (such  third  Trading  Day,  the
"Delivery  Date") after the date on which the Notice of  Conversion is delivered
to the Company as  contemplated in this paragraph B, and, if interest is paid by
Common Stock,  the Interest  Payment Date.  The Holder shall be deemed to be the
holder of the shares  issuable to it in accordance  with the  provisions of this
Section 4(B) on the Conversion Date.

            C.    Notwithstanding  any other  provision  hereof or of any of the
other Transaction  Agreements,  in no event (except (i) as specifically provided
herein as an exception to this  provision,  or (ii) while there is outstanding a
tender offer for any or all of the  shares of the Company's  Common Stock) shall
the Holder be entitled to convert  any portion of this  Debenture,  or shall the
Company have the obligation to convert such Debenture (and the Company shall not
have the right to pay interest  hereon in shares of Common  Stock) to the extent
that, after such conversion or issuance of stock in payment of interest, the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
its  affiliates  (other  than  shares  of  Common  Stock  which  may  be  deemed
beneficially  owned  through the  ownership  of the  unconverted  portion of the
Debentures  or other  convertible  securities or of the  unexercised  portion of
warrants or other rights to purchase Common Stock), and (2) the number of shares
of Common Stock issuable upon the  conversion of the Debentures  with respect to
which  the  determination  of this  proviso  is  being  made,  would  result  in
beneficial  ownership by the Holder and its affiliates of more than 4.99% of the
outstanding  shares of Common Stock (after  taking into account the shares to be
issued to the Holder up on such conversion).  For purposes of the proviso to the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended,  except as  otherwise  provided  in clause  (1) of such  sentence.  The
Holder,  by its acceptance of this Debenture,  further agrees that if the Holder
transfers or assigns any of the  Debentures to a party who or which would not be
considered  such an  affiliate,  such  assignment  shall be made  subject to the
transferee's or assignee's  specific  agreement to be bound by the provisions of
this Section 4(C) as if such  transferee  or assignee  were the original  Holder
hereof.  Aside from any  restrictions  imposed by applicable law, nothing herein
shall preclude the Holder from disposing of a sufficient  number of other shares
of Common Stock  beneficially owned by the Holder so as to thereafter permit the
continued conversion of this Debenture.

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<PAGE>

            D.    (i)  Subject  to the  terms of  Section  4(C) and to the other
terms of this Section 4(D),  interest on the principal amount of this  Debenture
converted  pursuant to a Notice of Conversion  shall be due and payable,  at the
option of the Company, in cash or Common Stock on the Interest Payment Date.

                  (ii)  If  the  interest  is to be paid in  cash,  the  Company
shall make such payment  within  three (3) Trading Days of the Interest  Payment
Date.  If the interest is not paid by such third  Trading Day, the interest must
be paid in Common Stock in accordance  with the  provisions  of Section  4(D)(i)
hereof, unless the Holder consents otherwise in each specific instance.

                  (iii) Notwithstanding  the foregoing,  the Company's  right to
issue shares in payment of such interest is applicable if, and only if, there is
then a currently  effective  Registration  Statement  covering the resale of the
shares to be issued to the Holder in payment of such interest.

                  (iv)  The  number of  shares  of Common  Stock to be issued in
payment of such  interest  shall be  determined by dividing the dollar amount of
the interest  to be so paid by the  Conversion  Price on the  relevant  Interest
Payment  Date.  Such Common  Stock  shall be  delivered  to the  Holder,  or per
Holder's  instructions,   on  the  Delivery  Date  for  the  related  Conversion
Certificates pursuant to Section 4(B) hereof.

                  (iv)  If the Company elects to have the interest paid in cash,
the  Company  shall  make such  payment  within  three (3)  Trading  Days of the
Interest  Payment  Date.  If such  payment is not made in cash by such date,  it
shall be deemed that,  subject to the  provisions  of Section  4(C) hereof,  the
Company  has  elected  to pay the  interest  in  stock,  if,  but  only if,  the
Registration Statement covering the shares being issued is effective on the date
such shares are issued.

            E.    Anything  herein  to  the  contrary  notwithstanding,  in  the
circumstances contemplated by Section 4(g) of the Securities Purchase Agreement,
the  Conversion  Price and the other  terms  of the  Unconverted  Debenture  (as
defined  below) may be adjusted in the manner  provided in said  Sections of the
Securities  Purchase  Agreement.  The term  "Unconverted  Debenture"  means  the
principal  amount  of this  Debenture  which  has not been  converted  as of the
relevant date.

            F.    (i) Subject to the terms  and conditions of this Section 4(F),
on each Mandatory Conversion Date (as defined below),  without further action by
the Holder,  the  outstanding  principal and accrued but unpaid interest on this
Debenture equal to the Mandatory  Conversion  Amount (as defined below) shall be

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deemed  converted into Common Stock  at the  Conversion  Price in effect on such
Mandatory  Conversion Date. The Mandatory  Conversion Date shall be a Conversion
Date for all purposes of this  Debenture and the other  Transaction  Agreements,
except  that the  provisions  of Section  4(C) shall not apply on the  Mandatory
Conversion Date. Any such mandatory conversion shall be subject to the following
terms and conditions of this Section F to the extent relevant.

                  (ii)  The following terms shall have the meanings indicated:

      (a)   "Mandatory  Conversion  Amount"  is the  amount  equal  to  (x)  the
Lender's Allocable Share of (x) ten percent (10%) of the Weekly Weighted Trading
Volume for the  Trading  Week ended on the last  Trading Day before the date the
Mandatory Conversion Notice is given.

      (b)   "Mandatory  Conversion  Date"  means  the  last  Trading  Day of the
Mandatory Conversion Period.

      (c)   "Mandatory   Conversion   Notice"  means a written  notice  from the
Company to the Holder specifying that the Holder is required to convert at least
the Mandatory Conversion Amount during the Mandatory Conversion Period.

      (d)   "Mandatory  Conversion  Period"  means,  if  the  Company  issues  a
Mandatory  Conversion Notice, the period beginning on the calendar day after the
last Trading Day of the most recent  Trading Week and ending on the last Trading
Day of the following calendar week.5

      (e)   "Trading Week" means the Trading Days during the period beginning on
the first  Trading Day after a Sunday and ending on the last  Trading Day before
the next following Monday.

      (f)   "Weighted  Volume" shall mean,  for each Trading Day, the product of
(a) the Closing Price for that Trading Day, multiplied by (b) the volume for the
Common  Stock  traded on the  Principal  Market for that  Trading  Day,  each as
reported by the Reporting Service.

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5 A calendar  week begins on Monday and ends on the last  Trading Day before the
following Monday. If a Mandatory  Conversion Notice were issued on Monday, April
11, 2005 (with  respect to the Weekly  Weighted  Trading  Volume for the Trading
Days April 4, 2005 through April 8, 2005,  inclusive,  the Mandatory  Conversion
Period would begin April 9, 2005 and continue through April 15, 2005.

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      (g)   "Weekly  Weighted  Trading  Volume"  means the total of the Weighted
Volume for all of the Trading Days in a Trading Week.

                  (iii) If, but only if,  all of the  following  conditions  are
true

      (a) the  Registration  Statement  covering  the  resale of the  Conversion
      Shares to be issued on the relevant Mandatory Conversion Date is in effect
      on the date the Company  issues a Mandatory  Conversion  Notice and on the
      relevant Mandatory Conversion Date,

      (b) the Company is not in default of any material  obligation under any of
      the  Transaction  Agreements  on the date the  Company  issues a Mandatory
      Conversion Notice and on the relevant Mandatory Conversion Date, and

      (c) the Common Stock of the Company, including the Conversion Shares to be
      issued on the Mandatory  Conversion  Date, are eligible for trading on the
      Principal Trading Market,

then on or before  the first  Trading  Day after  any given  Trading  Week,  the
Company  will have the right to give the Holder a Mandatory  Conversion  Notice,
and the  provisions  of  subparagraph  (iv)  below will  apply.  If any of these
conditions is not true on the date the Mandatory  Conversion  Notice is given or
on the  Mandatory  Conversion  Date,  the Mandatory  Conversion  Notice shall be
deemed canceled ab initio.

                  (iv)  The  Mandatory   Conversion  Notice  shall  specify  the
Mandatory  Conversion Amount and provide information  supporting the calculation
of such Mandatory  Conversion Amount. If during the Mandatory  Conversion Period
(ending at the close of business on the Mandatory  Conversion  Date), the Holder
has not submitted one or more Notices of Conversion  for, in the  aggregate,  at
least the  Mandatory  Conversion  Amount,  the Holder  shall be deemed,  without
further  action,  to have  submitted a  Notice of  Conversion  on the  Mandatory
Conversion  Date for the principal  amount equal to the  difference  between the
Mandatory  Conversion  Amount and the aggregate  principal  amount  specified in
Notices of  Conversion  actually  submitted by the Holder  during the  Mandatory
Conversion Period.

                  (v)   Provided each  satisfies the  provisions of this Section
4(F), the Company may issue multiple Mandatory  Conversion Notices, but not more
than one in any Trading Week.

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                  (vi)  After  receiving  a  Mandatory  Conversion  Notice,  the
Holder shall  continue to have the right to convert any  outstanding  portion of
this Debenture in accordance with its terms until it is fully converted.

      5.    A.  No  provision  of this  Debenture  shall  alter  or  impair  the
obligation of the Company,  which is absolute and  unconditional,   to  pay  the
principal of, and interest on, this Debenture at the time,  place, and rate, and
in the coin or  currency  or where  contemplated  herein in shares of its Common
Stock,  as  applicable,  as  herein  prescribed.  This  Debenture  and all other
Debentures  now or hereafter  issued of similar terms are direct  obligations of
the Company.

            B.    Except as provided in Section 5(C),  this Debenture may not be
prepaid in whole or in part at any time prior to the Maturity Date,  except with
the prior written  consent of the Holder in each  instance,  which consent is in
the sole and  absolute  discretion  of the  Holder and may be  withheld  for any
reason or for no reason whatsoever.

            C.    Anything herein or in any of the other Transaction  Agreements
to the  contrary  notwithstanding,  at any time after the  Effective  Date,  the
Company will have the absolute  and  unconditional  right to redeem all, but not
less than all,  of the then  Unconverted  Debenture  in cash for the  Redemption
Amount (as defined  below) in  accordance  with the terms of this  Section  5(C)
(such  redemption,   a  "Redemption"),   subject  to  the  following  terms  and
conditions:

                  (i)   The  Company  may give a written  notice (a  "Redemption
Notice") to the Holder of its intention to effect a Redemption.  The  Redemption
Notice shall (x) specify a date (the  "Scheduled  Redemption  Payment  Date") on
which such Redemption will be effected;  provided,  however,  that the Scheduled
Redemption  Payment Date must be at least fifteen (15) Trading Days and not more
than  twenty  (20)  Trading  Days  after  the  Holder's  actual  receipt  of the
Redemption  Notice,  and (y) identify the bank (the  "Redemption  Payment Bank")
where the  Redemption  Funds (as defined  below) will be deposited  prior to the
issuance of the Confirmation Notice (as defined below).

                  (ii)  No later than five (5) business  days after the date the
Redemption  Notice is given to the Holder,  the Company  will send a notice (the
"Confirmation  Notice") to the Holder that funds (the "Redemption  Funds") equal
to the  Redemption  Amount   (calculated as of the Scheduled  Redemption Payment
Date) have been deposited with the Prepayment Bank,  together with  confirmation
of such deposit by the  Redemption  Payment Bank. The  Confirmation  Notice will
also  include  instructions  for the  method  by  which the  Holder  can provide
instructions to the Redemption Payment Bank to make payment by check or wire, as
specified by the Holder, on the Scheduled Redemption Payment Date.

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                  (iii) The "Redemption Amount" is the amount,  payable in cash,
equal to (x) the aggregate principal of the Unconverted  Debenture (the "Accrued
Principal  Amount") and all accrued  interest  thereon through and including the
Redemption  Payment Date (as defined  below),  multiplied by (y) one hundred ten
percent  (110.00%).  The  "Redemption  Payment Date" is the date the  Redemption
Amount is actually paid to the Holder.

                  (iv)  Anything in this  Debenture or any Notice of  Conversion
to the  contrary  notwithstanding,  upon the  Holder's  receipt of a  Redemption
Notice,  the Holder  shall have the right,  in the  Holder's  sole and  absolute
discretion, to notify the Company in writing that the Holder has canceled all or
any part of any outstanding Notice of Conversion for which the Conversion Shares
have not been  delivered to the Holder.  In such event the  Debentures for which
the  Notice  of  Conversion  has  been  canceled  shall  be  deemed  Unconverted
Debentures.

                  (v)   Even after the  issuance  of a  Redemption  Notice,  the
Holder  may  continue  to  convert  this  Debenture  as  provided  in the  other
provisions of this Debenture until the Redemption  Payment Date, and the Company
covenants to honor all Notices of Conversion  duly given by the Holder,  without
regard to the  issuance of the  Redemption  Notice.  If the Holder  converts any
portion of this Debenture  after the date of the Redemption  Notice and prior to
the payment of the Redemption Amount to the Holder, so that the then outstanding
principal of this  Debenture  is less than the  Accrued  Principal  Amount,  the
Holder shall notify the  Prepayment  Bank of the then  outstanding  principal of
this Debenture.  The Redemption Amount will then be adjusted to and be deemed to
be equal such outstanding principal plus all accrued but unpaid interest thereon
through the Redemption Date.

                  (vi)  If the  Confirmation  Notice  is not timely  given or if
the Redemption  Funds are not timely paid or made  available to the Holder,  the
Holder will have the option, exercisable at any time prior to the actual payment
of the Redemption Amount (together with any additional  interest accruing on the
Accrued Principal Amount after the Scheduled  Redemption Payment Date) to effect
either or both of the following  actions:  (x)  cancellation,  ab initio, of the
prepayment  contemplated  by the Redemption  Notice and (y)  cancellation of the
Company's prepayment right under this Section 5(C) at any time thereafter.

      6.    No recourse shall be had for the payment of the principal of, or the
interest  on, this  Debenture,  or for any claim based  hereon,  or otherwise in
respect hereof, against any incorporator,  shareholder,  officer or director, as
such,  past,  present or future,  of the Company or any  successor  corporation,
whether  by  virtue  of any  constitution,  statute  or rule  of law,  or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance  hereof and as part of the consideration for the issue hereof,
expressly waived and released.

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<PAGE>

      7.    All payments  contemplated hereby to be made "in cash" shall be made
in immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company (which
account may be changed by notice similarly given). All payments of cash and each
delivery of shares of Common Stock issuable to the Holder as contemplated hereby
shall be made to the  Holder at the  address  last  appearing  on the  Debenture
Register  of the  Company as  designated  in writing by the Holder  from time to
time;  except  that the  Holder  can  designate,  by  notice to the  Company,  a
different delivery address for any one or more specific payments or deliveries.

      8.    If, for as long as this Debenture remains  outstanding,  the Company
enters into a merger (other than where the Company is the  surviving  entity) or
consolidation with another corporation or other entity or a sale or transfer  of
all or  substantially  all of  the  assets  of the  Company  to  another  person
(collectively, a "Sale"), the Company will require, in the agreements reflecting
such transaction,  that the surviving entity expressly assume the obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company enters into
a Sale and the  holders  of the Common  Stock are  entitled  to  receive  stock,
securities or property in respect of or in exchange for Common Stock,  then as a
condition  of such  Sale,  the  Company  and any such  successor,  purchaser  or
transferee  will agree that the  Debenture  may  thereafter  be converted on the
terms and subject to the  conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger,  consolidation,  sale
or transfer by a holder of the number of shares of Common  Stock into which this
Debenture   might  have  been   converted   immediately   before  such   merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be  practicable.  In the event of any such proposed  Sale, (i)
the Holder  hereof  shall have the right to  convert by  delivering  a Notice of
Conversion to the Company  within fifteen (15) days of receipt of notice of such
Sale  from the  Company,  except  that  Section  4(C)  shall  not  apply to such
conversion.

      9.    If,  at any time  while  any  portion  of  this  Debenture   remains
outstanding,  the Company spins off or otherwise divests itself of a part of its
business  or  operations  or  disposes  of all or of a part of its  assets  in a
transaction (the "Spin Off") in which the Company,  in addition to or in lieu of
any other  compensation  received and retained by the Company for such business,
operations  or  assets,  causes  securities  of  another  entity  (the "Spin Off
Securities") to be issued to security holders of the Company,  the Company shall
cause (i) to be reserved Spin Off  Securities  equal to the number thereof which
would  have  been  issued  to the  Holder  had  all of the  Holder's  Debentures
outstanding  on the record date (the "Record Date") for  determining  the amount
and  number  of Spin Off  Securities  to be issued to  security  holders  of the
Company  (the  "Outstanding  Debentures")  been  converted  as of the  close  of
business on the Trading Day  immediately  before the Record Date (the  "Reserved
Spin Off Shares"),  and (ii) to be issued to the Holder on the conversion of all
or any of the  Outstanding  Debentures,  such  amount of the  Reserved  Spin Off
Shares equal to (x) the Reserved  Spin Off Shares  multiplied by (y) a fraction,
of which (I) the numerator is the principal amount of the Outstanding Debentures
then being  converted,  and (II) the denominator is the principal  amount of the
Outstanding Debentures.

                                       10
<PAGE>

      10.   If, at any time while any  portion  of this  Debenture  remains  out
standing,  the Company  effectuates a stock split,  combination or reverse stock
split of its Common Stock or issues a dividend on its Common Stock consisting of
shares of Common Stock, the Conversion Price and any other amounts calculated as
contemplated  hereby or by any of the other  Transact  ion  Agreements  shall be
equitably  adjusted to reflect such action.  By way of illustration,  and not in
limitation, of the  foregoing, (i) if the Company effectuates a 2:1 split of its
Common Stock,  thereafter,  with respect to any conversion for which the Company
issues shares after the record date of such split, the Conversion Price shall be
deemed to be one-half of what it had been immediately  prior to such split; (ii)
if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter,
with respect to any  conversion  for which the Company  issues  shares after the
record date of such reverse split,  the  Conversion  Price shall be deemed to be
ten times what it had been calculated to be immediately prior to such split; and
(iii) if the Company  declares a stock dividend of one share of Common Stock for
every 10 shares  outstanding,  thereafter,  with respect to any  conversion  for
which the Company  issues  shares  after the record date of such  dividend,  the
Conversion Price shall be deemed to be such amount multiplied by a fraction,  of
which the  numerator  is the  number of shares (10 in the  example)  for which a
dividend share will be issued and the  denominator is such number of shares plus
the dividend share(s) issuable or issued thereon (11 in the example).

      11.   The Holder of the Debenture,  by acceptance hereof, agrees that this
Debenture is being  acquired for investment and that such Holder will not offer,
sell or  otherwise  dispose  of this  Debenture  or the  shares of Common  Stock
issuable  upon  conversion  thereof  except under  circumstances  which will not
result in a  violation  of the Act or any  applicable  state Blue Sky or foreign
laws or similar laws relating to the sale of securities.

      12.   Any notice required or permitted  hereunder shall be given in manner
provided in the Section headed "NOTICES" in the Securities  Purchase  Agreement,
the terms of which are incorporated herein by reference.

      13.   A. This  Debenture  shall be governed by and construed in accordance
with the laws of the State of New York for  contracts to be wholly  performed in
such state and without  giving effect to the  principles  thereof  regarding the
conflict of laws. Each of the parties consents to the exclusive  jurisdiction of
the federal courts whose districts  encompass any part of the County of New York
or the state  courts of the State of New York  sitting in the County of New York
in connection  with any dispute  arising under this Debenture and hereby waives,
to the maximum extent  permitted by law, any objection,  including any objection

                                       11
<PAGE>

based on forum non  coveniens,  to the bringing of any such  proceeding  in such
jurisdictions or to any claim that such venue of the suit,  action or proceeding
is improper. To the extent determined by such court, the Company shall reimburse
the  Holder for any  reasonable  legal fees and  disbursements  incurred  by the
Holder  in  enforcement  of or  protection  of  any  of its  rights  under  this
Debenture.  Nothing  in this  Section  shall  affect or limit any right to serve
process in any other manner permitted by law.

            B.    The  Company  and  the  Holder   acknowledge  and  agree  that
irreparable  damage would occur in the event that any of the  provisions of this
Debenture  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 Debenture and to enforce specifically the terms and provisions hereof, this
being in  addition  to any other  remedy to which any of them may be entitled by
law or equity.

      14.   JURY TRIAL  WAIVER.  The Company and the Holder hereby waive a trial
by jury in any  action,  proceeding  or  counterclaim  brought  by either of the
Parties  hereto  against the other in respect of any matter arising out of or in
connection with this Debenture.

      15.   The following shall constitute an "Event of Default":

            a.    The  Company  shall  default in the  payment of  principal  or
                  interest on this Debenture, or any other amount due hereunder,
                  and,  in any such  instance,  the same  shall  continue  for a
                  period of five (5) Trading Days; or

            b.    Any of the  representations  or warranties made by the Company
                  herein,  in the  Securities  Purchase  Agreement or any of the
                  other  Transaction  Agreements shall be false or misleading in
                  any material respect at the time made; or

            c.    Subject to the terms of the Securities Purchase Agreement, the
                  Company  fails to authorize or to cause its Transfer  Agent to
                  issue  shares of Common  Stock upon  exercise by the Holder of
                  the  conversion  rights  of the Holder in accordance  with the
                  terms of this  Debenture,  fails to  transfer  or to cause its
                  Transfer  Agent to  transfer  any  certificate  for  shares of
                  Common  Stock  issued to the Holder  upon  conversion  of this
                  Debenture  and  when   required  by  this   Debenture  or  the
                  Registration Rights Agreement,  and such transfer is otherwise
                  lawful,  or fails to  remove  any  restrictive  legend  on any
                  certificate  or fails to cause  its  Transfer  Agent to remove
                  such  restricted  legend,  in each case where such  removal is
                  lawful, as and when required by this Debenture,  the Agreement
                  or the  Registration  Rights  Agreement,  and any such failure
                  shall continue uncured for ten (10) Trading Days; or

                                       12
<PAGE>

            d.    The Company shall fail to perform or observe,  in any material
                  respect, any covenant, term, provision,  condition,  agreement
                  or  obligation  of the  Company  under any of the  Transaction
                  Agreements  and such  failure  shall  continue  uncured  for a
                  period  of thirty  (30) days  after  written  notice  from the
                  Holder of such failure; or

            e.    The Company  shall (1) admit in writing its  inability  to pay
                  its debts generally as they mature; (2) make an assignment for
                  the  benefit of  creditors  or  commence  proceedings  for its
                  dissolution; or (3) apply for or consent to the appointment of
                  a trustee, liquidator or receiver for its or for a substantial
                  part of its property or business; or

            f.    A trustee,  liquidator or receiver  shall be appointed for the
                  Company or for a substantial  part of its property or business
                  without its consent and shall not be  discharged  within sixty
                  (60) days after such appointment; or

            g.    Any governmental agency or any court of competent jurisdiction
                  at  the  instance  of any  governmental  agency  shall  assume
                  custody or control of the whole or any substantial  portion of
                  the  properties  or  assets  of the  Company  and shall not be
                  dismissed within sixty (60) days thereafter; or

            h.    Any money judgment, writ or warrant of attachment,  or similar
                  process in excess of Two Hundred Thousand  Dollars  ($200,000)
                  in the aggregate shall be entered or filed against the Company
                  or any of its  properties  or other  assets  and shall  remain
                  unpaid, unvacated,  unbonded or unstayed for a period of sixty
                  (60) days or in any event  later  than five (5) days  prior to
                  the date of any proposed sale thereunder; or

            j.    Bankruptcy,   reorganization,    insolvency   or   liquidation
                  proceedings  or  other   proceedings   for  relief  under  any
                  bankruptcy  law or any law for the relief of debtors  shall be
                  instituted  by or  against  the  Company  and,  if  instituted
                  against the Company,  shall not be dismissed within sixty (60)
                  days after such institution or the Company shall by any action
                  or answer  approve of,  consent to, or  acquiesce  in any such
                  proceedings or admit the  material  allegations of, or default
                  in answering a petition filed in any such proceeding; or

                                       13
<PAGE>

            k.    The Company shall have its Common Stock suspended from trading
                  on, or delisted  from,  the  Principal  Trading  Market for in
                  excess of ten (10) Trading Days; or

            l.    Any event defined in another provision of this Debenture as an
                  Event of Default shall have occurred.

If an Event of Default shall have occurred, then, or at any time thereafter, and
in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent  default)  at the  option  of the  Holder  and in the  Holder's  sole
discretion,  the Holder may consider this Debenture  immediately due and payable
(and the Maturity Date shall be accelerated  accordingly),  without presentment,
demand,  protest  or notice of any  kinds,  all of which  are  hereby  expressly
waived,  anything herein or in any other Transaction  Agreements to the contrary
notwithstanding, and interest shall accrue on the total amount due (the "Default
Amount") on the date of the Event of Default (the "Default Date") at the rate of
18% per annum or the maximum rate allowed by law,  whichever is lower,  from the
Default  Date  until the date  payment is made,  and the Holder may  immediately
enforce any and all of the Holder's  rights and remedies  provided herein or any
other rights or remedies afforded by law.

      16.   Nothing contained in this Debenture shall be construed as conferring
upon the  Holder  the right to vote or to  receive  dividends  or to  consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights  whatsoever  as a  shareholder  of the Company,  unless and to the extent
converted in accordance with the terms hereof.

      17.   (i) As evidenced by his signature  below,  the Guarantor (as defined
below) is personally  guarantying to the Holder the timely and full  fulfillment
of all  of the  obligations  of the  Company  under  this  Debenture  (each,  an
"Obligation" and  collectively,  the  "Obligations") on the terms provided above
and in the  Personal  Guarantee  attached to this  Debenture.  Such  guaranty is
further  evidenced  by the Personal  Guarantee  of Guarantor (the   "Guarantee")
attached  hereto  executed by the  Guarantor  in favor of and  delivered  to the
Holder.

            (ii)  The term "Guarantor" means Timothy M. Roberts,  an officer and
director of

                   [Balance of page intentionally left blank]

                                       14
<PAGE>

      18.   In the event for any reason, any payment by or act of the Company or
the Holder  shall  result in payment of interest  which  would  exceed the limit
authorized  by or be in violation of the law of the  jurisdiction  applicable to
this Debenture, then ipso facto the obligation of the Company to pay interest or
perform such act or requirement  shall be reduced to the limit  authorized under
such law,  so that in no event shall the  Company be  obligated  to pay any such
interest, perform any such act or be bound by any requirement which would result
in the payment of interest  in excess of the limit so  authorized.  In the event
any payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further  agreement or notice between or by the Company or the Holder,  be deemed
applied to the payment of principal,  if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated  such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Debenture.  If any part of such excess remains after the principal has been paid
in full, whether by the provisions of the preceding sentences of this Section or
otherwise,  such  excess  shall be deemed to be an  interest-free  loan from the
Company to the Holder,  which loan shall be payable  immediately  upon demand by
the Company.  The provisions of this Section shall control every other provision
of this Debenture.

      IN WITNESS  WHEREOF,  the Company has caused  this  instrument  to be duly
executed by an officer thereunto duly authorized.

Dated: ___________________, 20___

                                                 INFINIUM LABS, INC.

                                                 By:____________________________

                                                 _______________________________
                                                 (Print Name)

                                                 _______________________________
                                                 (Title)

                         PERSONAL GUARANTEE OF GUARANTOR

The undersigned has executed the attached Personal Guarantee.

_____________________________
    Timothy M. Roberts

                                       15
<PAGE>

                         PERSONAL GUARANTEE OF GUARANTOR

      Reference  is  made  to the 8%  Convertible  Debenture  Series  04-03  Due
December   ___,   2005   (the   "Debenture")   of   Infinium   Labs,   Inc.   to
___________________________.  Capitalized  terms not  otherwise  defined  herein
shall have the meanings ascribed to them in the Debenture.

      To induce the Holder (or  Holder's  predecessor  in  interest) to make the
loan to the Company contemplated  by  the  Securities  Purchase  Agreement,  the
Guarantor hereby unconditionally  personally guarantees to the Holder the timely
and full  fulfillment  of all of the  obligations of the Company under the above
Debenture (each, an "Obligation" and  collectively,  the  "Obligations")  on the
terms provided in the Debenture.

      The  guaranty  provided  by the  Guarantor  hereby is  referred  to as the
"Guarantee."

      This Guarantee will remain in effect as long as any of the  Obligations is
not fully satisfied, except that it will terminate of the Early Termination Date
(as defined below), if any.

      The  Guarantor  agrees that the Holder may proceed  against the  Guarantor
alone on account of this Guarantee  without any obligation to proceed against or
to exhaust any remedies against the Company or against any other Party.

      Guarantor is an officer and director of the Company.  Guarantor represents
to the Holder that he has determined  that it is in his best interest to execute
and deliver this Guarantee.

      Guarantor  agrees  that the  Holder  may extend or modify the terms of the
Obligations with the Company without the prior consent of the Guarantor, but the
terms  of this  Guarantee  shall  continue  to apply  to the  Obligations  as so
extended or modified.  Except to the extent that the Guarantor actually fulfills
any of the  Obligations,  no Guarantee by the  Guarantor or any other  guarantor
shall  reduce  or modify  the  obligations  of the  Company  or any other  Party
hereunder or under any of the Transaction Documents.

      Any other  provision of this  Guarantee  to the contrary  notwithstanding,
Guarantor's  obligations under this Guarantee shall terminate,  even if any part
of the Obligation is then still outstanding, on the date (the "Early Termination
Date") which is the earlier to occur of either the following:

      (i)   if the Company consummates a single financing  transaction for
      a gross amount (before  deduction of customary fees and expenses) of
      at least Ten  Million  Dollars  (US  $10,000,000.00),  the date such
      funding is consummated; or

                                       1
<PAGE>

      (ii)  if the Company  enters into an agreement  pursuant to which it
      is to be acquired  by or merged into  another  entity  (which  other
      entity  was not an  affiliate  of the  Company  or of any of Company
      Control  Person for at least three months prior to the  execution of
      such  agreement or for at least one year after the  consummation  of
      such   transaction)   and  such  agreement   provides   that,   upon
      consummation of the transaction  contemplated by such agreement, the
      Guarantor  will no longer be an  officer,  director,  consultant  or
      employee of Company,  the date  on which the Guarantor  ceases to be
      all of an officer, director, consult ant or employee of the Company.

      Guarantor  represents  to the Holder that this  Guarantee is the valid and
binding  agreement of the Guarantor,  enforceable in accordance  with its terms,
subject as to enforceability to general  principles of equity and to bankruptcy,
insolvency,  moratorium  and other  similar laws  affecting the  enforcement  of
creditors' rights generally.

      The provisions of Section 17 of the Debenture are  incorporated  herein by
reference as if set forth herein in full.

      Guarantor  agrees that the  provisions  of  Sections  12, 13 and 14 of the
Debenture  apply to the  Guarantor,  as if the Guarantor  were the Company named
therein.

      Guarantor  acknowledges that it is aware that Holder is explicitly relying
on the  execution  and delivery of this  Guarantee by such  Guarantor and on the
enforceability   of  this  Guarantee   against  such  Guarantor  in  making  the
determination to enter into the Securities  Purchase Agreement and to consummate
the loan transaction contemplated thereby.

      IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as
of the ____th day of December, 2004.

                                                 _______________________________
                                                 Timothy M. Roberts

                                       2
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION
                                       OF
           8% CONVERTIBLE DEBENTURE SERIES 04-03 DUE DECEMBER __, 2005

  (To be Executed by the Registered Holder in Order to Convert the Debenture)

TO:   INFINIUM LABS, INC.                        VIA TELECOPIER TO:
      2033 Main Street, Suite 1309               (941)917-0782
      Sarasota, FL 34237
      Attn: President

FROM: ____________________________________________________ ("Holder")

DATE:_____________________________________________________(the"Conversion Date")

RE:   Conversion of $___________ principal amount (the "Converted Debenture") of
      the 8% Convertible  Debenture  Series 04-03-__ Due December ___, 2005 (the
      "Debenture")  of INFINIUM LABS,  INC. (the  "Company")  into  ____________
      shares (the "Conversion Shares") of Common Stock (defined below)

      The captioned  Holder hereby gives notice to the Company,  pursuant to the
captioned  Debenture that the Holder elects to convert  the Converted  Debenture
into fully paid and  non-assessable  shares of Common  Stock,  $0.0001 par value
(the "Common Stock"),  of the Company as of the Conversion Date specified above.
Said conversion shall be based on the following  Conversion Price (check one and
fill in blank)

      [ ]   $__________, rep resenting the original Conversion Price (as defined
            in the Debenture)

      [ ]   $__________,  representing the original Conversion Price (as defined
            in the Debenture), adjusted in accordance with the provisions of the
            Debenture.

                                       1
<PAGE>

Based on this Conversion  Price, the number of Conversion Shares indicated above
should be issued in the following name(s):

      Name and Record Address                    Conversion Shares

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

      It is the intention of the Holder to comply with the provisions of Section
4(C) of the Debenture  regarding certain limits on the Holder's right to convert
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe this  conversion  complies  with the  provisions  of said Section  4(C).
Nonetheless, to the extent that, pursuant to the conversion effected hereby, the
Holder would have more shares than  permitted  under said  Section,  this notice
should be amended and revised, ab initio, to refer to the conversion which would
result in t he issuance of shares consistent with such provision. Any conversion
above such amount is hereby deemed void and revoked.

      As contemplated by the Debenture,  this Notice of Conversion is being sent
by facsimile to the telecopier number and officer indicated above.

      If this  Notice  of  Conversion  represents  the  full  conversion  of the
outstanding  balance  of the  Converted  Debenture,  the  Holder  either (1) has
previously surrendered the Converted Debenture, duly endorsed, to the Company or
(2) will surrender (or cause to be surrendered)  the Converted  Debenture,  duly
endorsed,  to the  Company at the  address  indicated  above by express  courier
within five (5) Trading Days after  delivery or facsimile  transmission  of this
Notice of Conversion.

      The certificates  representing the Conversion Shares should be transmitted
by the Company to the Holder (check one)

      [ ] via express courier or
      [ ] by electronic transfer (DTC)

within the time contemplated by the Debenture and Securities  Purchase Agreement
after  receipt  of this  Notice of  Conversion  (by  facsimile  transmission  or
otherwise) to:

                     ______________________________________
                     ______________________________________
                     ______________________________________

                                       2
<PAGE>

      The  Holder  has  determined  that  accrued  but  unpaid  interest  on the
Converted  Debenture  through  the  Conversion  Date  is   $____________________
(subject to further  accrual if payment not timely made). As contemplated by the
Debenture,  the Company should also pay all such accrued but unpaid  interest on
the Converted Debenture to the Holder.

      --    If the  Company  elects to pay such  interest  in Common  Stock,  as
            contemplated by and subject to the provisions of the Debenture, such
            shares  should be issued in the name of the Holder and  delivered in
            the same manner as, and together with, the Conversion Shares.

      --    If the Company  elects or is required  to pay the  interest  paid in
            cash, such payment should be made by wire transfer as follows:

                     ______________________________________
                     ______________________________________
                     ______________________________________
                     ______________________________________
                     ______________________________________
                     ______________________________________

                                                 _______________________________
                                                 (Print name of Holder)

                                              By:_______________________________
                                                (Signature of Authorized Person)

                                                 _______________________________
                                                    (Printed Name and Title)

                                       3
<PAGE>

                              NOTICE OF CONVERSION
                               WORKSHEET SCHEDULE

1.    Current Common Stock holdings of Holder and Affiliates       ___________

2.    Shares to be issued on current conversion(1)                 ___________

3.    Other shares to be issued on other current conversion(s)     ___________
      and other current exercise(s)(2)

4.    Other shares eligible to be acquired within next 60 days     ___________
      without restriction

5.    Total [sum of Lines 1 through 4]                             ___________

6.    Outstanding shares of Common Stock(3)                        ___________

7.    Adjustments to Outstanding                                   ___________

      a.    Shares known to Holder as previously issued to
            Holder or others but not included in Line 6            ___________

      b.    Shares to be issued per Line(s) 2 and 3                ___________

      c.    Total Adjustments [Lines 7a and 7b]                    ___________

8.    Total Adjusted Outstanding [Lines 6 plus 7c]                 ___________

9.    Holder's Percentage [Line 5 divided by Line 8]               ___________%
      [Note: Line 9 not to be above 4.99%]

----------
(1)   Includes  conversion of stated value and assumes  interest will be paid in
      Common Stock at the Conversion Price.

(2)   Includes   shares   issuable  on  conversion  of  convertible   securities
      (including  assumed payment of interest or dividends) or exercise of other
      rights, including other warrants or options

(3)   Based on latest SEC filing by Company or information provided by executive
      officer of Company, counsel to Company or transfer agent.

                                       4ANNEX V
                                                                              TO
                                                   SECURITIES PURCHASE AGREEMENT

                                                   [PROTOTYPE FOR EACH ISSUANCE]

                                 FORM OF WARRANT

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT FOR THE  SECURITIES
OR AN OPINION OF COUNSEL OR OTHER  EVIDENCE  ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

CLASS 2004-A2

                               INFINIUM LABS, INC.

                          COMMON STOCK PURCHASE WARRANT

      1.    Issuance. In consideration of good and valuable  consideration,  the
receipt and sufficiency of which is hereby  acknowledged by INFINIUM LABS, INC.,
a Delaware corporation (the "Company"), __________________________ or registered
assigns (the "Holder") is hereby granted the right to purchase at any time until
5:00 P.M.,  New York City  time,  on the  Expiration  Date (as  defined  below),
__________________________ (____________)(1) fully paid and nonassessable shares
of the  Company's  Common Stock  $0.0001 par value (the "Common  Stock"),  at an
initial  exercise  price per share (the  "Exercise  Price") of  US$0.266667  per
share,  subject to further adjustment as set forth herein. This Warrant is being
issued  pursuant to the terms of that  certain  Securities  Purchase  Agreement,
dated as of December 23, 2004 (the "Agreement"), to which the Company and Holder
(or  Holder's  predecessor  in  interest)  are  parties.  Capitalized  terms not
otherwise  defined  herein  shall  have  the  meanings  ascribed  to them in the
Agreement.  This  Warrant was  originally  issued to the Holder or the  Holder's
predecessor in interest on _____________, 2004(2) (the "Issue Date").

----------
(1)   Insert  number  equal  to 50% of the  number  of the  Maximum  Issue  Date
      Conversion Shares.
(2)   Insert the Closing Date.

<PAGE>

      2.    Exercise of Warrants.

            2.1   General.

            (a)   This  Warrant is  exercisable  in whole or in part at any time
and from time to time  commencing on the  Commencement  Date (as defined below).
Such exercise  shall be  effectuated  by  submitting  to the Company  (either by
delivery to the Company  or by facsimile  transmission  as provided in Section 9
hereof) a completed and duly executed Notice of Exercise  (substantially  in the
form attached to this Warrant Certificate) as provided in the Notice of Exercise
(or revised by notice given by the Company as contemplated by the Section headed
"NOTICES"  in the  Agreement).  The date such Notice of Exercise is faxed to the
Company shall be the "Exercise Date," provided that, if such exercise represents
the full exercise of the outstanding balance of the Warrant,  the Holder of this
Warrant tenders this Warrant Certificate to the Company within five (5) business
days thereafter.  The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate the number of shares then being purchased pursuant to
such exercise.

            (b)   The  Exercise  Price per share of Common  Stock for the shares
then being  exercised shall be payable to the Company in cash or by certified or
official bank check or by wire transfer in accordance with instructions provided
by the Company at the request of the Holder.

            (c)   Upon the  appropriate  payment of the  Exercise  Price for the
shares of Common Stock  purchased,  together  with the surrender of this Warrant
Certificate (if required), the Holder shall be entitled to receive a certificate
or certificates  for the shares of Common Stock so purchased.  The Company shall
deliver such certificates representing the Warrant Shares in accordance with the
instructions  of the Holder as provided in the Notice of Exercise  within  three
Trading  Days of the later of the  Exercise  Date or the date the payment of the
Exercise Price for the relevant Warrant Shares is received by the Company.

            (d)   The  Holder  shall be  deemed to be the  holder of the  shares
issuable to it in  accordance  with the  provisions  of this  Section 2.1 on the
Exercise Date.

            2.2   Limitation on Exercise. Notwithstanding the provisions of this
Warrant,  the  Agreement or of the other  Transact ion  Agreements,  in no event
(except (i) as  specifically  provided in this  Warrant as an  exception to this
provision,  (ii) during the  forty-five  (45) day period prior to the Expiration
Date,  or (iii) while there is  outstanding a tender offer for any or all of the
shares of the  Company's  Common Stock) shall the Holder be entitled to exercise
this Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this  Warrant to the extent  that,  after such
exercise the sum of (1) the number of shares of Common Stock  beneficially owned

                                       2
<PAGE>

by the Holder and its affiliates (other than shares of Common Stock which may be
deemed  beneficially  owned through the ownership of the unexercised  portion of
the Warrants or other rights to purchase  Common Stock or through the  ownership
of the  unconverted  portion of convertible  securities),  and (2) the number of
shares of Common Stock  issuable  upon the exercise of the Warrants with respect
to which the  determination  of this  proviso  is being  made,  would  result in
beneficial  ownership by the Holder and its affiliates of more than 4.99% of the
outstanding  shares of Common Stock (after  taking into account the shares to be
issued to the Holder upon such  exercise).  For  purposes of the proviso to  the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"),  except as otherwise  provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers  or assigns  any of the  Warrants to a party who or which would not be
considered  such an  affiliate,  such  assignment  shall be made  subject to the
transferee's or assignee's  specific  agreement to be bound by the provisions of
this Section 2.2 as if such  transferee  or assignee  were the  original  Holder
hereof.

            2.3   Commencement Date and Expiration Date.

            (a)   The term "Commencement Date" means the earlier of (i) the date
which is sixty-five (65) days after the Issue Date, or (ii) the Effective Date.

            (b)   The term "Expiration Date" means [__________], 2009.(3)

      3.    Reservation  of Shares.  The Company hereby agrees that at all times
during the term of this  Warrant  there  shall be  reserved  for  issuance  upon
exercise of this Warrant one hundred ten percent (110%) of the Warrant Shares.

      4.    Mutilation  or Loss of  Warrant.  Upon  receipt  by the  Company  of
evidence  satisfactory  to it of the loss,  theft,  destruction or mutilation of
this  Warrant,  and (in the  case of  loss,  theft or  destruction)  receipt  of
reasonably  satisfactory  indemnification,  and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new  Warrant of like tenor and date and any such lost,  stolen,  destroyed  or
mutilated Warrant shall thereupon become void.

----------
(3)   Insert date which is the last calendar day of the month in which the fifth
      anniversary of the Closing Date occurs.

                                       3
<PAGE>

      5.    Rights of the Holder.  The Holder  shall not, by virtue  hereof,  be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those  expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.

      6.    Protection Against Dilution and Other Adjustments.

            6.1   Adjustment  Mechanism.  If an adjustment of the Exercise Price
is required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of shares of Common  Stock as will cause (i) (x) the total number of
shares of Common Stock  Holder is entitled to purchase  pursuant to this Warrant
following  such  adjustment,  multiplied by (y) the adjusted  Exercise Price per
share,  to equal the result of (ii) (x) the dollar amount of the total number of
shares of Common  Stock  Holder  is  entitled  to  purchase  before  adjustment,
multiplied by (y) the total Exercise Price before adjustment.(4)

            6.2   Capital  Adjustments.  In case of any stock  split or  reverse
stock  split,   stock   dividend,   reclassificat   ion  of  the  Common  Stock,
recapitalization,  merger  or  consolidation  (where  the  Company  is  not  the
surviving entity),  the provisions of this Section 6 shall be applied as if such
capital  adjustment  event had  occurred  immediately  prior to the date of this
Warrant and the original  Exercise Price had been fairly  allocated to the stock
resulting from such capital adjustment;  and in other respects the provisions of
this Section shall be applied in a fair,  equitable and reasonable  manner so as
to give effect,  as nearly as may be, to the purposes  hereof. A rights offering
to  stockholders  shall be deemed a stock  dividend to the extent of the bargain
purchase element of the rights.

            6.3   Adjustment  for Spin Off.  If,  for any  reason,  prior to the

exercise of this Warrant in full,  the Company  spins off or  otherwise  divests
itself of a material  part of its business or operations or disposes all or of a
part of its assets in a  transaction  (the "Spin Off") in which the Company does
not receive  compensation  for such business,  operations or assets,  but causes

----------
(4)   Example:  Assume 10,000  shares  remain under  Warrant at original  stated
      Exercise Price of  US$0.266667.  Total exercise price (clause (y) in text)
      is (i) 10,000 x (ii)  US$0.266667,  or  US$2,666.66.  Company  effects 2:1
      stock split.  Exercise Price is adjusted to US$0.133333.  Number of shares
      covered by Warrant is adjusted to 20,000,  because (applying clause (x) in
      text) (i) 20,000 x (ii) US$0.133333 = US$2,666.66.

                                       4
<PAGE>

securities  of  another  entity  (the  "Spin  Off  Securities")  to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities  equal to the number thereof which would have been issued to
the Holder  had all of the  Holder's  unexercised  Warrants  outstanding  on the
record date (the "Record  Date") for  determining  the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants")  been  exercised  as of the  close of  business  on the  Trading  Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be  issued  to the  Holder  on  the  exercise  of all or any of the  Outstanding
Warrants,  such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount  of  the  Outstanding  Warrants  then  being  exercised,   and  (II)  the
denominator is the amount of the Outstanding Warrants.

            6.4   Adjustment for Certain  Transactions. Reference is made to the
provisions of Section 4(g) of the Agreement, the terms of which are incorporated
herein by  reference.  The  number of shares  covered  by this  Warrant  and the
Exercise  Price shall be adjusted as provided in the  applicable  provisions  of
said Section 4(g) of the Agreement.

      7.    Transfer to Comply with the Securities  Act;  Registration  Rights.

            7.1   Transfer.  This  Warrant  has not been  registered  under  the
Securities  Act of 1933,  as  amended,  (the  "Act") and has been  issued to the
Holder  for  investment  and not with a view to the  distribution  of either the
Warrant or the  Warrant  Shares.  Neither  this  Warrant  nor any of the Warrant
Shares or any other  security  issued or issuable  upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration  statement under the Act relating to such security or an opinion of
counsel  satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable  upon  exercise of this Warrant shall contain a legend on the
face  thereof,  in form and substance  satisfactory  to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.

            7.2   Registration Rights.

            (a)   Reference is made to the Registration  Rights  Agreement.  The
Company's  obligations  under the  Registration  Rights  Agreement and the other
terms and conditions thereof with respect to the Warrant Shares,  including, but
not  necessarily  limited to, the Company's  commitment  to file a  registration
statement  including the Warrant Shares, to have the registration of the Warrant
Shares  completed  and  effective,  and  to  maintain  such  registration,   are
incorporated herein by reference.

                                       5
<PAGE>

            (b)   In  addition  to the  registration  rights  referred to in the
preceding  provisions of Section  7.2(a),  effective after the expiration of the
effectiveness of the Registration  Statement as contemplated by the Registration
Rights  Agreement,  the Holder shall have  piggy-back  registration  rights with
respect  to the  Warrant  Shares  then  held by the  Holder or then  subject  to
issuance upon exercise of this Warrant  (collectively,  the  "Remaining  Warrant
Shares"),  subject to the conditions set forth below.  If, at any time after the
Registration  Statement  has ceased to be  effective,  the Company  participates
(whether  voluntarily  or by reason of an  obligation  to a third  party) in the
registration  of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4),  the Company shall give written  notice thereof to the
Holder  and the   Holder  shall  have the  right,  exercisable  within  ten (10)
business  days after  receipt of such  notice,  to demand  inclusion of all or a
portion of the Holder's Remaining Warrant Shares in such registration statement.
If  the  Holder  exercises  such  election,  the  Remaining  Warrant  Shares  so
designated shall be included in the registration statement at no cost or expense
to the Holder (other than any costs or  commissions  which would be borne by the
Holder  under the terms of the  Registration  Rights  Agreement).  The  Holder's
rights  under  this  Section 7 shall expire  at such time as the Holder can sell
all of the  Remaining  Warrant  Shares  under Rule 144  without  volume or other
restrictions or limit.

      8.    Buy-In Amount.

      (a)   If, by the relevant  Warrant Share  Delivery Date, the Company fails
for any reason to deliver the relevant  Warrant  Share  Certificates,  and after
such Warrant Share  Delivery Date, the Holder who has exercised this Warrant (an
"Exercising  Holder")  purchases,  in an arm's-length open market transaction or
otherwise,  shares of Common  Stock  (the  "Covering  Shares")  in order to make
delivery in  satisfaction  of  a sale of Common Stock by the  Exercising  Holder
(the "Sold Shares"),  which delivery such Exercising Holder  anticipated to make
using the shares to be issued upon such  exercise (a "Buy-In"),  the  Exercising
Holder  shall have the right to  require  the  Company to pay to the  Exercising
Holder,  in addition  to and not in lieu of all other  amounts  contemplated  in
other  provisions  of the  Transaction  Agreements,  the  Warrant  Share  Buy-In
Adjustment  Amount (as defined  below).  The Company shall pay the Warrant Share
Buy-In  Adjustment  Amount to the  Exercising  Holder in  immediately  available
funds immediately upon demand by the Exercising Holder.

                                       6
<PAGE>

      (b)   The term "Warrant Share Buy-In  Adjustment  Amount" means the amount
equal to the excess, if any, of (i) the Exercising Holder's total purchase price
(including brokerage commissions,  if any) for the Covering Shares over (ii) the
net proceeds (after  brokerage  commissions,  if any) received by the Exercising
Holder  from the  sale of the Sold  Shares.  By way of  illustration  and not in
limitation of the foregoing, if the Exercising Holder purchases shares of Common
Stock having a total purchase price (including brokerage commissions) of $11,000
to cover a  Buy-In  with  respect  to  shares  of  Common  Stock it sold for net
proceeds of $10,000,  the  Warrant  Share  Buy-In  Adjustment  Amount  which the
Company will be required to pay to the Exercising Holder will be $1,000.

      9.    Notices.  Any notice required or permitted  hereunder shall be given
in manner provided in the Section headed  "NOTICES" in the Agreement,  the terms
of which are incorporated herein by reference.

      10.   Supplements and  Amendments;  Whole  Agreement.  This Warrant may be
amended or  supplemented  only by an instrument in writing signed by the parties
hereto.  This Warrant contains the full understanding of the parties hereto with
respect  to  the   subject   matter   hereof  and   thereof  and  there  are  no
representations,  warranties,  agreements or understandings other than expressly
contained herein and therein.

      11.   Governing Law.

      (a)   This Warrant shall be governed by and  construed in accordance  with
the laws of the State of New York for  contracts to be wholly  performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws.  Each of the parties  consents  to the  exclusive  jurisdiction  of the
federal courts whose  districts  encompass any part of the County of New York or
the state  courts of the State of New York  sitting in the County of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum  non  coveniens,   to  the  bringing  of  any  such   proceeding  in  such
jurisdictions or to any claim that such venue of the suit,  action or proceeding
is improper. To the extent determined by such court, the Company shall reimburse
the  Holder for any  reasonable  legal fees and  disbursements  incurred  by the
Holder in  enforcement of or protection of any of its rights under this Warrant.
Nothing in this Section  shall affect or limit any right to serve process in any
other manner permitted by law.

      (b)   The Company and the Holder  acknowledge  and agree that  irreparable
damage would occur in the event that any of the  provisions of this Warrant 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

                                       7
<PAGE>

Warrant and to enforce  specifically the terms and provisions hereof, this being
in addition  to any other  remedy to which any of them may be entitled by law or
equity.

      12.   JURY TRIAL  WAIVER.  The Company and the Holder hereby waive a trial
by jury in any  action,  proceeding  or  counterclaim  brought  by either of the
Parties  hereto  against  the other in respect of any matter  arising  out or in
connection with this Warrant.

      13.   Remedies.  The Company  stipulates  that the  remedies at law of the
Holder of this Warrant in the event of any default or threatened  default by the
Company  in the  performance  of or  compliance  with  any of the  terms of this
Warrant  are not and  will not be  adequate  and  that,  to the  fullest  extent
permitted by law,  such terms may be  specifically  enforced by a decree for the
specific  performance  of any  agreement  contained  herein or by an  injunction
against a violation of any of the terms hereof or otherwise.

      14.   Counterparts.  This  Warrant  may  be  executed  in  any  number  of
counterparts and each of such counterparts  shall  for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

                   [Balance of page intentionally left blank]

                                       8
<PAGE>

      15.   Descriptive  Headings.  Descriptive headings of the several Sections
of this  Warrant  are  inserted  for  convenience  only and shall not control or
affect the meaning or construction of any of the provisions hereof.

      IN WITNESS  WHEREOF,  the parties  hereto have executed this Warrant as of
the _______ day of _____________________________, 200__.

                                                 INFINIUM LABS, INC.

                                                 By:____________________________

                                                 _______________________________
                                                 (Print Name)

                                                 _______________________________
                                                 (Title)

                                       9
<PAGE>

                          NOTICE OF EXERCISE OF WARRANT

TO:   INFINIUM LABS, INC.                        VIA TELECOPIER TO:
      2033 Main Street, Suite 1309               (941)917-0782
      Sarasota, FL 34237
      Attn: President

      The  undersigned   hereby   irrevocably  elects  to  exercise  the  right,
represented  by the Class 2004-A  Common  Stock  Purchase  Warrant,  dated as of
________________,  20___,  to purchase  shares of the Common Stock,  $0.0001 par
value ("Common  Stock"),  of INFINIUM LABS, INC. and tenders herewith payment in
accordance with Section 2 of said Common Stock Purchase Warrant.

[ ]   CASH: US$___________________________ = (Exercise Price x Exercise Shares)

             Payment is being made by:

                   [ ] enclosed check
                   [ ] wire transfer
                   [ ] other_____________________

      It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant  regarding  certain  limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe  this  exercise  complies  with  the  provisions  of said  Section  2.2.
Nonetheless,  to the extent that,  pursuant to the exercise effected hereby, the
Holder would have more shares than  permitted  under said  Section,  this notice
should be amended and revised,  ab initio,  to refer to the exercise which would
result in the issuance of shares  consistent with such  provision.  Any exercise
above such amount is hereby deemed void and revoked.

      As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.

      If  this  Notice  of  Exercise  represents   the   full  exercise  of  the
outstanding  balance  of the  Warrant,  the  Holder  either  (1) has  previously
surrendered  the  Warrant to the Company or (2) will  surrender  (or cause to be

                                       10
<PAGE>

surrendered)  the  Warrant to the  Company  at the  address  indicated  above by
express  courier  within five (5)  business  days after  delivery  or  facsimile
transmission of this Notice of Exercise.

      The certificates  representing the Warrant Shares should be transmitted by
the Company to the Holder

      [ ] via express courier, or
      [ ] by electronic transfer

after  receipt  of  this  Notice  of  Exercise  (by  facsimile  transmission  or
otherwise) to:

          _______________________________
          _______________________________
          _______________________________
          _______________________________
          _______________________________
          _______________________________

Dated:_______________________

_____________________________
[Name of Holder]

By: _________________________

                                       11
<PAGE>

                         NOTICE OF EXERCISE OF WARRANT
                               WORKSHEET SCHEDULE

1.    Current Common Stock holdings of Holder and Affiliates       ___________

2.    Shares to be issued on current exercise                      ___________

3.    Other shares to be issued on other current exercise(s)
      and other current conversion(s)(1)                           ___________

4.    Other  shares  eligible  to  be  acquired  within next
      60  days  without restriction                                ___________

5.    Total [sum of Lines 1 through 4]                             ___________

6.    Outstanding shares of Common Stock(2)                        ___________

7.    Adjustments to Outstanding

      a.    Shares known to Holder as previously  issued to
            Holder or others but not included in Line 6            ___________

      b.    Shares to be issued per Line(s) 2 and 3                ___________

      c.    Total Adjustments [Lines 7a and 7b]                    ___________

8.    Total Adjusted Outstanding [Lines 6 plus 7c] _____________

9.    Holder's  Percentage  [Line 5 divided  by Line 8]
      [Note:  Line 9 not to be above 4.99%]

----------
(1)   Includes   shares   issuable  on  conversion  of  convertible   securities
      (including  assumed payment of interest or dividends) or exercise of other
      rights, including other warrants or options
(2)   Based on latest SEC filing by Company or information provided by executive
      officer of Company, counsel to Company or transfer agent

                                       12

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