Document:

Exhibit 10.3

    
      

    

    Exhibit
      10.3

    

    

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
      UNDER
      THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
      LAWS
      IS NOT REQUIRED.

    

    WARRANT
      TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    OF

    

    IMPART
      MEDIA GROUP, INC.

    

    

    Expires
      March 2, 2009

    

    
      	
              No.:
                W-06- __

            	
              Number
                of Shares: ___________

            
	
              Date
                of Issuance: March 3, 2006

            	 

    

    

    

    FOR
      VALUE
      RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
      Impart Media Group, Inc., a Nevada corporation (together with its successors
      and
      assigns, the "Issuer"),
      hereby certifies that _______________________________ or its registered assigns
      (the “Holder”)
      is
      entitled to subscribe for and purchase, during the Term (as hereinafter
      defined), up to ____________________________________ (_____________) shares
      (subject to adjustment as hereinafter provided) of the duly authorized, validly
      issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
      price per share equal to the Warrant Price then in effect, on the terms and
      conditions hereinafter set forth. Capitalized terms used in this Warrant and
      not
      otherwise defined herein shall have the respective meanings specified in Section
      8 hereof.

    

    1.    
Term.
      The
      term of this Warrant shall commence on March 3, 2006 (the “Original
      Issue Date”)
      and
      shall expire at 6:00 p.m., eastern time, on March 2, 2009 (such period being
      the
      "Term").

    

    
      	 	
              2.

            	
              Method
                of Exercise; Payment; Issuance of New Warrant; Transfer and
                Exchange.

            

    

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    

    (a)    Time
      of Exercise.
      The
      purchase rights represented by this Warrant may be exercised in whole or in
      part
      during the Term. 

    

    (b)    Method
      of Exercise.
      The
      Holder hereof may exercise this Warrant, in whole or in part, by the surrender
      of this Warrant (with the exercise form attached hereto as Exhibit
      A
      duly
      executed) at the principal office of the Issuer, and by the payment to the
      Issuer of an amount of consideration therefor equal to the Warrant Price in
      effect on the date of such exercise multiplied by the number of shares of
      Warrant Stock with respect to which this Warrant is then being exercised,
      payable at such Holder's election (i) by certified or official bank check or
      by
      wire
      transfer to an account designated by the Issuer,
      (ii) by
      "cashless exercise" in accordance with the provisions of subsection (c) of
      this
      Section 2, but only when a registration statement under the Securities Act
      providing for the resale of the Warrant Stock is not then in effect, or (iii)
      by
      a combination of the foregoing methods of payment selected by the Holder of
      this
      Warrant.

    

    (c)    Cashless
      Exercise.
      Notwithstanding any provisions herein to the contrary, if, on or after the
      Effectiveness Date (as defined in the Registration Rights Agreement dated as
      of
      even date hereof (the “Registration
      Rights Agreement”)
      by and
      among the Issuer and the Purchasers), (i) the Per Share Market Value of one
      share of Common Stock is greater than the Warrant Price (at the date of
      calculation as set forth below) and (ii) a Registration Statement (as defined
      in
      the Registration Rights Agreement) providing for the resale of the Warrant
      Stock
      is not then in effect or ceases to be effective (other than for reasons
      permitted under Section 3(n) of the Registration Rights Agreement) at any time
      during the Effectiveness Period (as defined in the Registration Rights
      Agreement), without being succeeded immediately by a subsequent registration
      statement filed with and declared effective by the Securities and Exchange
      Commission, in lieu of exercising this Warrant by payment of cash, the Holder
      may exercise this Warrant by a cashless exercise and shall receive the number
      of
      shares of Common Stock equal to an amount (as determined below) by surrender
      of
      this Warrant at the principal office of the Issuer together with the properly
      endorsed Notice of Exercise in which event the Issuer shall issue to the Holder
      a number of shares of Common Stock computed using the following
      formula:

    
       

      
        	 	
                X
                  =
                  

              	
                Y
                  -

              	
                (A)(Y)

              

      

      
        
          	 	 	 	
                     
                    B

                

        

        
          	 	 	 	 

        

      

      
        
          	
                  Where

                	
                  X
                    =

                	 	
                  the
                    number of shares of Common Stock to be issued to the
                    Holder.

                

        

        
          	 	 	 	 

        

      

      
        
          	 	
                  Y
                    =

                	 	
                  the
                    number of shares of Common Stock purchasable upon exercise of
                    all of the
                    Warrant or, if only a portion of the Warrant is being exercised,
                    the
                    portion of the Warrant being exercised.

                

        

        
          	 	 	 	 

        

      

      
        
          	 	
                  A
                    =

                	 	
                  the
                    Warrant Price. 

                

        

        
          	 	 	 	 

        

      

      
        	 	
                B
                  =

              	 	
                the
                  Per Share Market Value of one share of Common
                  Stock.

              

      

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (d)    Issuance
      of Stock Certificates.
      In the
      event of any exercise of this Warrant in accordance with and subject to the
      terms and conditions hereof, (i) certificates for the shares of Warrant Stock
      so
      purchased shall be delivered to the Holder hereof within a reasonable time,
      not
      exceeding three (3) Trading Days after such exercise (the “Delivery
      Date”)
      or, at
      the request of the Holder (provided that a registration statement under the
      Securities Act providing for the resale of the Warrant Stock is then in effect),
      issued and delivered to the Depository Trust Company (“DTC”)
      account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
      System (“DWAC”)
      within
      a reasonable time, not exceeding three (3) Trading Days after such exercise
      (provided, however that the Issuer or its transfer agent shall only be obligated
      to issue and deliver the shares to the DTC on the Holder’s behalf via DWAC or
      certificates free of restrictive legends if such exercise is in connection
      with
      a sale (as evidenced by documentation furnished to and reasonably satisfactory
      to the Issuer) and the registration statement providing for the resale of the
      Warrant Stock is effective, and the Holder hereof shall be deemed for all
      purposes to be the holder of the shares of Warrant Stock so purchased as of
      the
      date of such exercise and (ii) unless this Warrant has expired, a new Warrant
      representing the number of shares of Warrant Stock, if any, with respect to
      which this Warrant shall not then have been exercised (less any amount thereof
      which shall have been canceled in payment or partial payment of the Warrant
      Price as hereinabove provided) shall also be issued to the Holder hereof at
      the
      Issuer's expense within such time.

    

    (e)    Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Issuer fails to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Stock pursuant to an exercise on or before the Delivery
      Date, and if after such date the Holder is required by its broker to purchase
      (in an open market transaction or otherwise) shares of Common Stock to deliver
      in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
      anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Issuer shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of shares of Warrant Stock that the Issuer was
      required to deliver to the Holder in connection with the exercise at issue
      times
      (B) the price at which the sell order giving rise to such purchase obligation
      was executed, and (2) at the option of the Holder, either reinstate the portion
      of the Warrant and equivalent number of shares of Warrant Stock for which such
      exercise was not honored or deliver to the Holder the number of shares of Common
      Stock that would have been issued had the Issuer timely complied with its
      exercise and delivery obligations hereunder. For example, if the Holder
      purchases Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to an attempted exercise of shares of Common Stock with
      an
      aggregate sale price giving rise to such purchase obligation of $10,000, under
      clause (1) of the immediately preceding sentence the Issuer shall be required
      to
      pay the Holder $1,000. The Holder shall provide the Issuer written notice
      indicating the amounts payable to the Holder in respect of the Buy-In, together
      with applicable confirmations and other evidence reasonably requested by the
      Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief with respect to the
      Issuer’s failure to timely deliver certificates representing shares of Common
      Stock upon exercise of this Warrant as required pursuant to the terms
      hereof.

     

    (f)    Transferability
      of Warrant.
      Subject
      to Section 2(h) hereof, this Warrant, and the rights evidenced hereby, may
      be
      transferred by a Holder, in whole or in part, without the consent of the Issuer.
      If transferred pursuant to this paragraph, this Warrant may be transferred
      on
      the books of the Issuer by the Holder hereof in person or by duly authorized
      attorney, upon surrender of this Warrant at the principal office of the Issuer,
      properly endorsed (by the Holder executing an assignment in the form attached
      hereto) and upon payment of any necessary transfer tax or other governmental
      charge imposed upon such transfer. This Warrant is exchangeable at the principal
      office of the Issuer for Warrants to purchase the same aggregate number of
      shares of Warrant Stock, each new Warrant to represent the right to purchase
      such number of shares of Warrant Stock as the Holder hereof shall designate
      at
      the time of such exchange. All Warrants issued on transfers or exchanges shall
      be dated the Original Issue Date and shall be identical with this Warrant except
      as to the number of shares of Warrant Stock issuable pursuant
      thereto.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (g)    Continuing
      Rights of Holder.
      The
      Issuer will, at the time of or at any time after each exercise of this Warrant,
      upon the request of the Holder hereof, acknowledge in writing the extent, if
      any, of its continuing obligation to afford to such Holder all rights to which
      such Holder shall continue to be entitled after such exercise in accordance
      with
      the terms of this Warrant, provided
      that if
      any such Holder shall fail to make any such request, the failure shall not
      affect the continuing obligation of the Issuer to afford such rights to such
      Holder.

    

    (h)    Compliance
      with Securities Laws.

    

    (i)    The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the shares of Warrant Stock to be issued upon exercise hereof are being acquired
      solely for the Holder's own account and not as a nominee for any other party,
      and for investment, and that the Holder will not offer, sell or otherwise
      dispose of this Warrant or any shares of Warrant Stock to be issued upon
      exercise hereof except pursuant to an effective registration statement, or
      an
      exemption from registration, under the Securities Act and any applicable state
      securities laws.

    

    (ii)    Except
      as
      provided in paragraph (iii) below, this Warrant and all certificates
      representing shares of Warrant Stock issued upon exercise hereof shall be
      stamped or imprinted with a legend in substantially the following
      form:

    

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
      UNDER
      THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
      LAWS
      IS NOT REQUIRED.

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    (iii)   The
      Issuer agrees to reissue this Warrant or certificates representing any of the
      Warrant Stock, without the legend set forth above if at such time, prior to
      making any transfer of any such securities, the Holder shall give written notice
      to the Issuer describing the manner and terms of such transfer. Such proposed
      transfer will not be effected until: either (i) the Issuer has received an
      opinion of counsel reasonably satisfactory to the Issuer, to the effect that
      the
      registration of such securities under the Securities Act is not required in
      connection with such proposed transfer (which condition shall be satisfied
      by
      the receipt of an executed Notice of Effectiveness of Registration Statement
      contemplated by the Purchase Agreement), (ii) a registration statement under
      the
      Securities Act covering such proposed disposition has been filed by the Issuer
      with the Securities and Exchange Commission and has become effective under
      the
      Securities Act, (iii) the Issuer has received other evidence reasonably
      satisfactory to the Issuer that such registration and qualification under the
      Securities Act and state securities laws are not required, or (iv) the Holder
      provides the Issuer with reasonable assurances that such security can be sold
      pursuant to Rule 144 under the Securities Act. The Issuer will respond to any
      such notice from a holder within three (3) business days and, to the extent
      the
      above conditions are satisfied, will cause its transfer agent to remove the
      legend set forth above. In the case of any proposed transfer under this Section
      2(h), the Issuer will use reasonable efforts to comply with any such applicable
      state securities or "blue sky" laws, but shall in no event be required, (x)
      to
      qualify to do business in any state where it is not then qualified, (y) to
      take
      any action that would subject it to tax or to the general service of process
      in
      any state where it is not then subject, or (z) to comply with state securities
      or “blue sky” laws of any state for which registration by coordination is
      unavailable to the Issuer. The restrictions on transfer contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other
      restrictions on transfer contained in any other section of this Warrant.
      Whenever
      a
      certificate representing the Warrant Stock is required to be issued to a the
      Holder without a legend, in lieu of delivering physical certificates
      representing the Warrant Stock, provided the Issuer’s transfer agent is
      participating in the DTC Fast Automated Securities Transfer program, the Issuer
      shall use its reasonable best efforts to cause its transfer agent to
      electronically transmit the Warrant Stock to the Holder by crediting the account
      of the Holder's Prime Broker with DTC through its DWAC system (to the extent
      not
      inconsistent with any provisions of this Warrant or the Purchase
      Agreement). 

    

    (i)    
Accredited
      Investor Status.
      In no
      event may the Holder exercise this Warrant in whole or in part unless the Holder
      is an “accredited investor” as defined in Regulation D under the Securities
      Act.

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    3.             
      Stock
      Fully Paid; Reservation and Listing of Shares; Covenants.

    

    (a)    Stock
      Fully Paid.
      The
      Issuer represents, warrants, covenants and agrees that all shares of Warrant
      Stock which may be issued upon the exercise of this Warrant or otherwise
      hereunder will, when issued in accordance with the terms of this Warrant, be
      duly authorized, validly issued, fully paid and nonassessable and free from
      all
      taxes, liens and charges created by or through the Issuer. The Issuer further
      covenants and agrees that during the period within which this Warrant may be
      exercised, the Issuer will at all times have authorized and reserved for the
      purpose of issuance upon exercise of this Warrant a number of authorized but
      unissued shares of Common Stock equal to at least one hundred ten percent (110%)
      of the aggregate number of shares of Common Stock to provide for the exercise
      of
      this Warrant.

    

    (b)   Reservation.
      If any
      shares of Common Stock required to be reserved for issuance upon exercise of
      this Warrant or as otherwise provided hereunder require registration or
      qualification with any Governmental Authority under any federal or state law
      before such shares may be so issued, the Issuer will in good faith use its
      best
      efforts as expeditiously as possible at its expense to cause such shares to
      be
      duly registered or qualified. If the Issuer shall list any shares of Common
      Stock on any securities exchange or market it will, at its expense, list
      thereon, and maintain and increase when necessary such listing, of, all shares
      of Warrant Stock from time to time issued upon exercise of this Warrant or
      as
      otherwise provided hereunder (provided that such Warrant Stock has been
      registered pursuant to a registration statement under the Securities Act then
      in
      effect), and, to the extent permissible under the applicable securities exchange
      rules, all unissued shares of Warrant Stock which are at any time issuable
      hereunder, so long as any shares of Common Stock shall be so listed. The Issuer
      will also so list on each securities exchange or market, and will maintain
      such
      listing of, any other securities which the Holder of this Warrant shall be
      entitled to receive upon the exercise of this Warrant if at the time any
      securities of the same class shall be listed on such securities exchange or
      market by the Issuer.

    

    (c)    Covenants.
      The
      Issuer shall not by any action including, without limitation, amending the
      Articles of Incorporation or the by-laws of the Issuer, or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other action, avoid or seek to avoid the observance
      or
      performance of any of the terms of this Warrant, but will at all times in good
      faith assist in the carrying out of all such terms and in the taking of all
      such
      actions as may be necessary or appropriate to protect the rights of the Holder
      hereof against dilution (to the extent specifically provided herein) or
      impairment. Without limiting the generality of the foregoing, the Issuer will
      (i) not permit the par value, if any, of its Common Stock to exceed the then
      effective Warrant Price, (ii) not amend or modify any provision of the Articles
      of Incorporation or by-laws of the Issuer in any manner that would adversely
      affect the rights of the Holders of the Warrants, (iii) take all such action
      as
      may be reasonably necessary in order that the Issuer may validly and legally
      issue fully paid and nonassessable shares of Common Stock, free and clear of
      any
      liens, claims, encumbrances and restrictions (other than as provided herein)
      upon the exercise of this Warrant, and (iv) use its best efforts to obtain
      all
      such authorizations, exemptions or consents from any public regulatory body
      having jurisdiction thereof as may be reasonably necessary to enable the Issuer
      to perform its obligations under this Warrant.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

    (d)    Loss,
      Theft, Destruction of Warrants.
      Upon
      receipt of evidence satisfactory to the Issuer of the ownership of and the
      loss,
      theft, destruction or mutilation of any Warrant and, in the case of any such
      loss, theft or destruction, upon receipt of indemnity or security satisfactory
      to the Issuer or, in the case of any such mutilation, upon surrender and
      cancellation of such Warrant, the Issuer will make and deliver, in lieu of
      such
      lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
      representing the right to purchase the same number of shares of Common
      Stock.

    

    (e)    Payment
      of Taxes.
      The
      Issuer will pay any documentary stamp taxes attributable to the initial issuance
      of Warrant Stock issuable upon exercise of the Warrant; provided, however,
      that
      the Issuer shall not be required to pay any tax or taxes which may be payable
      in
      respect of any transfer involved in the issuance or delivery of any certificates
      for Warrant Stock in a name other than that of the Holder in respect of which
      such shares are issued.

    

    4.    Adjustment
      of Warrant Price.
      The
      price at which such shares of Warrant Stock may be purchased upon exercise
      of
      this Warrant and the Warrant Share Number shall be subject to adjustment from
      time to time as set forth in this Section 4. The Issuer shall give the Holder
      notice of any event described below which requires an adjustment pursuant to
      this Section 4 in accordance with the notice provisions set forth in Section
      5.

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (a)    Recapitalization,
      Reorganization, Reclassification, Consolidation, Merger or Sale.

     

    (i)    
In
      case the
      Issuer after the Original Issue Date shall do any of the following (each, a
      "Triggering
      Event"):
      (a)
      consolidate or merge with or into any other Person and the Issuer shall not
      be
      the continuing or surviving corporation of such consolidation or merger, or
      (b)
      permit any other Person to consolidate with or merge into the Issuer and the
      Issuer shall be the continuing or surviving Person but, in connection with
      such
      consolidation or merger, any Capital Stock of the Issuer shall be changed into
      or exchanged for Securities of any other Person or cash or any other property,
      or (c) transfer all or substantially all of its properties or assets to any
      other Person, or (d) effect a capital reorganization or reclassification of
      its
      Capital Stock, then, and as a condition to such Triggering Event, proper and
      adequate provision shall be made so that, upon the basis and the terms and
      in
      the manner provided in this Warrant, the Holder of this Warrant shall be
      entitled upon the exercise hereof at any time after the consummation of such
      Triggering Event, to the extent this Warrant is not exercised prior to such
      Triggering Event, to receive at the Warrant Price in effect at the time
      immediately prior to the consummation of such Triggering Event in lieu of the
      Common Stock issuable upon such exercise of this Warrant prior to such
      Triggering Event, the Securities, cash and property to which such Holder would
      have been entitled upon the consummation of such Triggering Event if such Holder
      had exercised the rights represented by this Warrant immediately prior thereto
      (including the right of a shareholder to elect the type of consideration it
      will
      receive upon a Triggering Event), subject to adjustments (subsequent to such
      corporate action) as nearly equivalent as possible to the adjustments provided
      for elsewhere in this Section 4. Notwithstanding the foregoing to the contrary,
      this Section 4(a)(i) shall only apply if the surviving entity pursuant to any
      such Triggering Event is a public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and
      its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board. In the event that the
      surviving entity pursuant to any such Triggering Event is not a public company
      that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national exchange or the OTC Bulletin
      Board, then the Holder shall have the right to demand that the Issuer pay to
      the
      Holder an amount equal to the value of this Warrant according to the
      Black-Scholes formula.

    

    (ii)    Notwithstanding
      anything contained in this Warrant to the contrary and so long as the surviving
      entity pursuant to any Triggering Event is a public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and
      its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board,
      a
      Triggering Event shall not be deemed to have occurred if, prior to the
      consummation thereof, each Person (other than the Issuer) which may be required
      to deliver any Securities, cash or property upon the exercise of this Warrant
      as
      provided herein shall assume, by written instrument delivered to, and reasonably
      satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer
      under this Warrant (and if the Issuer shall survive the consummation of such
      Triggering Event, such assumption shall be in addition to, and shall not release
      the Issuer from, any continuing obligations of the Issuer under this Warrant)
      and (B) the obligation to deliver to such Holder such Securities, cash or
      property as, in accordance with the foregoing provisions of this subsection
      (a),
      such Holder shall be entitled to receive, and such Person shall have similarly
      delivered to such Holder an opinion of counsel for such Person, which counsel
      shall be reasonably satisfactory to such Holder, or in the alternative, a
      written acknowledgement executed by the President or Chief Financial Officer
      of
      the Issuer, stating that this Warrant shall thereafter continue in full force
      and effect and the terms hereof (including, without limitation, all of the
      provisions of this subsection (a)) shall be applicable to the Securities, cash
      or property which such Person may be required to deliver upon any exercise
      of
      this Warrant or the exercise of any rights pursuant hereto.

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    (b)    Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Issuer shall:

    

       (i)    
make
      or
      issue or set a record date for the holders of the Common Stock for the purpose
      of entitling them to receive a dividend payable in, or other distribution of,
      shares of Common Stock, 

    

       (ii)    subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock, or

    

       (iii)   combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock,

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      happening of such event, and (2) the Warrant Price then in effect shall be
      adjusted to equal (A) the Warrant Price then in effect multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares of Common Stock
      for
      which this Warrant is exercisable immediately after such
      adjustment.

    

    (c)    Certain
      Other Distributions.
      If at
      any time the Issuer shall make or issue or set a record date for the holders
      of
      the Common Stock for the purpose of entitling them to receive any dividend
      or
      other distribution of:

    

    (i)    
cash
      (other than a cash dividend payable out of earnings or earned surplus legally
      available for the payment of dividends under the laws of the jurisdiction of
      incorporation of the Issuer),

    

    (ii)    any
      evidences of its indebtedness, any shares of stock of any class or any other
      securities or property of any nature whatsoever (other than cash, Common Stock
      Equivalents or Additional Shares of Common Stock), or

    

    (iii)   any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property of any nature whatsoever (other than cash, Common Stock Equivalents
      or
      Additional Shares of Common Stock),

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      shall
      be adjusted to equal the product of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such adjustment
      multiplied by a fraction (A) the numerator of which shall be the Per Share
      Market Value of Common Stock at the date of taking such record and (B) the
      denominator of which shall be such Per Share Market Value minus the amount
      allocable to one share of Common Stock of any such cash so distributable and
      of
      the fair value (as determined in good faith by the Board of Directors of the
      Issuer and supported by an opinion from an investment banking firm of recognized
      national standing acceptable to (but not affiliated with) the Holder) of any
      and
      all such evidences of indebtedness, shares of stock, other securities or
      property or warrants or other subscription or purchase rights so distributable,
      and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
      Warrant Price then in effect multiplied by the number of shares of Common Stock
      for which this Warrant is exercisable immediately prior to the adjustment
      divided by (B) the number of shares of Common Stock for which this Warrant
      is
      exercisable immediately after such adjustment. A reclassification of the Common
      Stock (other than a change in par value, or from par value to no par value
      or
      from no par value to par value) into shares of Common Stock and shares of any
      other class of stock shall be deemed a distribution by the Issuer to the holders
      of its Common Stock of such shares of such other class of stock within the
      meaning of this Section 4(c) and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4(b). 

    

    (d)    Issuance
      of Additional Shares of Common Stock.
      In the
      event the Issuer shall at any time following the Original Issue Date issue
      any
      Additional Shares of Common Stock (otherwise than as provided in the foregoing
      subsections (b) through (c) of this Section 4), at a price per share less than
      the Warrant Price then in effect or without consideration, then the Warrant
      Price upon each such issuance shall be adjusted to the price equal to the
      consideration per share paid for such Additional Shares of Common
      Stock.

    

    (e)    Issuance
      of Common Stock Equivalents.
      If at
      any time the Issuer shall take a record of the holders of its Common Stock
      for
      the purpose of entitling them to receive a distribution of, or shall in any
      manner (whether directly or by assumption in a merger in which the Issuer is
      the
      surviving corporation) issue or sell, any Common Stock Equivalents, whether
      or
      not the rights to exchange or convert thereunder are immediately exercisable,
      and the price per share for which Common Stock is issuable upon such conversion
      or exchange shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, or if, after any such issuance of Common Stock
      Equivalents, the price per share for which Additional Shares of Common Stock
      may
      be issuable thereafter is amended or adjusted, and such price as so amended
      shall make be less than the Warrant Price in effect at the time of such
      amendment or adjustment, then the Warrant Price then in effect shall be adjusted
      as provided in Section 4(d). No further adjustments of the number of shares
      of
      Common Stock for which this Warrant is exercisable and the Warrant Price then
      in
      effect shall be made upon the actual issue of such Common Stock upon conversion
      or exchange of such Common Stock Equivalents.

    

    (f)    Other
      Provisions Applicable to Adjustments under this Section.
      The
      following provisions shall be applicable to the making of adjustments of the
      number of shares of Common Stock for which this Warrant is exercisable and
      the
      Warrant Price then in effect provided for in this Section 4:

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    

    (i)    
Computation
      of Consideration.
      To the
      extent that any Additional Shares of Common Stock or any Common Stock
      Equivalents (or any warrants or other rights therefor) shall be issued for
      cash
      consideration, the consideration received by the Issuer therefor shall be the
      amount of the cash received by the Issuer therefor, or, if such Additional
      Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
      for
      subscription, the subscription price, or, if such Additional Shares of Common
      Stock or Common Stock Equivalents are sold to underwriters or dealers for public
      offering without a subscription offering, the initial public offering price
      (in
      any such case subtracting any amounts paid or receivable for accrued interest
      or
      accrued dividends and without taking into account any compensation, discounts
      or
      expenses paid or incurred by the Issuer for and in the underwriting of, or
      otherwise in connection with, the issuance thereof). In connection with any
      merger or consolidation in which the Issuer is the surviving corporation (other
      than any consolidation or merger in which the previously outstanding shares
      of
      Common Stock of the Issuer shall be changed to or exchanged for the stock or
      other securities of another corporation), the amount of consideration therefore
      shall be, deemed to be the fair value of such portion of the assets and business
      of the nonsurviving corporation as the Board may determine to be attributable
      to
      such shares of Common Stock or Common Stock Equivalents, as the case may be.
      Such determination of the fair value of such consideration shall be made by
      an
      Independent Appraiser. The consideration for any Additional Shares of Common
      Stock issuable pursuant to the terms of any Common Stock Equivalents shall
      be
      the consideration received by the Issuer for issuing such Common Stock
      Equivalents, plus the additional consideration, if any, payable to the Issuer
      upon the exercise of the right of conversion or exchange in such Common Stock
      Equivalents. In the event of any consolidation or merger of the Issuer in which
      the Issuer is not the surviving corporation or in which the previously
      outstanding shares of Common Stock of the Issuer shall be changed into or
      exchanged for the stock or other securities of another corporation, or in the
      event of any sale of all or substantially all of the assets of the Issuer for
      stock or other securities of any corporation, the Issuer shall be deemed to
      have
      issued a number of shares of its Common Stock for stock or securities or other
      property of the other corporation computed on the basis of the actual exchange
      ratio on which the transaction was predicated, and for a consideration equal
      to
      the fair market value on the date of such transaction of all such stock or
      securities or other property of the other corporation. In the event any
      consideration received by the Issuer for any securities consists of property
      other than cash, the fair market value thereof at the time of issuance or as
      otherwise applicable shall be as determined in good faith by the Board. In
      the
      event Common Stock is issued with other shares or securities or other assets
      of
      the Issuer for consideration which covers both, the consideration computed
      as
      provided in this Section 4(f)(i) shall be allocated among such securities and
      assets as determined in good faith by the Board.

    

    (ii)    When
      Adjustments to Be Made.
      The
      adjustments required by this Section 4 shall be made whenever and as often
      as
      any specified event requiring an adjustment shall occur, except that any
      adjustment of the number of shares of Common Stock for which this Warrant is
      exercisable that would otherwise be required may be postponed (except in the
      case of a subdivision or combination of shares of the Common Stock, as provided
      for in Section 4(b)) up to, but not beyond the date of exercise if such
      adjustment either by itself or with other adjustments not previously made adds
      or subtracts less than one percent (1%) of the shares of Common Stock for which
      this Warrant is exercisable immediately prior to the making of such adjustment.
      Any adjustment representing a change of less than such minimum amount (except
      as
      aforesaid) which is postponed shall be carried forward and made as soon as
      such
      adjustment, together with other adjustments required by this Section 4 and
      not
      previously made, would result in a minimum adjustment or on the date of
      exercise. For the purpose of any adjustment, any specified event shall be deemed
      to have occurred at the close of business on the date of its
      occurrence.

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (iii)    Fractional
      Interests.
      In
      computing adjustments under this Section 4, fractional interests in Common
      Stock
      shall be taken into account to the nearest one one-hundredth (1/100th)
      of a
      share.

    

    (iv)    When
      Adjustment Not Required.
      If the
      Issuer shall take a record of the holders of its Common Stock for the purpose
      of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights and shall, thereafter and before the distribution to stockholders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

     

    (g)   Form
      of Warrant after Adjustments.
      The
      form of this Warrant need not be changed because of any adjustments in the
      Warrant Price or the number and kind of Securities purchasable upon the exercise
      of this Warrant.

    

    (h)    Escrow
      of Warrant Stock.
      If
      after any property becomes distributable pursuant to this Section 4 by reason
      of
      the taking of any record of the holders of Common Stock, but prior to the
      occurrence of the event for which such record is taken, and the Holder exercises
      this Warrant, any shares of Common Stock issuable upon exercise by reason of
      such adjustment shall be deemed the last shares of Common Stock for which this
      Warrant is exercised (notwithstanding any other provision to the contrary
      herein) and such shares or other property shall be held in escrow for the Holder
      by the Issuer to be issued to the Holder upon and to the extent that the event
      actually takes place, upon payment of the current Warrant Price. Notwithstanding
      any other provision to the contrary herein, if the event for which such record
      was taken fails to occur or is rescinded, then such escrowed shares shall be
      cancelled by the Issuer and escrowed property returned.

    

    5.    Notice
      of Adjustments.
      Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
      to
      Section 4 hereof (for purposes of this Section 5, each an "adjustment"),
      the
      Issuer shall cause its Chief Financial Officer to prepare and execute a
      certificate setting forth, in reasonable detail, the event requiring the
      adjustment, the amount of the adjustment, the method by which such adjustment
      was calculated (including a description of the basis on which the Board made
      any
      determination hereunder), and the Warrant Price and Warrant Share Number after
      giving effect to such adjustment, and shall cause copies of such certificate
      to
      be delivered to the Holder of this Warrant promptly after each adjustment.
      Any
      dispute between the Issuer and the Holder of this Warrant with respect to the
      matters set forth in such certificate may at the option of the Holder of this
      Warrant be submitted to a national or regional accounting firm reasonably
      acceptable to the Issuer and the Holder, provided
      that the
      Issuer shall have ten (10) days after receipt of notice from such Holder of
      its
      selection of such firm to object thereto, in which case such Holder shall select
      another such firm and the Issuer shall have no such right of objection. The
      firm
      selected by the Holder of this Warrant as provided in the preceding sentence
      shall be instructed to deliver a written opinion as to such matters to the
      Issuer and such Holder within thirty (30) days after submission to it of such
      dispute. Such opinion shall be final and binding on the parties hereto. The
      costs and expenses of the initial accounting firm shall be paid equally by
      the
      Issuer and the Holder and, in the case of an objection by the Issuer, the costs
      and expenses of the subsequent accounting firm shall be paid in full by the
      Issuer.

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    

    6.    Fractional
      Shares.
      No
      fractional shares of Warrant Stock will be issued in connection with any
      exercise hereof, but in lieu of such fractional shares, the Issuer shall round
      the number of shares to be issued upon exercise up to the nearest whole number
      of shares.

    

    7.    Ownership
      Cap and Certain Exercise Restrictions.
      (a)
      Notwithstanding anything to the contrary set forth in this Warrant, at no time
      may a Holder of this Warrant exercise any portion of this Warrant if the number
      of shares of Common Stock to be issued pursuant to such exercise would exceed,
      when aggregated with all other shares of Common Stock owned by such Holder
      at
      such time, the number of shares of Common Stock which would result in such
      Holder beneficially owning (as determined in accordance with Section 13(d)
      of
      the Exchange Act and the rules thereunder) in excess of 4.9% of the then issued
      and outstanding shares of Common Stock; provided,
      however,
      that
      upon a holder of this Warrant providing the Issuer with sixty-one (61) days
      notice (pursuant to Section 13 hereof) (the "Waiver
      Notice")
      that
      such Holder would like to waive this Section 7(a) with regard to any or all
      shares of Common Stock issuable upon exercise of this Warrant, this Section
      7(a)
      will be of no force or effect with regard to all or a portion of the Warrant
      referenced in the Waiver Notice; provided,
      further,
      that
      this provision shall be of no further force or effect during the sixty-one
      (61)
      days immediately preceding the expiration of the term of this
      Warrant.

    

    (b)    The
      Holder may not exercise the Warrant hereunder to the extent such exercise would
      result in the Holder beneficially owning (as determined in accordance with
      Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9%
      of
      the then issued and outstanding shares of Common Stock, including shares
      issuable upon exercise of the Warrant held by the Holder after application
      of
      this Section; provided,
      however,
      that
      upon a holder of this Warrant providing the Issuer with a Waiver Notice that
      such holder would like to waive this Section 7(b) with regard to any or all
      shares of Common Stock issuable upon exercise of this Warrant, this Section
      7(b)
      shall be of no force or effect with regard to those shares of Warrant Stock
      referenced in the Waiver Notice; provided,
      further,
      that
      this provision shall be of no further force or effect during the sixty-one
      (61)
      days immediately preceding the expiration of the term of this
      Warrant.

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    

    8.    Issuer's
      Redemption Option.
      Commencing on the date that is ninety (90) days following the effective date
      of
      a registration statement under the Securities Act providing for the resale
      of
      the Warrant Stock with respect to this Warrant, if the average Per Share Market
      Value of the Issuer’s Common Stock for any ten (10) consecutive Trading Days
      exceeds $5.62 per share, the Issuer may, at any time thereafter upon ten (10)
      Trading Days prior written notice (the “Issuer
      Redemption Notice”)
      to the
      Holder, redeem the unexercised portion of this Warrant in cash at a price equal
      to the number of shares of Warrant Stock with respect to the unexercised portion
      of this Warrant multiplied by $0.10 (the “Issuer
      Redemption Price”);
      provided,
      that,
      in
      connection with any redemption by the Issuer under this Section 8, (A)
a
      registration statement under the Securities Act providing for the resale of
      the
      Warrant Stock (the
      “Registration
      Statement”)
      is
      then in effect and has been effective, without lapse or suspension of any kind,
      for a period of sixty (60) consecutive calendar days, (B) trading in the Common
      Stock shall not have been suspended by the Securities and Exchange Commission
      or
      the OTC Bulletin Board (or other exchange or market on which the Common Stock
      is
      trading), (C) the Issuer is in material compliance with the terms and conditions
      of this Warrant and the other Transaction Documents (as defined in the Purchase
      Agreement) and (D) the
      Issuer is not in possession of any material non-public information.
      The
      Issuer's Redemption Notice shall state the date of redemption which date shall
      be the tenth (10h)
      day (or
      if such day is a Saturday or Sunday or a day on which banking institutions
      in
      the City of New York are not open for business, the next succeeding day) after
      the Issuer has delivered the Issuer's Redemption Notice (the "Issuer’s
      Redemption Date"), the Issuer's Redemption Price and the number of shares to
      be
      redeemed by the Issuer. The Issuer shall not send a Issuer's Redemption Notice
      unless it has good and clear funds for a minimum of the amount it intends to
      redeem in a bank account controlled by the Issuer. The Issuer shall deliver
      the
      Issuer's Redemption Price to the holder(s) on the Issuers Redemption Date.
      Not
      later than five (5) days after receipt of the Issuer Redemption Price, Holder
      shall return to the Issuer for cancellation the original Warrant to be redeemed.
      If the Issuer fails to pay the Issuers Redemption Price by the Issuer’s
      Redemption Date, the redemption will be declared null and void.

    

    9.    Definitions.
      For the
      purposes of this Warrant, the following terms have the following
      meanings:

    

    "Additional
      Shares of Common Stock"
      means
      all shares of Common Stock issued by the Issuer after the Original Issue Date,
      and all shares of Other Common, if any, issued by the Issuer after the Original
      Issue Date, except: (i) securities issued (other than for cash) in connection
      with a merger, acquisition, or consolidation, (ii) securities issued pursuant
      to
      a bona fide firm underwritten public offering of the Issuer’s securities of at
      least $20,000,000 in which the price per share is at least $4.00 (subject to
      appropriate adjustment in the event of any stock dividend, stock split, stock
      distribution or combination with respect to the Common Stock), (iii) securities
      issued pursuant to the conversion or exercise of convertible or exercisable
      securities issued or outstanding on or prior to the date hereof or issued
      pursuant to the Purchase Agreement, (iv) the Warrant Stock, (v) securities
      issued in connection with bona fide strategic license agreements or other
      partnering arrangements so long as such issuances are not for the purpose of
      raising capital, (vi) Common Stock issued or the issuance or grants of options
      to purchase Common Stock pursuant to the Issuer’s stock option plans and
      employee stock purchase plans as they exist on the date hereof or hereafter
      adopted by the Board and approved by the Majority Holders, (vii) any warrants
      issued to the placement agent and its designees for the transactions
      contemplated by the Purchase Agreement and (viii) the payment of any dividends
      in shares of Common Stock pursuant to the Preferred Stock issued pursuant to
      the
      Purchase Agreement.

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    "Articles
      of Incorporation"
      means
      the Articles of Incorporation of the Issuer as in effect on the Original Issue
      Date, and as hereafter from time to time amended, modified, supplemented or
      restated in accordance with the terms hereof and thereof and pursuant to
      applicable law. 

    

    “Board"
      shall
      mean the Board of Directors of the Issuer.

    

    "Capital
      Stock"
      means
      and includes (i) any and all shares, interests, participations or other
      equivalents of or interests in (however designated) corporate stock, including,
      without limitation, shares of preferred or preference stock, (ii) all
      partnership interests (whether general or limited) in any Person which is a
      partnership, (iii) all membership interests or limited liability company
      interests in any limited liability company, and (iv) all equity or ownership
      interests in any Person of any other type.

    

    "Common
      Stock"
      means
      the Common Stock, $.001 par value per share, of the Issuer and any other Capital
      Stock into which such stock may hereafter be changed.

    

    "Common
      Stock Equivalent"
      means
      any Convertible Security or warrant, option or other right to subscribe for
      or
      purchase any Additional Shares of Common Stock or any Convertible
      Security.

    

    "Convertible
      Securities"
      means
      evidences of Indebtedness, shares of Capital Stock or other Securities which
      are
      or may be at any time convertible into or exchangeable for Additional Shares
      of
      Common Stock. The term "Convertible Security" means one of the Convertible
      Securities.

    

    "Governmental
      Authority"
      means
      any governmental, regulatory or self-regulatory entity, department, body,
      official, authority, commission, board, agency or instrumentality, whether
      federal, state or local, and whether domestic or foreign.

    

    "Holders"
      mean
      the Persons who shall from time to time own any Warrant. The term "Holder"
      means
      one of the Holders.

    

    "Independent
      Appraiser"
      means a
      nationally recognized or major regional investment banking firm or firm of
      independent certified public accountants of recognized standing (which may
      be
      the firm that regularly examines the financial statements of the Issuer) that
      is
      regularly engaged in the business of appraising the Capital Stock or assets
      of
      corporations or other entities as going concerns, and which is not affiliated
      with either the Issuer or the Holder of any Warrant.

    

    "Issuer"
      means
      Impart Media Group, Inc., a Nevada corporation, and its successors.

    

    "Majority
      Holders"
      means
      at any time the Holders of Warrants exercisable for a majority of the shares
      of
      Warrant Stock issuable under the Warrants at the time
      outstanding.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    

    "Original
      Issue Date"
      means
      March 2, 2006.

    

    "OTC
      Bulletin Board"
      means
      the over-the-counter electronic bulletin board.

    

    "Other
      Common"
      means
      any other Capital Stock of the Issuer of any class which shall be authorized
      at
      any time after the date of this Warrant (other than Common Stock) and which
      shall have the right to participate in the distribution of earnings and assets
      of the Issuer without limitation as to amount.

    

    “Outstanding
      Common Stock”
means,
      at any given time, the aggregate amount of outstanding shares of Common Stock,
      assuming full exercise, conversion or exchange (as applicable) of all options,
      warrants and other Securities which are convertible into or exercisable or
      exchangeable for, and any right to subscribe for, shares of Common Stock that
      are outstanding at such time.

    

    "Person"
      means
      an individual, corporation, limited liability company, partnership, joint stock
      company, trust, unincorporated organization, joint venture, Governmental
      Authority or other entity of whatever nature.

    

    "Per
      Share Market Value"
      means
      on any particular date (a) the last closing bid price per share of the Common
      Stock on such date on the OTC
      Bulletin Board or
      another registered national stock exchange on which the Common Stock is then
      listed, or if there is no such price on such date, then the closing bid price
      on
      such exchange or quotation system on the date nearest preceding such date,
      or
      (b) if the Common Stock is not listed then on the OTC Bulletin Board or any
      registered national stock exchange, the last closing bid price for a share
      of
      Common Stock in the over-the-counter market, as reported by the OTC Bulletin
      Board or in the National Quotation Bureau Incorporated or similar organization
      or agency succeeding to its functions of reporting prices) at the close of
      business on such date, or (c) if the Common Stock is not then reported by the
      OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar
      organization or agency succeeding to its functions of reporting prices), then
      the average of the "Pink Sheet" quotes for the five (5) Trading Days preceding
      such date of determination, or (d) if the Common Stock is not then publicly
      traded the fair market value of a share of Common Stock as determined by the
      agreement of the Board and the Majority Holders, provided,
      however,
      if the
      Board and the Majority Holders cannot agree on the fair market value of a share
      of the Common Stock, the fair market value shall be determined by an Independent
      Appraiser selected in good faith by the Majority Holders; provided,
      however,
      that
      the Issuer, after receipt of the determination by such Independent Appraiser,
      shall have the right to select an additional Independent Appraiser, in which
      case, the fair market value shall be equal to the average of the determinations
      by each such Independent Appraiser; and provided,
      further
      that all
      determinations of the Per Share Market Value shall be appropriately adjusted
      for
      any stock dividends, stock splits or other similar transactions during such
      period. The determination of fair market value by an Independent Appraiser
      shall
      be based upon the fair market value of the Issuer determined on a going concern
      basis as between a willing buyer and a willing seller and taking into account
      all relevant factors determinative of value, and shall be final and binding
      on
      all parties. In determining the fair market value of any shares of Common Stock,
      no consideration shall be given to any restrictions on transfer of the Common
      Stock imposed by agreement or by federal or state securities laws, or to the
      existence or absence of, or any limitations on, voting rights.

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    

    “Preferred
      Stock”
means
      the Series A Convertible Preferred Stock issued by the Issuer to the Purchasers
      pursuant to the Purchase Agreement.

    

    "Purchase
      Agreement"
      means
      the Series A Convertible Preferred Stock Purchase Agreement dated as of March
      2,
      2006 among the Issuer and the Purchasers.

    

    "Purchasers"
      means
      the purchasers of the Preferred Stock and
      the
      Warrants issued by the Issuer pursuant to the Purchase Agreement.

    

    "Securities"
      means
      any debt or equity securities of the Issuer, whether now or hereafter
      authorized, any instrument convertible into or exchangeable for Securities
      or a
      Security, and any option, warrant or other right to purchase or acquire any
      Security. "Security" means one of the Securities.

    

    "Securities
      Act"
      means
      the Securities Act of 1933, as amended, or any similar federal statute then
      in
      effect.

    

    "Subsidiary"
      means
      any corporation at least 50% of whose outstanding Voting Stock shall at the
      time
      be owned directly or indirectly by the Issuer or by one or more of its
      Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

    

    "Term"
      has the
      meaning specified in Section 1 hereof.

    

    "Trading
      Day"
      means
      (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or
      (b)
      if the Common Stock is not traded on the OTC Bulletin Board, a day on which
      the
      Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding its functions of reporting prices); provided,
      however,
      that in
      the event that the Common Stock is not listed or quoted as set forth in (a)
      or
      (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any
      day which shall be a legal holiday or a day on which banking institutions in
      the
      State of New York are authorized or required by law or other government action
      to close.

    

    "Voting
      Stock"
      means,
      as applied to the Capital Stock of any corporation, Capital Stock of any class
      or classes (however designated) having ordinary voting power for the election
      of
      a majority of the members of the Board of Directors (or other governing body)
      of
      such corporation, other than Capital Stock having such power only by reason
      of
      the happening of a contingency.

    

    "Warrants"
      means
      the Warrants issued and sold pursuant to the Purchase Agreement, including,
      without limitation, this Warrant, and any other warrants of like tenor issued
      in
      substitution or exchange for any thereof pursuant to the provisions of Section
      2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    

    "Warrant
      Price"
      initially means $2.25, as such price may be adjusted from time to time as shall
      result from the adjustments specified in this Warrant, including Section 4
      hereto.

    

    "Warrant
      Share Number"
      means
      at any time the aggregate number of shares of Warrant Stock which may at such
      time be purchased upon exercise of this Warrant, after giving effect to all
      prior adjustments and increases to such number made or required to be made
      under
      the terms hereof.

    

    "Warrant
      Stock"
      means
      Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
      issuable pursuant to any Warrant or Warrants.

    

    10.    Other
      Notices.    
      In case at any time:

    

    
      	 	
              (A)

            	
              the
                Issuer shall make any distributions to the holders of Common Stock;
                or

            

    

    

    
      	 	
              (B)

            	
              the
                Issuer shall authorize the granting to all holders of its Common
                Stock of
                rights to subscribe for or purchase any shares of Capital Stock of
                any
                class or other rights; or

            

    

    

    
      	 	
              (C)

            	
              there
                shall be any reclassification of the Capital Stock of the Issuer;
                or

            

    

    

    
      	 	
              (D)

            	
              there
                shall be any capital reorganization by the Issuer;
                or

            

    

    

    
      	 	
              (E)

            	
              there
                shall be any (i) consolidation or merger involving the Issuer or
                (ii)
                sale, transfer or other disposition of all or substantially all of
                the
                Issuer's property, assets or business (except a merger or other
                reorganization in which the Issuer shall be the surviving corporation
                and
                its shares of Capital Stock shall continue to be outstanding and
                unchanged
                and except a consolidation, merger, sale, transfer or other disposition
                involving a wholly-owned Subsidiary);
                or

            

    

    

    
      	 	
              (F)

            	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding-up
                of the Issuer or any partial liquidation of the Issuer or distribution
                to
                holders of Common Stock;

            

    

    

    then,
      in
      each of such cases, the Issuer shall give written notice to the Holder of the
      date on which (i) the books of the Issuer shall close or a record shall be
      taken
      for such dividend, distribution or subscription rights or (ii) such
      reorganization, reclassification, consolidation, merger, disposition,
      dissolution, liquidation or winding-up, as the case may be, shall take place.
      Such notice also shall specify the date as of which the holders of Common Stock
      of record shall participate in such dividend, distribution or subscription
      rights, or shall be entitled to exchange their certificates for Common Stock
      for
      securities or other property deliverable upon such reorganization,
      reclassification, consolidation, merger, disposition, dissolution, liquidation
      or winding-up, as the case may be. Such notice shall be given at least twenty
      (20) days prior to the action in question and not less than ten (10) days prior
      to the record date or the date on which the Issuer's transfer books are closed
      in respect thereto. This Warrant entitles the Holder to receive copies of all
      financial and other information distributed or required to be distributed to
      the
      holders of the Common Stock.

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    

    11.    Amendment
      and Waiver.
      Any
      term, covenant, agreement or condition in this Warrant may be amended, or
      compliance therewith may be waived (either generally or in a particular instance
      and either retroactively or prospectively), by a written instrument or written
      instruments executed by the Issuer and the Majority Holders; provided,
      however,
      that no
      such amendment or waiver shall reduce the Warrant Share Number, increase the
      Warrant Price, shorten the period during which this Warrant may be exercised
      or
      modify any provision of this Section 11 without the consent of the Holder of
      this Warrant. No consideration shall be offered or paid to any person to amend
      or consent to a waiver or modification of any provision of this Warrant unless
      the same consideration is also offered to all holders of the
      Warrants.

    

    12.    Governing
      Law; Jurisdiction.
      This
      Warrant shall be governed by and construed in accordance with the internal
      laws
      of the State of New York, without giving effect to any of the conflicts of
      law
      principles which would result in the application of the substantive law of
      another jurisdiction. This Warrant shall not be interpreted or construed with
      any presumption against the party causing this Warrant to be drafted. The Issuer
      and the Holder agree that venue for any dispute arising under this Warrant
      will
      lie exclusively in the state or federal courts located in New York County,
      New
      York, and the parties irrevocably waive any right to raise forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The Issuer and the Holder
      irrevocably consent to personal jurisdiction in the state and federal courts
      of
      the state of New York. The Issuer and the Holder consent to process being served
      in any such suit, action or proceeding by mailing a copy thereof to such party
      at the address in effect for notices to it under this Warrant and agrees that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing in this Section 12 shall affect or limit any right to serve
      process in any other manner permitted by law. The Issuer and the Holder hereby
      agree that the prevailing party in any suit, action or proceeding arising out
      of
      or relating to this Warrant or the Purchase Agreement, shall be entitled to
      reimbursement for reasonable legal fees from the non-prevailing party. The
      parties hereby waive all rights to a trial by jury.

    

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

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Issuer:

            	 	
              Impart
                Media Group, Inc. 

              1300
                North Northlake Way

              Seattle,
                Washington 98103

              Attention:
                Chief Executive Officer

              Tel.
                No.: (206) 633-1852 

              Fax
                No.: (206) 633-2768

            
	 	 	 
	
              with
                copies (which copies shall not constitute notice)to:

            	 	
              Pryor
                Cashman Sherman & Flynn LLP

              410
                Park Avenue, 10th
                Floor

              New
                York, New York 10022

              Attention:
                Eric M. Hellige

              Tel.
                No.: (212) 326-0846

              Fax
                No.: (212) 326-0806

            
	 	 	 
	
              If
                to any Holder:

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

            
	 	 	 
	
              with
                copies (which copies shall not constitute notice) to:

            	 	
              Kramer
                Levin Naftalis & Frankel LLP

              1177
                Avenue of the Americas

              New
                York, New York 10036

              Attention:
                Christopher S. Auguste

              Tel.
                No.: (212) 715-9100

              Fax
                No.: (212) 715-8000

            

    

    

    Any
      party
      hereto may from time to time change its address for notices by giving written
      notice of such changed address to the other party hereto.

     

    14.    Warrant
      Agent.
      The
      Issuer may, by written notice to each Holder of this Warrant, appoint an agent
      having an office in New York, New York for the purpose of issuing shares of
      Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
      Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section
      2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3
      hereof, or any of the foregoing, and thereafter any such issuance, exchange
      or
      replacement, as the case may be, shall be made at such office by such
      agent.

    

    15.    Remedies.
      The
      Issuer stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Issuer 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.

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    

    16.    Successors
      and Assigns.
      This
      Warrant and the rights evidenced hereby shall inure to the benefit of and be
      binding upon the successors and assigns of the Issuer, the Holder hereof and
      (to
      the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,
      and shall be enforceable by any such Holder or Holder of Warrant
      Stock.

    

    17.    Modification
      and Severability.
      If, in
      any action before any court or agency legally empowered to enforce any provision
      contained herein, any provision hereof is found to be unenforceable, then such
      provision shall be deemed modified to the extent necessary to make it
      enforceable by such court or agency. If any such provision is not enforceable
      as
      set forth in the preceding sentence, the unenforceability of such provision
      shall not affect the other provisions of this Warrant, but this Warrant shall
      be
      construed as if such unenforceable provision had never been contained
      herein.

    

    18.    Registration
      Rights.
      The
      initial Holder of this Warrant is entitled to the benefit of certain
      registration rights with respect to the shares of Common Stock issuable upon
      the
      exercise of this Warrant pursuant to that certain Registration Rights Agreement,
      of even date herewith, by and among the Company and Persons listed on Schedule
      I
      thereto (the “Registration Rights Agreement”) and the registration rights with
      respect to the shares of Common Stock issuable upon the exercise of this Warrant
      by any subsequent Holder may only be assigned in accordance with the terms
      and
      provisions of the Registrations Rights Agreement.

    

    19.    Headings.
      The
      headings of the Sections of this Warrant are for convenience of reference only
      and shall not, for any purpose, be deemed a part of this Warrant.

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
      first above written.

     

    

      
        	 	
                IMPART
                  MEDIA GROUP, INC.

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                /s/Joseph
                  Martinez

              	 
	 	 	
                Name:
                  Joseph Martinez

              	 
	 	 	
                Title:
                  Chief Financial Officer

              	 

      

    

     

     

    -22-Exhibit 10.1

    
      
        

      

      M-Wave,
        Inc.

       

      Shares
        of Series B Convertible Preferred Stock

       

      SUBSCRIPTION
        AGREEMENT

       

      
        	 	
                March
                  1, 2006

              
	
                M.A.G.
                  Capital, LLC

              	 
	
                Mercator
                  Momentum Fund, LP

              	 
	
                Mercator
                  Momentum Fund III, LP

              	 
	
                Monarch
                  Pointe Fund, Ltd. 

              	 
	
                555
                  South Flower Street, Suite 4200

              	 
	
                Los
                  Angeles, California 90071

              	 

      

      

      Ladies
        and Gentlemen:

       

      M-Wave,
        Inc., a Delaware corporation (the "Company"),
        hereby
        confirms its agreement with Mercator Momentum Fund, LP ("MMF"),
        Mercator Momentum Fund III, LP ("MMF
        III"),
        and
        Monarch Pointe Fund, Ltd. ("Monarch"
        and,
        together with MMF and MMF III, the "Purchasers"),
        and
        M.A.G. Capital, LLC ("MAG")
        as set
        forth below.

       

      1.     The
        Securities.  
        Subject to the terms and conditions herein contained, the Company proposes
        to
        issue and sell to the Purchasers an aggregate of: (a) 64,648 shares (the
"Shares")
        of its
        Series B Convertible Preferred Stock (the "Series
        B Stock"),
        which
        shall be convertible into shares (the "Conversion
        Shares")
        of the
        Company's Common Stock (the "Common
        Stock")
        in
        accordance with the formula set forth in the Certificate of Designations
        further
        described below. The rights, preferences and privileges of the Series B
        Stock are as set forth in the Certificate of Designations of Series B
        Preferred Stock as filed with the Secretary of State of the State of Delaware
        (the "Certificate
        of Designations")
        in the
        form attached hereto as Exhibit
        A.
        The
        numbers of Conversion Shares that any Purchaser may acquire at any time are
        subject to limitation in the Certificate of Designations, so that the aggregate
        number of shares of Common Stock of which such Purchaser and all persons
        affiliated with such Purchaser have beneficial ownership (calculated pursuant
        to
        Rule 13d-3 of the Securities Exchange Act of 1934, as amended) does not at
        any
        time exceed 9.99% of the Company's then outstanding Common Stock. 

       

      The
        Shares are sometimes herein referred to as the "Securities."
        This
        Agreement, the Certificate of Designations and the Registration Rights
        Agreement, in the form attached hereto as Exhibit
        B
        (the
"Registration
        Rights Agreement")
        are
        sometimes herein collectively referred to as the "Transaction
        Documents."

       

      The
        Securities will be offered and sold to the Purchasers without such offers
        and
        sales being registered under the Securities Act of 1933, as amended (together
        with the rules and regulations of the Securities and Exchange Commission
        (the
"SEC")
        promulgated thereunder, the "Securities
        Act"),
        in
        reliance on exemptions therefrom.

       

      Each
        Purchaser and MAG acknowledges that notwithstanding the terms of the
        Registration Rights Agreement, the Company may issue the Conversion
        Shares in unregistered form; provided, however, that the immediately preceding
        clause shall not affect the obligations of the Company under this Agreement
        and
        under Section 2 and Section 3 of the Registration Rights Agreement to file
        the
        Registration Statement and to use its best efforts to cause the Registration
        Statement to become effective with the SEC within the applicable periods
        described herein and in the Registration Rights Agreement.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      In
        connection with the sale of the Securities, the Company has made available
        (including electronically via the SEC's EDGAR system) to Purchasers its periodic
        and current reports, forms, schedules, proxy statements and other documents
        (including exhibits and all other information incorporated by reference)
        filed
        with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange
        Act").
        These
        reports, forms, schedules, statements, documents, filings and amendments,
        are
        collectively referred to as the "Disclosure
        Documents."
        All
        references in this Agreement to financial statements and schedules and other
        information which is "contained," "included" or "stated" in the Disclosure
        Documents (or other references of like import) shall be deemed to mean and
        include all such financial statements and schedules, documents, exhibits
        and
        other information which is incorporated by reference in the Disclosure
        Documents.

       

      2.     Representations
        and Warranties of the Company. 
         Except as set forth in the Disclosure Documents and on the Disclosure
        Schedule contained in Schedules A through D attached hereto and made a part
        hereof (the "Disclosure
        Schedule"),
        the
        Company represents and warrants to and agrees with Purchasers and MAG as
        follows: 

       

      (a)     The
        Disclosure Documents as of their respective dates did not and will not as
        of the
        Closing Date (after giving effect to any updated disclosures therein), contain
        any untrue statement of a material fact or omit to state a material fact
        necessary to make the statements therein, in the light of the circumstances
        under which they were made, not misleading. The Disclosure Documents and
        the
        documents incorporated or deemed to be incorporated by reference therein,
        at the
        time they were filed or hereafter are filed with the SEC, complied and will
        comply, at the time of filing, in all material respects with the requirements
        of
        the Securities Act and/or the Exchange Act, as the case may be, as
        applicable.

       

      (b)     Schedule
        A attached hereto sets forth a complete list of the subsidiaries of the Company
        (the "Subsidiaries"). Except as set forth in the Disclosure Documents or
        on
Schedule
        A,
        each of
        the Company and its Subsidiaries has been duly incorporated and each of the
        Company and the Subsidiaries is validly existing in good standing as a
        corporation under the laws of its jurisdiction of incorporation, with the
        requisite corporate power and authority to own its properties and conduct
        its
        business as now conducted as described in the Disclosure Documents and is
        duly
        qualified to do business as a foreign corporation in good standing in all
        other
        jurisdictions where the ownership or leasing of its properties or the conduct
        of
        its business requires such qualification, except where the failure to be
        so
        qualified would not, individually or in the aggregate, have a material adverse
        effect on the business, condition (financial or other), properties, prospects
        or
        results of operations of the Company and the Subsidiaries, taken as a whole
        (any
        such event, a "Material
        Adverse Effect");
        as of
        the Closing Date, the Company will have the authorized, issued and outstanding
        capitalization set forth in on Schedule
        B
        attached
        hereto (the "Company
        Capitalization");
        except
        as set forth in the Disclosure Documents or on Schedule
        A,
        the
        Company does not have any subsidiaries or own directly or indirectly any
        of the
        capital stock or other equity or long-term debt securities of or have any
        equity
        interest in any other person; all of the outstanding shares of capital stock
        of
        the Company and the Subsidiaries have been duly authorized and validly issued,
        are fully paid and non-assessable and were not issued in violation of any
        preemptive or similar rights and are owned free and clear of all liens,
        encumbrances, equities, and restrictions on transferability (other than those
        imposed by the Securities Act and the state securities or "Blue Sky" laws)
        or
        voting; except as set forth in the Disclosure Documents, all of the outstanding
        shares of capital stock of the Subsidiaries are owned, directly or indirectly,
        by the Company; except as set forth in the Disclosure Documents, no options,
        warrants or other rights to purchase from the Company or any Subsidiary,
        agreements or other obligations of the Company or any Subsidiary to issue
        or
        other rights to convert any obligation into, or exchange any securities for,
        shares of capital stock of or ownership interests in the Company or any
        Subsidiary are outstanding; and except as set forth in the Disclosure Documents
        or on Schedule
        C,
        there
        is no agreement, understanding or arrangement among the Company or any
        Subsidiary and each of their respective stockholders or any other person
        relating to the ownership or disposition of any capital stock of the Company
        or
        any Subsidiary or the election of directors of the Company or any Subsidiary
        or
        the governance of the Company's or any Subsidiary's affairs, and, if any,
        such
        agreements, understandings and arrangements will not be breached or violated
        as
        a result of the execution and delivery of, or the consummation of the
        transactions contemplated by, the Transaction Documents.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      (c)     The
        Company has the requisite corporate power and authority to execute, deliver
        and
        perform its obligations under the Transaction Documents. Each of the Transaction
        Documents has been duly and validly authorized by the Company and, when executed
        and delivered by the Company, will constitute a valid and legally binding
        agreement of the Company, enforceable against the Company in accordance with
        its
        terms except as the enforcement thereof may be limited by (A) bankruptcy,
        insolvency, reorganization, fraudulent conveyance, moratorium or other similar
        laws now or hereafter in effect relating to or affecting creditors' rights
        generally or (B) general principles of equity and the discretion of the
        court before which any proceeding therefore may be brought (regardless of
        whether such enforcement is considered in a proceeding at law or in equity)
        (collectively, the "Enforceability
        Exceptions").

       

      (d)     The
        Shares have been duly authorized and, when issued upon payment thereof in
        accordance with this Agreement, will have been validly issued, fully paid
        and
        non-assessable. The Conversion Shares issuable have been duly authorized
        and
        validly reserved for issuance, and when issued upon conversion of the Shares
        in
        accordance with the terms of the Certificate of Designations, will have been
        validly issued, fully paid and non-assessable. The Common Stock of the Company
        conforms to the description thereof contained in the Disclosure Documents.
        The
        stockholders of the Company have no preemptive or similar rights with respect
        to
        the Common Stock. 

       

      (e)     No
        consent, approval, authorization, license, qualification, exemption or order
        of
        any court or governmental agency or body or third party is required for the
        performance of the Transaction Documents by the Company or for the consummation
        by the Company of any of the transactions contemplated thereby, or the
        application of the proceeds of the issuance of the Securities as described
        in
        this Agreement, except for such consents, approvals, authorizations, licenses,
        qualifications, exemptions or orders (i) as have been obtained on or prior
        to the Closing Date, (ii) as are not required to be obtained on or prior to
        the Closing Date that will be obtained when required, or (iii) the failure
        to obtain which would not, individually or in the aggregate, have a Material
        Adverse Effect.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      (f)     Except
        as
        set forth on Schedule
        D,
        none of
        the Company or the Subsidiaries is (i) in material violation of its
        certificate of incorporation or bylaws (or similar organizational document),
        (ii) in breach or violation of any statute, judgment, decree, order, rule
        or regulation applicable to it or any of its properties or assets, which
        breach
        or violation would, individually or in the aggregate, have a Material Adverse
        Effect, or (iii) except as described in the Disclosure Documents, in
        default (nor has any event occurred which with notice or passage of time,
        or
        both, would constitute a default) in the performance or observance of any
        obligation, agreement, covenant or condition contained in any contract,
        indenture, mortgage, deed of trust, loan agreement, note, lease, license,
        franchise agreement, permit, certificate or agreement or instrument to which
        it
        is a party or to which it is subject, which default would, individually or
        in
        the aggregate, have a Material Adverse Effect.

       

      (g)     The
        execution, delivery and performance by the Company of the Transaction Documents
        and the consummation by the Company of the transactions contemplated thereby
        and
        the fulfillment of the terms thereof will not (a) violate, conflict with or
        constitute or result in a breach of or a default under (or an event that,
        with
        notice or lapse of time, or both, would constitute a breach of or a default
        under) any of (i) the terms or provisions of any contract, indenture,
        mortgage, deed of trust, loan agreement, note, lease, license, franchise
        agreement, permit, certificate or agreement or instrument to which any of
        the
        Company or the Subsidiaries is a party or to which any of their respective
        properties or assets are subject, (ii) the Certificate of Designations or
        bylaws of any of the Company or the Subsidiaries (or similar organizational
        document) or (iii) any statute, judgment, decree, order, rule or regulation
        of any court or governmental agency or other body applicable to the Company
        or
        the Subsidiaries or any of their respective properties or assets or
        (b) result in the imposition of any lien upon or with respect to any of the
        properties or assets now owned or hereafter acquired by the Company or any
        of
        the Subsidiaries; which violation, conflict, breach, default or lien would,
        individually or in the aggregate, have a Material Adverse Effect.

       

      (h)     The
        audited consolidated financial statements included in the Disclosure Documents
        present fairly the consolidated financial position, results of operations,
        cash
        flows and changes in shareholders' equity of the entities, at the dates and
        for
        the periods to which they relate and have been prepared in accordance with
        generally accepted accounting principles applied on a consistent basis; the
        interim un-audited consolidated financial statements included in the Disclosure
        Documents present fairly the consolidated financial position, results of
        operations and cash flows of the entities, at the dates and for the periods
        to
        which they relate subject to year-end audit adjustments and have been prepared
        in accordance with generally accepted accounting principles applied on a
        consistent basis with the audited consolidated financial statements included
        therein; the selected financial and statistical data included in the Disclosure
        Documents present fairly the information shown therein and have been prepared
        and compiled on a basis consistent with the audited financial statements
        included therein, except as otherwise stated therein; and each of the auditors
        previously engaged by the Company or to be engaged in the future by the Company
        is an independent certified public accountant as required by the Securities
        Act.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      (i)     Except
        as
        described in the Disclosure Documents, there is not pending or, to the knowledge
        of the Company, threatened any action, suit, proceeding, inquiry or
        investigation, governmental or otherwise, to which any of the Company or
        the
        Subsidiaries is a party, or to which their respective properties or assets
        are
        subject, before or brought by any court, arbitrator or governmental agency
        or
        body, that, if determined adversely to the Company or any such Subsidiary,
        would, individually or in the aggregate, have a Material Adverse Effect or
        that
        seeks to restrain, enjoin, prevent the consummation of or otherwise challenge
        the issuance or sale of the Securities to be sold hereunder or the application
        of the proceeds therefrom or the other transactions described in the Disclosure
        Documents.

       

      (j)     The
        Company and the Subsidiaries own or possess adequate licenses or other rights
        to
        use all patents, trademarks, service marks, trade names, copyrights and know-how
        that are necessary to conduct their businesses as described in the Disclosure
        Documents. None of the Company or the Subsidiaries has received any written
        notice of infringement of (or knows of any such infringement of) asserted
        rights
        of others with respect to any patents, trademarks, service marks, trade names,
        copyrights or know-how that, if such assertion of infringement or conflict
        were
        sustained, would, individually or in the aggregate, have a Material Adverse
        Effect.

       

      (k)     Each
        of
        the Company and the Subsidiaries possesses all licenses, permits, certificates,
        consents, orders, approvals and other authorizations from, and has made all
        declarations and filings with, all federal, state, local and other governmental
        authorities, all self-regulatory organizations and all courts and other
        tribunals presently required or necessary to own or lease, as the case may
        be,
        and to operate its respective properties and to carry on its respective
        businesses as now or proposed to be conducted as set forth in the Disclosure
        Documents ("Permits"),
        except
        where the failure to obtain such Permits would not, individually or in the
        aggregate, have a Material Adverse Effect and none of the Company or the
        Subsidiaries has received any notice of any proceeding relating to revocation
        or
        modification of any such Permit, except as described in the Disclosure Documents
        and except where such revocation or modification would not, individually
        or in
        the aggregate, have a Material Adverse Effect.

       

      (l)     Subsequent
        to the respective dates as of which information is given in the Disclosure
        Documents and except as described therein, (i) the Company and the
        Subsidiaries have not incurred any material liabilities or obligations, direct
        or contingent, or entered into any material transactions not in the ordinary
        course of business or (ii) the Company and the Subsidiaries have not
        purchased any of their respective outstanding capital stock, or declared,
        paid
        or otherwise made any dividend or distribution of any kind on any of their
        respective capital stock or otherwise (other than, with respect to any of
        such
        Subsidiaries, the purchase of capital stock by the Company), (iii) there
        has not been any material increase in the long-term indebtedness of the Company
        or any of the Subsidiaries, (iv) there has not occurred any event or
        condition, individually or in the aggregate, that has a Material Adverse
        Effect,
        and (v) the Company and the Subsidiaries have not sustained any material
        loss or interference with respect to their respective businesses or properties
        from fire, flood, hurricane, earthquake, accident or other calamity, whether
        or
        not covered by insurance, or from any labor dispute or any legal or governmental
        proceeding.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      (m)     There
        are
        no material legal or governmental proceedings nor are there any material
        contracts or other documents required by the Securities Act to be described
        in a
        prospectus that are not described in the Disclosure Documents. Except as
        described in the Disclosure Documents, none of the Company or the Subsidiaries
        is in default under any of the contracts described in the Disclosure Documents,
        has received a notice or claim of any such default or has knowledge of any
        breach of such contracts by the other party or parties thereto, except for
        such
        defaults or breaches as would not, individually or in the aggregate, have
        a
        Material Adverse Effect.

       

      (n)     Each
        of
        the Company and the Subsidiaries has good and marketable title to all real
        property described in the Disclosure Documents as being owned by it and good
        and
        marketable title to the leasehold estate in the real property described therein
        as being leased by it, free and clear of all liens, charges, encumbrances
        or
        restrictions, except, in each case, as described in the Disclosure Documents
        or
        such as would not, individually or in the aggregate, have a Material Adverse
        Effect. All material leases, contracts and agreements to which the Company
        or
        any of the Subsidiaries is a party or by which any of them is bound are valid
        and enforceable against the Company or any such Subsidiary, are, to the
        knowledge of the Company, valid and enforceable against the other party or
        parties thereto and are in full force and effect.

       

      (o)     Each
        of
        the Company and the Subsidiaries has filed all necessary federal, state and
        foreign income and franchise tax returns, except where the failure to so
        file
        such returns would not, individually or in the aggregate, have a Material
        Adverse Effect, and has paid all taxes shown as due thereon; and other than
        tax
        deficiencies which the Company or any Subsidiary is contesting in good faith
        and
        for which adequate reserves have been provided in accordance with generally
        accepted accounting principles, there is no tax deficiency that has been
        asserted against the Company or any Subsidiary that would, individually or
        in
        the aggregate, have a Material Adverse Effect.

       

      (p)     None
        of
        the Company or the Subsidiaries is, or immediately after the Closing Date
        will
        be, required to register as an "investment company" or a company "controlled
        by"
        an "investment company" within the meaning of the Investment Company Act
        of
        1940, as amended (the "Investment
        Company Act").

       

      (q)     None
        of
        the Company or the Subsidiaries or, to the knowledge of any of such entities'
        directors, officers, employees, agents or controlling persons, has taken,
        directly or indirectly, any action designed, or that might reasonably be
        expected, to cause or result in the stabilization or manipulation of the
        price
        of the Common Stock.

       

      (r)     None
        of
        the Company, the Subsidiaries or any of their respective Affiliates (as defined
        in Rule 501(b) of Regulation D under the Securities Act) directly, or
        through any agent, engaged in any form of general solicitation or general
        advertising (as those terms are used in Regulation D under the Securities
        Act) in connection with the offering of the Securities or engaged in any
        other
        conduct that would cause such offering to be constitute a public offering
        within
        the meaning of Section 4(2) of the Securities Act. Assuming the accuracy of
        the representations and warranties of the Purchasers in Section 6 hereof,
        it is not necessary in connection with the offer, sale and delivery of the
        Securities to the Purchasers in the manner contemplated by this Agreement
        to
        register any of the Securities under the Securities Act.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      (s)     There
        is
        no strike, labor dispute, slowdown or work stoppage with the employees of
        the
        Company or any of the Subsidiaries which is pending or, to the knowledge
        of the
        Company or any of the Subsidiaries, threatened.

       

      (t)     Each
        of
        the Company and the Subsidiaries carries general liability insurance coverage
        comparable to other companies of its size and similar business.

       

      (u)     Each
        of
        the Company and the Subsidiaries maintains internal accounting controls which
        provide reasonable assurance that (A) transactions are executed in
        accordance with management's authorization, (B) transactions are recorded
        as necessary to permit preparation of its financial statements and to maintain
        accountability for its assets, (C) access to its material assets is
        permitted only in accordance with management's authorization and (D) the
        values and amounts reported for its material assets are compared with its
        existing assets at reasonable intervals.

       

      (v)     The
        Company does not know of any claims for services, either in the nature of
        a
        finder's fee or financial advisory fee, with respect to the offering of the
        Shares and the transactions contemplated by the Transaction
        Documents.

       

      (w)     The
        Common Stock is traded on the NASDAQ Small Cap Market. Except as described
        in
        the Disclosure Documents, the Company currently is not in violation of, and
        subject to approval of the Company's shareholders, the consummation of the
        transactions contemplated by the Transaction Documents will not violate,
        any
        rule of the NASDAQ Small Cap Market. 

       

      (x)     The
        Company is eligible to use SB-2 for the resale of the Conversion Shares by
        Purchasers or their transferees. The Company has no reason to believe that
        it is
        not capable of satisfying the registration or qualification requirements
        (or an
        exemption therefrom) necessary to permit the resale of the Conversion Shares
        under the securities or "blue sky" laws of any jurisdiction within the United
        States. 

       

      
        	 	
                3.

              	
                Purchase,
                  Sale and Delivery of the Shares.
                  

              

      

       

      (a)     On
        the
        basis of the representations, warranties, agreements and covenants herein
        contained and subject to the terms and conditions herein set forth, the Company
        agrees to issue and sell to the Purchasers, and Purchasers agree to purchase
        from the Company on the Closing Date (as defined below), 45,648 Shares of
        Series B Stock as follows: 

       

      (i)     MMF
        agrees to purchase 7,100 Shares of Series B Stock in exchange for tendering
        the
        Promissory Note in the principal amount of $710,000 plus accrued interest
        issued
        by the Company in favor of MMF on June 16, 2005;

       

      (ii)     MMF
        III
        agrees to purchase 25,148 Shares of Series B Stock in exchange for tendering
        the
        Promissory Note in the principal amount of $350,000 plus accrued interest
        issued
        by the Company in favor of MMF III on June 16, 2005 and for the cancellation
        of
        all indebtedness of the Company to MMF III pursuant to the "Loans",
        as such
        term is defined in that certain First Amendment to Loan and Security Agreements
        dated January 25, 2006, among the Company, M-Wave DBS, an Illinois corporation
        and MMF III; and

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      (iii)     Monarch
        agrees to purchase 13,400 Shares of Series B Stock in exchange for tendering
        the
        Promissory Note in the principal amount of $1,340,000 plus accrued interest
        issued by the Company in favor of Monarch on June 16, 2005.

       

      (b)     Effective
        as of the Closing, all warrants previously issued by the Company to any of
        the
        Purchasers or to MAG shall be amended such that the Warrant Price (as defined
        in
        the warrants) for each such warrant shall be $0.65 per share. Promptly upon
        delivery of any such warrants by any Purchaser or MAG to the Company, the
        Company shall issue a replacement warrant that shall reflect such amended
        Warrant Price.

       

      (c)     One
        or
        more certificates in definitive form for the Shares that the Purchasers have
        agreed to purchase, shall be delivered by or on behalf of the Company, against
        delivery by or on behalf of each of the Purchasers, of the securities to
        be
        tendered pursuant to Sections 3(a) and 3(b) above, each of the Purchasers,
        MAG
        and the Company shall deliver the Registration Rights Agreement, duly executed
        by such party, and each of MMF III and the Company shall deliver such
        instruments as the other may reasonably request to effect and to evidence
        the
        cancellation of the indebtedness under the Loans pursuant to Section 3(a)(ii)
        above. Such delivery of and payment for the Shares shall be made at the offices
        of M.A.G., LLC, 555 South Flower Street, Suite 4200, Los Angeles, California
        90071, at not later than 5:00 p.m. (Los Angeles Time) on March
        1,
        2006 (the "Closing"),
        or at
        such date as the Purchasers and the Company may agree upon, such time and
        date
        of delivery against payment being herein referred to as the "Closing
        Date."
        On the
        Closing Date, the Company shall deliver by wire transfer of immediately
        available funds to the account or accounts designated by MAG, the aggregate
        amount of interest accrued through the Closing Date on the Promissory Notes
        and
        Loans described in Sections 3(a)(i), (ii) and (iii) above.

       

      (d)     On
        the
        basis of the representations, warranties, agreements and covenants herein
        contained and subject to the terms and conditions herein set forth, the Company
        agrees to issue and sell to the Subsequent Purchasers (as defined below),
        and
        the Subsequent Purchasers agree to purchase from the Company on March 15,
        2006 (the "Second
        Closing Date"),
        an
        aggregate of 19,000 Shares of Series B Stock for an aggregate purchase
        price of $1,900,000 (the "Second
        Purchase Price");
        provided,
        however, that the Subsequent Purchasers shall have no obligation to consummate
        the transactions contemplated to occur on the Second Closing Date unless
        all of
        the following conditions have been met as of the Second Closing Date:
        (i) no Event of Default shall have occurred and remain uncured,
        (ii) there shall have been no breach by the Company of any covenant under
        this Agreement, (iii) the Subsequent Purchasers shall have received
        certificates, dated as of the Second Closing Date and signed by the Chief
        Executive Officer and Chief Financial Officer of the Company, to the effect
        of
        Sections 5(a) and 5(b) hereof, (iv) the Company shall be current in all of
        its public filings, (v) the Subsequent Purchasers shall have received an
        opinion from the Company's counsel with respect to the authorization of the
        securities to be issued to the Subsequent Purchasers and other customary
        matters, and (vi) the Company shall not, after the date of this Agreement
        but prior to the Second Closing Date, have consummated or entered into any
        agreement to effect a transaction that would be regarded as a liquidation,
        dissolution or winding up of the affairs of the Company under the Certificate
        of
        Designations. The term "Subsequent
        Purchasers,"
        means,
        with respect to a given Second Closing Date, the Purchaser or Purchasers
        designated by MAG in writing prior to the Second Closing Date. 

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      (e)     One
        or
        more certificates in definitive form for the Shares that the Purchasers have
        agreed to purchase pursuant to Section 3(d) above, shall be delivered by
        or on
        behalf of the Company, against delivery by or on behalf of each of the
        Subsequent Purchasers of the Second Purchase Price by wire transfer of
        immediately available funds to the account of the Company previously designated
        by it in writing. Such delivery of and payment for the Shares shall be made
        at
        the offices of M.A.G., LLC, 555 South Flower Street, Suite 4200, Los Angeles,
        California 90071, at not later than 5:00 p.m. (Los Angeles Time) on the Second
        Closing Date.

       

      (f)     The
        proceeds from the Second Purchase Price shall be held in a reserve account
        at
        the bank currently utilized by the Company and shall be released therefrom
        only
        upon a resolution by a majority of the Company's independent directors (as
        defined in the NASD Manual) that the release of such proceeds (or a portion
        thereof) is necessary or appropriate under the Company's budget (as approved
        by
        the Finance Committee of the Company's Board of Directors).

       

      4.     Certain
        Covenants of the Company.  
        The Company covenants and agrees with each Purchaser as follows:

       

      (a)     None
        of
        the Company or any of its Affiliates will sell, offer for sale or solicit
        offers
        to buy or otherwise negotiate in respect of any "security" (as defined in
        the
        Securities Act) which could be integrated with the sale of the Securities
        in a
        manner which would require the registration under the Securities Act of the
        Securities.

       

      (b)     The
        Company will not become, at any time prior to the expiration of three years
        after the Closing Date, an open-end investment company, unit investment trust,
        closed-end investment company or face-amount certificate company that is
        or is
        required to be registered under the Investment Company Act.

       

      (c)     None
        of
        the proceeds of the Series B Stock will be used to reduce or retire any
        insider note or convertible debt held by an officer or director of the
        Company.

       

      (d)     Subject
        to Section 9 of this Agreement, the Conversion Shares will be traded on the
        NASDAQ Small Cap Market, or such market on which the Company's shares are
        subsequently listed or traded, immediately following the later of (i) their
        issuance or (ii) declaration of effectiveness of the Registration Statement
        by the SEC.

       

      (e)     The
        Company will use commercially reasonable efforts to do and perform all things
        required to be done and performed by it under this Agreement and the other
        Transaction Documents and to satisfy all conditions precedent on its part
        to the
        obligations of the Purchasers to purchase and accept delivery of the Securities.
        

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      (f)     The
        Purchasers shall have a right of first refusal on any financing in which
        the
        Company is the issuer of debt or equity securities between the date of this
        Agreement and the date of effectiveness of the Registration
        Statement.

       

      (g)     For
        so
        long as any shares of Series B Stock are outstanding, the Company shall not
        issue any debt or equity securities with rights or preferences superior to
        those
        of the Series B Stock with respect to the distribution of assets on any
        liquidation, dissolution or winding up of the Company. 

       

      5.     Conditions
        of the Purchasers' Obligations.  
        The obligation of each Purchaser to purchase and pay for the Securities is
        subject to the following conditions unless waived in writing by the
        Purchaser:

       

      (a)     The
        representations and warranties of the Company contained in this Agreement
        shall
        be true and correct in all material respects (other than representations
        and
        warranties with a Material Adverse Effect qualifier, which shall be true
        and
        correct as written) on and as of the Closing Date; the Company shall have
        complied in all material respects with all agreements and satisfied all
        conditions on its part to be performed or satisfied hereunder at or prior
        to the
        Closing Date.

       

      (b)     None
        of
        the issuance and sale of the Securities pursuant to this Agreement or any
        of the
        transactions contemplated by any of the other Transaction Documents shall
        be
        enjoined (temporarily or permanently) and no restraining order or other
        injunctive order shall have been issued in respect thereof; and there shall
        not
        have been any legal action, order, decree or other administrative proceeding
        instituted or, to the Company's knowledge, threatened against the Company
        or
        against any Purchaser relating to the issuance of the Securities or any
        Purchaser's activities in connection therewith or any other transactions
        contemplated by this Agreement, the other Transaction Documents or the
        Disclosure Documents.

       

      (c)     The
        Purchasers shall have received certificates, dated the Closing Date and signed
        by the Chief Executive Officer and the Chief Financial Officer of the Company,
        to the effect of paragraphs 5(a) and (b). 

       

      (d)     The
        Purchasers shall have received an opinion of legal counsel to the Company,
        with
        respect to the authorization of the Shares and other customary matters in
        the
        form attached hereto as Exhibit C.
        

       

      
        	 	
                6.

              	
                Representations
                  and Warranties of the Purchasers and MAG.

              

      

       

      (a)     Each
        Purchaser and MAG represents and warrants to the Company that the Securities
        to
        be acquired by it hereunder (including the Conversion Shares that it may
        acquire
        upon conversion thereof) are being acquired for its own account for investment
        and with no intention of distributing or reselling such Securities (including
        the Conversion Shares that it may acquire upon conversion thereof) or any
        part
        thereof or interest therein in any transaction which would be in violation
        of
        the securities laws of the United States of America or any State. Nothing
        in
        this Agreement, however, shall prejudice or otherwise limit a Purchaser's
        or
        MAG's right to sell or otherwise dispose of all or any part of such Conversion
        Shares under an effective registration statement under the Securities Act
        and in
        compliance with applicable state securities laws or under an exemption from
        such
        registration. By executing this Agreement, each Purchaser and MAG further
        represents that it does not have any contract, undertaking, agreement or
        arrangement with any person to sell, transfer or grant participation to any
        Person with respect to any of the Securities.

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      (b)    Each
        Purchaser and MAG understands that the Securities (including the Conversion
        Shares that it may acquire upon conversion thereof) have not been registered
        under the Securities Act and may not be offered, resold, pledged or otherwise
        transferred except (a) pursuant to an exemption from registration under the
        Securities Act (and, if requested by the Company, based upon an opinion of
        counsel acceptable to the Company) or pursuant to an effective registration
        statement under the Securities Act and (b) in accordance with all
        applicable securities laws of the states of the United States and other
        jurisdictions.

       

      Each
        Purchaser and MAG agrees to the imprinting, so long as appropriate, of the
        following legend on the Securities (including the Conversion Shares that
        it may
        acquire upon conversion thereof):

       

      The
        shares of stock evidenced by this certificate have not been registered under
        the
        U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged
        or otherwise transferred ("transferred") in the absence of such registration
        or
        an applicable exemption therefrom. In the absence of such registration, such
        shares may not be transferred unless, if the Company requests, the Company
        has
        received a written opinion from counsel in form and substance satisfactory
        to
        the Company stating that such transfer is being made in compliance with all
        applicable federal and state securities laws.

       

      Further
        with regard to the Series B Stock, the following legend shall be included:

       

      Additional
        restrictions on transfer pursuant to agreements exist and are available upon
        request from the Company. 

       

      The
        legend set forth above may be removed if and when the Conversion Shares are
        disposed of pursuant to an effective registration statement under the Securities
        Act or in the opinion of counsel to the Company experienced in the area of
        United States Federal securities laws such legends are no longer required
        under
        applicable requirements of the Securities Act. The Shares and the Conversion
        Shares shall also bear any other legends required by applicable Federal or
        state
        securities laws, which legends may be removed when in the opinion of counsel
        to
        the Company experienced in the applicable securities laws, the same are no
        longer required under the applicable requirements of such securities laws.
        The
        Company agrees that it will provide each Purchaser, upon request, with a
        substitute certificate, not bearing such legend at such time as such legend
        is
        no longer applicable. Each Purchaser agrees that, in connection with any
        transfer of the Conversion Shares by it pursuant to an effective registration
        statement under the Securities Act, it will comply with all prospectus delivery
        requirements of the Securities Act. The Company makes no representation,
        warranty or agreement as to the availability of any exemption from registration
        under the Securities Act with respect to any resale of the Shares or the
        Conversion Shares.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      (c)     Each
        Purchaser and MAG is an "accredited investor" within the meaning of Rule
        501(a)
        of Regulation D under the Securities Act. Neither Purchaser nor MAG learned
        of
        the opportunity to acquire Shares or any other security issuable by the Company
        through any form of general advertising or public solicitation.

       

      (d)     Each
        Purchaser and MAG represents and warrants to the Company that it has such
        knowledge, sophistication and experience in business and financial matters
        so as
        to be capable of evaluating the merits and risks of the prospective investment
        in the Securities, having been represented by counsel, and has so evaluated
        the
        merits and risks of such investment and is able to bear the economic risk
        of
        such investment and, at the present time, is able to afford a complete loss
        of
        such investment.

       

      (e)     Each
        Purchaser represents and warrants to the Company that (i) the purchase of
        the Securities to be purchased by it has been duly and properly authorized
        and
        this Agreement has been duly executed and delivered by it or on its behalf
        and
        constitutes the valid and legally binding obligation of the Purchaser,
        enforceable against the Purchaser in accordance with its terms, subject to
        bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
        similar laws of general applicability relating to or affecting creditors'
        rights
        generally and to general principles of equity; (ii) the purchase of the
        Securities to be purchased by it does not conflict with or violate its charter,
        by-laws or any law, regulation or court order applicable to it; and
        (iii) the purchase of the Securities to be purchased by it does not impose
        any penalty or other onerous condition on the Purchaser under or pursuant
        to any
        applicable law or governmental regulation.

       

      (f)     Each
        Purchaser and MAG represents and warrants to the Company that neither it
        nor any
        of its directors, officers, employees, agents, partners, members, or controlling
        persons has taken, or will take, directly or indirectly, any actions designed,
        or that might reasonably be expected to cause or result in, the destabilization
        or manipulation of the price of the Common Stock.

       

      (g)     Each
        Purchaser and MAG acknowledges it or its representatives have reviewed the
        Disclosure Documents and further acknowledges that it or its representatives
        have been afforded (i) the opportunity to ask such questions as it has
        deemed necessary of, and to receive answers from, representatives of the
        Company
        concerning the terms and conditions of the offering of the Securities and
        the
        merits and risks of investing in the Securities; (ii) access to information
        about the Company and the Company's financial condition, results of operations,
        business, properties, management and prospects sufficient to enable it to
        evaluate its investment in the Securities; and (iii) the opportunity to
        obtain such additional information which the Company possesses or can acquire
        without unreasonable effort or expense that is necessary to verify the accuracy
        and completeness of the information contained in the Disclosure
        Documents.

       

      (h)     Each
        Purchaser and MAG represents and warrants to the Company that it has based
        its
        investment decision solely upon the information contained in the Disclosure
        Documents and such other information as may have been provided to it or its
        representatives by the Company in response to its inquiries, and has not
        based
        its investment decision on any research or other report regarding the Company
        prepared by any third party ("Third
        Party Reports").
        Each
        Purchaser and MAG understands and acknowledges that (i) the Company does
        not endorse any Third Party Reports and (ii) its actual results may differ
        materially from those projected in any Third Party Report.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      (i)     Each
        Purchaser and MAG understands and acknowledges that (i) any forward-looking
        information included in the Disclosure Documents is subject to risks and
        uncertainties, including those risks and uncertainties set forth in the
        Disclosure Documents; and (ii) the Company's actual results may differ
        materially from those projected by the Company or its management in such
        forward-looking information.

       

      (j)    Each
        Purchaser and MAG understands and acknowledges that (i) the Securities are
        offered and sold without registration under the Securities Act in a private
        placement that is exempt from the registration provisions of the Securities
        Act
        and (ii) the availability of such exemption depends in part on, and that
        the Company and its counsel will rely upon, the accuracy and truthfulness
        of the
        foregoing representations and Purchaser hereby consents to such
        reliance.

       

      7.     Covenants
        of Purchasers.  
        Purchasers
        and MAG, on behalf of themselves and their affiliates and the permitted assignee
        of any Conversion Shares hereby covenant and agree not to, directly or
        indirectly, offer to "short sell", contract to "short sell" or otherwise
        "short
        sell" any securities of the Company, including, without limitation, shares
        of
        Common Stock that will be received as a result of the conversion of the
        Series B Stock.

       

      
        	 	
                8.

              	
                Termination.

              

      

       

      (a)     This
        Agreement may be terminated in the sole discretion of the Company by notice
        to
        each Purchaser if at the Closing Date:

       

      (i)     the
        representations and warranties made by any Purchaser in Section 6 are not
        true
        and correct in all material respects; or

       

      (ii)     as
        to the
        Company, the sale of the Securities hereunder (i) is prohibited or enjoined
        by any applicable law or governmental regulation or (ii) subjects the
        Company to any penalty, or in its reasonable judgment, other onerous condition
        under or pursuant to any applicable law or government regulation that would
        materially reduce the benefits to the Company of the sale of the Securities
        to
        such Purchaser, so long as such regulation, law or onerous condition was
        not in
        effect in such form at the date of this Agreement.

       

      (b)     This
        Agreement may be terminated by any Purchaser by notice to the Company given
        in
        the event that (i) the Company shall have failed, refused or been unable to
        satisfy all material conditions on its part to be performed or satisfied
        hereunder on or prior to the Closing Date or (ii) if after the date of this
        Agreement but prior to the Closing Date, trading in securities of the Company
        on
        the NASDAQ Small Cap Market shall have been suspended and the Company ceases
        to
        be publicly traded. 

       

      (c)     This
        Agreement may be terminated by mutual written consent of all
        parties.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      9.     Registration.
        The
        Company shall use its best efforts to prepare and file with the SEC on or
        prior
        to the Filing Deadline (as defined below) a Registration Statement covering
        the
        resale of the maximum number of Conversion Shares issuable upon conversion
        of
        the Shares (collectively, the "Registrable
        Securities"),
        for an
        offering to be made on a continuous basis pursuant to Rule 415 (the "Registration
        Statement")
        based
        on the Conversion Price set forth in the Certificate of Designations. The
        term
        "Filing Deadline" means (i) in the event that within 45 days after the Closing
        Date the Company enters into any agreement (a "Merger
        Agreement")
        to
        effect a merger, reorganization, consolidation, recapitalization, sale of
        substantial assets or similar transaction, the date that is 45 days after
        the
        Company enters into such Merger Agreement, or (ii) in the event that the
        Company
        does not enter into a Merger Agreement within 45 days after the Closing Date,
        the date that is 60 days after the Closing Date. The Company shall use its
        best
        efforts to ensure that the Registration Statement is declared effective by
        the
        SEC (i) in the event that the Company enters into a Merger Agreement within
        45
        days after the Closing Date, not later than 150 days after the date the Company
        enters into such Merger Agreement and (ii) in the event that the Company
        does
        not enter into a Merger Agreement within 45 days after the Closing Date,
        within
        60 days of the date the Registration Statement is filed with the SEC.

       

      10.     Event
        of Default.  
        An
        "Event
        of Default"
        means
        the Company's failure to: (i) file the Registration Statement with the SEC
        on or prior to the Filing Deadline (as defined in Section 9 hereof), (ii)
        maintain trading of the Company's Common Stock on the NASDAQ Small Cap Market
        or
        other publicly traded market, or (iii) deliver to Purchasers, or
        Purchasers' broker, as directed, Common Stock that Purchasers have converted
        within three (3) business days of such conversions. 

       

      11.     Notices.  
        All communications hereunder shall be in writing and shall be hand delivered,
        mailed by first-class mail, couriered by next-day air courier or by facsimile
        and confirmed in writing (i) if to the Company, at the addresses set forth
        below, or (ii) if to a Purchaser or MAG, to the address set forth for such
        party on the signature page hereto, with a copy to Sheppard, Mullin, Richter
        & Hampton, LLP, 333 South Hope Street, Los Angeles, California 90071,
        Attention: David Ulich, Esq. 

       

      If
        to the
        Company:

      

      M-Wave,
        Inc.

      11533
        Franklin Avenue, 2nd
        Floor

      Franklin
        Park, Illinois 60131

      

      Attention:
        Jim Mayer

      Telephone:
        630-562-4751

      Facsimile:
        630-562-1775

      

      with
        a
        copy to:

      

      Ellenoff
        Grossman & Schole LLP

      370
        Lexington Avenue, Floor 19 

      New
        York,
        New York 10017

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      Attn:
        Barry I. Grossman

      Telephone:
        212-370-1300

      Facsimile:
        212-370-7889

      

      All
        such
        notices and communications shall be deemed to have been duly given:
        (i) when delivered by hand, if personally delivered; (ii) five
        business days after being deposited in the mail, postage prepaid, if mailed
        certified mail, return receipt requested; (iii) one business day after
        being timely delivered to a next-day air courier guaranteeing overnight
        delivery; (iv) the date of transmission if sent via facsimile to the
        facsimile number as set forth in this Section or the signature page hereof
        prior
        to 6:00 p.m. (Pacific time) on a business day, or (v) the business day
        following the date of transmission if sent via facsimile at a facsimile number
        set forth in this Section or on the signature page hereof after 6:00 p.m.
        (Pacific time) or on a date that is not a business day. Change of a party's
        address or facsimile number may be designated hereunder by giving notice
        to all
        of the other parties hereto in accordance with this Section.

       

      12.     Survival
        Clause.  
        The respective representations, warranties, agreements and covenants of the
        Company and the Purchasers set forth in this Agreement shall survive until
        the
        first anniversary of the Closing.

       

      13.     Fees
        and Expenses.  
        Concurrently with the execution of this Agreement, the Company shall pay,
        by
        wire transfer of immediately available funds to an account or accounts
        designated by MAG, $40,000 for Purchasers' and MAG's legal expenses incurred
        in
        connection with the preparation and negotiation of the Transaction Documents.
        

       

      14.     Enforcement.  
        If any action at law or in equity is necessary to enforce or interpret the
        terms
        of this Agreement or the Certificate of Designations, the prevailing party
        or
        parties shall be entitled to receive from the other party or parties reasonable
        attorneys' fees, costs and necessary disbursements in addition to any other
        relief to which the prevailing party or parties may be entitled. 

       

      15.     Successors.  
        This Agreement shall inure to the benefit of and be binding upon Purchasers,
        MAG
        and the Company and their respective successors and legal representatives,
        and
        nothing expressed or mentioned in this Agreement is intended or shall be
        construed to give any other person any legal or equitable right, remedy or
        claim
        under or in respect of this Agreement, or any provisions herein contained;
        this
        Agreement and all conditions and provisions hereof being intended to be and
        being for the sole and exclusive benefit of such persons and for the benefit
        of
        no other person. Neither the Company nor any Purchaser may assign this Agreement
        or any rights or obligation hereunder without the prior written consent of
        the
        other party.

       

      16.     No
        Waiver; Modifications in Writing. 
         No failure or delay on the part of the Company, MAG or any Purchaser in
        exercising any right, power or remedy hereunder shall operate as a waiver
        thereof, nor shall any single or partial exercise of any such right, power
        or
        remedy preclude any other or further exercise thereof or the exercise of
        any
        other right, power or remedy. The remedies provided for herein are cumulative
        and are not exclusive of any remedies that may be available to the Company,
        MAG
        or any Purchaser at law or in equity or otherwise. No waiver of or consent
        to
        any departure by the Company, MAG or any Purchaser from any provision of
        this
        Agreement shall be effective unless signed in writing by the party entitled
        to
        the benefit thereof, provided that
        notice of any such waiver shall be given to each party hereto as set forth
        below. Except as otherwise provided herein, no amendment, modification or
        termination of any provision of this Agreement shall be effective unless
        signed
        in writing by or on behalf of each of the Company, MAG and the Purchasers.
        Any
        amendment, supplement or modification of or to any provision of this Agreement,
        any waiver of any provision of this Agreement, and any consent to any departure
        by the Company, MAG or any Purchaser from the terms of any provision of this
        Agreement shall be effective only in the specific instance and for the specific
        purpose for which made or given. Except where notice is specifically required
        by
        this Agreement, no notice to or demand on the Company in any case shall entitle
        the Company to any other or further notice or demand in similar or other
        circumstances.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      17.     Entire
        Agreement. 
         This Agreement, together with the other Transaction Documents, constitutes
        the entire agreement among the parties hereto and supersedes all prior
        agreements, understandings and arrangements, oral or written, among the parties
        hereto with respect to the subject matter hereof and thereof. Disclosure
        by the
        Company in any Schedule to this Agreement shall be deemed applicable to all
        applicable provisions hereof.

       

      18.     Severability. 
         If any provision of this Agreement is held to be invalid or unenforceable
        in any respect, the validity and enforceability of the remaining terms and
        provisions of this Agreement shall not in any way be affected or impaired
        thereby.

       

      19.     APPLICABLE
        LAW.  
        THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS
        SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
        LAWS
        OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PROVISIONS RELATING
        TO
        CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER
        JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY IRREVOCABLY AND
        UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR
        RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL COURTS
        LOCATED IN THE CITY OF LOS ANGELES, CALIFORNIA AND HEREBY SUBMIT TO THE
        EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE. 

       

      20.     Counterparts.  
        This Agreement may be executed in two or more counterparts and may be delivered
        by facsimile transmission, each of which shall be deemed an original, but
        all of
        which together shall constitute one and the same instrument. 

       

      21.     If
        the
        foregoing correctly sets forth our understanding, please indicate your
        acceptance thereof in the space provided below for that purpose, whereupon
        this
        Agreement shall constitute a binding agreement among the Company, the Purchasers
        and MAG.

       

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

       

      
        	 	
                Very
                  truly yours,

              	 
	 	 	 
	 	
                M-Wave,
                  Inc.

              	 
	 	 	 	 
	 	
                By:

              	
                /s/
                  Joseph A. Turek 

              	 
	 	 	
                Name:  
                  Joseph A. Turek

              	 
	 	 	
                Title:    
                  President and COO

              	 
	
                ACCEPTED
                  AND AGREED:

              	 	 	 

      

       

       

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

      
        
          	
                  Mercator
                    Momentum Fund, LP

                	
                  Mercator
                    Momentum Fund III, LP

                
	 	 	 	 	 	 
	
                  By:

                	
                  M.A.G.
                    Capital, LLC

                	
                  By:

                	
                  M.A.G.
                    Capital, LLC

                
	
                  Its:

                	
                  General
                    Partner

                	
                  Its:

                	
                  General
                    Partner

                
	 	
                  /s/
                    David Firestone 

                	 	 	
                  /s/
                    David Firestone

                	 
	 	
                  David
                    Firestone

                	 	
                  David
                    Firestone

                
	 	
                  Managing
                    Member

                	 	
                  Managing
                    Member

                

        

        

        
          	
                  M.A.G.
                    Capital, LLC 

                	
                  Monarch
                    Pointe Fund, Ltd.

                
	 	 
	
                  /s/
                    David Firestone

                	 	
                  /s/
                    David Firestone

                	 
	
                  By:

                	
                  David
                    Firestone

                	 	
                  By:

                	
                  David
                    Firestone

                	 
	
                  Its:

                	
                  Managing
                    Member

                	 	
                  Its:

                	
                  Managing
                    Member

                	 

        

         

         

        
          	
                  M.A.G.
                    Capital, LLC

                	
                  Addresses
                    for Notice:

                
	 	 	 
	
                  By:

                	
                  /s/
                    David Firestone

                	 	
                  M.A.G.
                    Capital, LLC

                
	 	
                  David
                    Firestone

                	 	
                  555
                    South Flower Street, Suite 4200

                
	 	Managing
                  Member	 	
                  Los
                    Angeles, California 90071

                
	 	
                   

                	 	
                  Attention:
                    David
                    Firestone

                
	 	 	 	
                  Facsimile:
                    (213) 533-8285

                
	 	 	 	 
	 	 	 	
                  with
                    copy to:

                
	 	 	 	 
	 	 	 	
                  David
                    C. Ulich, Esq.

                
	 	 	 	
                  Sheppard,
                    Mullin, Richter & Hampton LLP

                
	 	 	 	
                  333
                    South Hope Street, 48th
                    Floor

                
	 	 	 	
                  Los
                    Angeles, California 90071

                
	 	 	 	
                  Facsimile:
                    (213) 620-1398

                

        

      

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      Schedule
        A

       

      Direct
        and Indirect Subsidiaries of M-Wave, Inc.

       

      

      M-Wave
        DBS, Inc., an Illinois corporation (not in good standing)

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Schedule
        B

       

      Company
        Capitalization

       

      See
        the
        Balance Sheet of the Company set forth in the Form 10-QSB for the period
        ended
        September 30, 2005 included in the Disclosure Documents. 

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Schedule
        C

       

      Agreements
        regarding ownership or disposition of capital stock

       

      None

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Schedule
        D

       

      Violations/Breaches

       

      None

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Exhibit
        A

       

      Certificate
        of Designations of

      Series
        B
        Convertible Preferred Stock

      of

      M-Wave,
        Inc.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Exhibit
        B

       

      Registration
        Rights Agreement

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      Exhibit
        C

       

      Form
        of
        Legal Opinion

       

      (Delivered
        to Purchasers at the Closing)

       

      1.     The
        Company is a corporation duly incorporated, validly existing and in good
        standing under the laws of the State of Delaware, with corporate power to
        own
        its properties and to conduct its business. 

       

      2.     The
        Company has the corporate power to execute, deliver and perform the transaction
        documents, including the Exhibits thereto (the "Transaction Documents").
        The
        Transaction Documents have been duly authorized by all requisite corporate
        action by the Company and constitute the valid and binding obligations of
        the
        Company, enforceable in accordance with their terms (subject to bankruptcy,
        equitable principles and other customary exceptions). 

       

      (a)     As
        of the
        date hereof, in accordance with its Certificate of Incorporation on file
        with
        the Secretary of State of Delaware, the authorized capital stock of the Company
        consists of 1,000,000 shares of Preferred Stock, and 20,000,000 shares of
        Common
        Stock. 

       

      (b)     The
        shares of the Company's Series B Stock have been duly authorized and, upon
        issuance, delivery, and payment therefor as described in the Subscription
        Agreement, will be validly issued, fully paid and nonassessable. 

       

      (c)     The
        shares of the Company's Common Stock initially issuable upon conversion of
        the
        shares of Series B Stock sold have been duly authorized and reserved for
        issuance and, upon issuance and delivery upon conversion of the Shares as
        described in the Certificate of Designations, will be validly issued, fully
        paid
        and nonassessable. 

       

      3.     The
        Company's execution and delivery of the Transaction Documents and the issue
        and
        sale of the Shares, on the terms and conditions set forth in the Subscription
        Agreement, will not violate any law of the United States or the State of
        Delaware any rule or regulation of any governmental authority or regulatory
        body
        of the United States or the State of Delaware or any provision of the Company's
        Certificate of Incorporation or Bylaws. 

       

      4.     No
        consent, approval, order or authorization of, and no notice to or filing
        with,
        any governmental agency or body or any court is required to be obtained or
        made
        by the Company for the issuance and sale of the Shares pursuant to the
        Transaction Documents or Agreement, except such as have been obtained or
        made
        and such as may be required under applicable securities laws. 

       

      5.     On
        the
        assumption that the representations of the Company and the Purchasers in
        the
        Subscription Agreement are correct and complete, the offer and sale of the
        Shares pursuant to the terms of the Subscription Agreement are exempt from
        the
        registration requirements of Section 5 of the Securities Act of 1933, as
        amended, and, under such securities laws as they presently exist, the issuance
        of the Company's Common Stock upon conversion of the Shares would also be
        exempt
        from such registration.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

       

      6.     We
        know
        of no pending or overtly threatened action, proceeding or governmental
        investigation with respect to the Company's sale of Series B Stock pursuant
        to the Transaction Documents.

       

       

      -2-

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