Document:

ANNEX IV TO

Exhibit 4.2

ANNEX IV

TO

SECURITIES PURCHASE AGREEMENT

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 13, 2004 (this “Agreement”), is made by and between INFINIUM LABS, INC., a Delaware corporation with headquarters located at 2033 Main Street, Suite 1309, Sarasota, FL 34237 (the “Company”), and each entity named on a signature page hereto (each, an “Initial Investor”) (each agreement with an Initial Investor being deemed a separate and independent agreement between the Company and such Initial Investor, except that each Initial Investor acknowledges and consents to the rights granted to each other Initial Investor under such agreement).

WITNESSETH:

WHEREAS, upon the terms and subject to the conditions of the Securities Purchase Agreement, dated as of December 13, 2004, between the Initial Investor and the Company (the “Securities Purchase Agreement”; capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement), the Company has agreed to issue and sell to the Initial Investors the Debentures and the Warrants; and

WHEREAS, the Debentures are convertible into shares of Common Stock (the “Conversion Shares”; which term, for purposes of this Agreement, shall include shares of Common Stock of the Company issuable in lieu of accrued interest, as contemplated by the Debentures) upon the terms and subject to the conditions contained in the Debentures; and

WHEREAS, the Warrant Shares may be issued upon the exercise of the Warrants; and

WHEREAS, to induce the Initial Investor to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), with respect to the Registrable Securities (as defined below);

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Initial Investor hereby agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Company Counsel” means Sichenzia Ross Friedman Ference LLP, or such other reputable law firm as may be retained by the Company from time to time.

“Effective Date” means the date the SEC declares a Registration Statement covering Registrable Securities and otherwise meeting the conditions contemplated hereby to be effective.

“Held Shares Value” means, for shares of Common Stock acquired by the Investor upon a conversion of a Debenture within the twenty (20) Trading Days (excluding any Trading Days on which the on which the Investor is restricted from making sales of Registrable Securities covered by any previously effective Registration Statement) preceding the Restricted Sale Date, but not yet sold by the Investor, the principal amount of the Debentures converted into such Conversion Shares; provided, however, that if the Investor effected more than one such conversion during such twenty (20) Trading Day period and sold less than all of such shares, the sold shares shall be deemed to be derived first from the conversions in the sequence of such conversions (that is, for example, until the number of shares from the first of such conversions have been sold, all shares shall be deemed to be from the first conversion; thereafter, from the second conversion until all such shares are sold).

“Investor” means the Initial Investor and any permitted transferee or assignee who agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof and who holds Debentures or Registrable Securities.

“Other Issuable Shares” means (i) the Payment Shares, if any, issued or issuable to the Holder as of the date of the filing of the Registration Statement and any amendment thereto or as of any subsequent date, and (ii) the good faith estimate of the Company of the number of other Payment Shares, as the case may be, which the Company anticipates, as of the date of the filing of the Registration Statement and any amendment thereto or any subsequent date, will be issuable to the Holder pursuant to the provisions of the Transaction Agreements.

“Payment Shares” means shares of Common Stock issued by the Company as provided in Section 2(b) below.

“Permitted Suspension Period” means up to two periods during any consecutive 12-month period during which the Holder’s right to sell Registrable Securities under the Registration Statement is suspended, each of which suspension period shall neither (i) be for more than ten (10) days nor (ii) begin less than ten (10) business days after the last day of the preceding suspension (whether or not such last day was during or after a Permitted Suspension Period).

“Potential Material Event” means any of the following: (i) the possession by the Company of material information not ripe for disclosure in a registration statement, which shall be evidenced by a determination in good faith by the Board of Directors of the Company that disclosure of such information in the registration statement would be detrimental to the business and affairs of the Company; or (ii) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in a registration statement at such time, in each case where such determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the registration statement would be materially misleading absent the inclusion of such information.

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“Register,” “Registered,” and “Registration” refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement by the SEC.

“Registrable Securities” means, collectively, the Conversion Shares, the Warrant Shares, the Other Issuable Shares, and, if issuable in accordance with the terms of the Agreement, the Additional Warrant Shares.

“Registration Statement” means a registration statement of the Company under the Securities Act covering Registrable Securities on Form SB-2, if the Company is then eligible to file using such form, and if not eligible, on Form 5-1 or other appropriate form.

“Required Effective Date” means, initially, the Initial Required Effective Date or the Increased Required Effective Date (as those terms are defined below), as the case may be.

“Restricted Sale Date” means the first date, other than a date during a Permitted Suspension Period (as defined below), on which the Investor is restricted from making sales of Registrable Securities covered by any previously effective Registration Statement.

2. Registration.

(a) Mandatory Registration.

(i) The Company shall cause Company Counsel to prepare and file with the SEC, as soon as practicable after the Closing Date but no later than thirty (30) days after the Closing Date (the “Required Filing Date”), a Registration Statement registering for resale by the Investor a sufficient number of shares of Common Stock for the Initial Investors to sell the Registrable Securities. Notwithstanding the requirement to register all Registrable Securities, the Company’s obligation to register the Registrable Securities shall initially be satisfied by the registration of the Initial Number of Shares to Be Registered (as defined below). The “Initial Number of Shares to Be Registered” is a number of shares of Common Stock which is at least equal to the sum of (x) two hundred percent (200%) of the number of shares into which the Debentures and all dividends thereon through the Maturity Date would be convertible at the time of filing of such Registration Statement (assuming for such purposes that all such Debentures had been eligible to be converted, and had been converted, into Conversion Shares in accordance with their terms, whether or not such eligibility, accrual of interest or conversion had in fact occurred as of such date), based on the Conversion Price then in effect, (y) the number of Warrant Shares covered by the Warrants (assuming for such purposes that all the Basic Warrants and all Additional Warrants, if any, actually issued or issuable as of the date of the filing of the Registration Statement or any pre-effective amendment thereto had been eligible to be exercised and had been exercised for the issuance of Warrant Shares in accordance with their terms, whether or not such eligibility or exercise had in fact occurred as of such date), and (z) the number of Other Issuable Shares as of the date of the filing of

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the Registration Statement or any amendment thereto (provided, however, that for purposes of this provision, the number of Other Issuable Shares shall not be greater than the number of such shares which the SEC permits to be included in the Registration Statement). If, after the filing of the Registration Statement and prior to the Effective Date, the Conversion Price or the number of shares covered by the Warrants or both is or are to be adjusted or if the number of Other Issuable Shares increases, the Company shall file an amendment to the Registration Statement reflecting the registration of the adjusted number of shares reflected in the foregoing formula based on such adjustments. Unless otherwise specifically agreed to in writing in advance by the Holder, the Registration Statement (X) shall include only (1) the Registrable Securities, (2) the shares issuable on exercise of the Finder’s Warrants (as defined in the Joint Escrow Instructions) and (3) the shares listed in Schedule 1 annexed hereto, and (Y) shall also state that, in accordance with Rule 416 and 457 under the Securities Act, it also covers such indeterminate number of additional shares of Common Stock as may become issuable to prevent dilution resulting from stock splits, or stock dividends.

(ii) The Company and Company Counsel will use their reasonable best efforts to cause such Registration Statement to be declared effective on a date (the “Initial Required Effective Date”) which is no later than the earlier of (Y) five (5) days after oral or written notice by the SEC that it may be declared effective or (Z) ninety (90) days after the Closing Date.

(iii) If at any time (an “Increased Registered Shares Date”), the number of shares of Common Stock represented by the Registrable Securities, issued or to be issued as contemplated by the Transaction Agreements, exceeds the aggregate number of shares of Common Stock then registered or sought to be registered in a Registration Statement which has not yet been declared effective, the Company shall either

(X) amend the relevant Registration Statement filed by the Company pursuant to the preceding provisions of this Section 2, if such Registration Statement has not been declared effective by the SEC at that time, to register the Increased Number of Shares to Be Registered (as defined below). The “Increased Number of Shares to Be Registered” is a number of shares of Common Stock which is at least equal to (A) the sum of the number of shares theretofore issued on conversion of the Debentures (including any interest paid on conversion by the issuance of Conversion Shares) and on exercise of the Warrants, plus the Other Issuable Shares issued or issuable as of that date plus (B) the sum of (I) two hundred percent (200%) of the number of shares into which the Unconverted Debentures and all interest thereon through the Maturity Date would be convertible at the time of filing of such Registration Statement or amendment (assuming for such purposes that all Debentures, reduced by any previously converted Debentures, had been eligible to be converted, and had been converted, into Conversion Shares in accordance with their terms, whether or not such eligibility, accrual of interest or conversion had in fact occurred as of such date), (II) the number of Warrant Shares covered by the unexercised Warrants (assuming for such purposes that all the Warrants, including all the Basic Warrants and all Additional Warrants, if any, actually issued or issuable as of the Increased

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Registered Shares Date, reduced by any exercised Warrants, had been eligible to be exercised and had been exercised for the issuance of Warrant Shares in accordance with their terms, whether or not such issuance, eligibility or exercise had in fact occurred as of such date), and (III) the number of Other Issuable Shares as of the date of the filing of such amendment to the Registration Statement (provided, however, that for purposes of this provision, the number of Other Issuable Shares shall not be greater than the number of such shares which the SEC permits to be included in the Registration Statement), or

(Y) if such Registration Statement has been declared effective by the SEC at that time, file with the SEC an additional Registration Statement (an “Additional Registration Statement”) to register the number of shares equal to the excess of the Increased Number of Shares to Be Registered over the aggregate number of shares of Common Stock already registered.

The Company and Company Counsel will use their reasonable best efforts to cause such Registration Statement to be declared effective on a date (each, an “Increased Required Effective Date”) which is no later than (q) with respect to a Registration Statement under clause (X) of this subparagraph (ii), the Initial Required Effective Date and (r) with respect to an Additional Registration Statement, the earlier of (I) five (5) days after notice by the SEC that it may be declared effective or (II) thirty (30) days after the Increased Registered Shares Date.

(b) Payments by the Company.

(i) If the Registration Statement covering the Registrable Securities is not filed as contemplated by this Agreement with the SEC by the Required Filing Date, the Company will make payments to the Initial Investor in such amounts and at such times as shall be determined pursuant to this Section 2(b).(1)

(ii) If the Registration Statement covering the Registrable Securities in form as contemplated by this Agreement(2) is not effective by the relevant Required Effective Date or if there is a Restricted Sale Date, the Company will make payments to the Initial Investor in such amounts and at such times as shall be determined pursuant to this Section 2(b).

(iii) The amount (the “Periodic Amount”) to be paid by the Company to the Initial Investor shall be determined as of each Computation Date (as defined below) and such amount shall be equal to the Periodic Amount Percentage (as defined below) of the Purchase Price for all

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1.

The Company acknowledges that a Registration Statement that includes shares not otherwise permitted to be included in the Registration Statement, or which is not filed not in compliance with the provisions of Section 3 hereof, including, but not limited to Section 3(c), shall not be a Registration Statement filed or effective “as contemplated by this Agreement.”

2.

See footnote 1.

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Debentures for the period from the date following the relevant Required Filing Date or the Required Effective Date or a Restricted Sale Date, as the case may be, to the first relevant Computation Date (each, a “First Period”), and thereafter to each subsequent Computation Date (each, a “Subsequent Period”). The “Periodic Amount Percentage” means (i) two percent (2%) of the Purchase Price for the First Period, and (ii) two percent (2%) of the Purchase Price for each Subsequent Period thereafter. Anything in the preceding provisions of this paragraph (iii) to the contrary notwithstanding, after the relevant Effective Date the Purchase Price shall be deemed to refer to the sum of the principal of the Unconverted Debentures plus the Held Shares Value. By way of illustration and not in limitation of the foregoing, if the Registration Statement is filed on or before the Required Filing Date, but is not declared effective until seventy-five (75) days after the Initial Required Effective Date, the Periodic Amount will aggregate six percent (5%) of the Purchase Price (2% for days 1-30, plus 2% for days 3 1-60, plus 2% for days 6 1-75).

(iv) Each Periodic Amount, if any, will be payable by the Company, except as provided in the other provisions of the immediately succeeding subparagraph (v), in cash or other immediately available funds to the Investor (1) on the day after the Required Filing Date, the Required Effective Date or a Restricted Sale Date, as the case may be, and (2) on the earlier of (A) each thirtieth day thereafter, (B) the third business day after the date the Registration Statement is filed or is declared effective, or (C) the third business day after the Registration Statement has its restrictions removed after the relevant Effective Date, in each case without requiring demand therefor by the Investor.

(v) Notwithstanding the provisions of the immediately preceding subparagraph (iv), at the option of the Investor, exercisable in its sole and absolute discretion by written notice to the Company at any time before the Periodic Amount is paid, all or a portion of the Periodic Amount shall be paid by the issuance of additional shares of Common Stock to the Investor (“Payment Shares”) in an amount equal to the Periodic Amount being paid thereby divided by the then applicable Conversion Price; provided, further that the “Delivery Date” for the Payment Shares shall be three (3) business days after the date the Investor gives the notice contemplated by this subparagraph, and the provisions of Sections 5(c) and (d) shall apply with respect thereto.

(vi) The parties acknowledge that the damages which may be incurred by the Investor if the Registration Statement is not filed by the Required Filing Date or the Registration Statement has not been declared effective by a Required Effective Date, including if the right to sell Registrable Securities under a previously effective Registration Statement is suspended or the shares of the Company’s stock are not listed on the Principal Trading Market, may be difficult to ascertain. The parties agree that the amounts payable pursuant to the foregoing provisions of this Section 2(b) represent a reasonable estimate on the part of the parties, as of the date of this Agreement, of the amount of such damages.

(vii) Notwithstanding the foregoing, the amounts payable by the Company pursuant to this provision shall not be payable to the extent any delay in the filing or effectiveness of the Registration Statement occurs because of an act of, or a failure to act or to act timely by the Initial Investor or its counsel.

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(viii) “Computation Date” means (A) the date which is the earlier of (1) thirty (30) days after the Required Filing Date, the Required Effective Date or a Restricted Sale Date, as the case may be, or (2) the date after the Required Filing Date, the Required Effective Date or Restricted Sale Date on which the Registration Statement is filed (with respect to payments due as contemplated by Section 2(b) (i) hereof) or is declared effective or has its restrictions removed or the shares of the Company’s stock are listed on the Principal Trading Market (with respect to payments due as contemplated by Section 2(b) (ii) hereof), as the case may be, and (B) each date which is the earlier of (1) thirty (30) days after the previous Computation Date or (2) the date after the previous Computation Date on which the Registration Statement is filed (with respect to payments due as contemplated by Section 2(b) (i) hereof) or is declared effective or has its restrictions removed or the shares of the Company’s stock are listed on the Principal Trading Market (with respect to payments due as contemplated by Section 2(b) (ii) hereof), as the case may be.

(c) Subsequent Registrations. If, for any reason, the SEC does not permit the registration of any specific component of the Registrable Securities, such excluded Registrable Securities shall be registered by the Company at the earliest possible time thereafter.

3. Obligations of the Company. In connection with the registration of the Registrable Securities, the Company shall do each of the following:

(a) Prepare promptly, and file with the SEC by the Required Filing Date a Registration Statement with respect to not less than the number of Registrable Securities provided in Section 2(a) above, and thereafter use its reasonable best efforts to cause such Registration Statement relating to Registrable Securities to become effective by the Required Effective Date and keep the Registration Statement effective at all times other than during Permitted Suspension Periods during the period (the “Registration Period”) continuing until the earlier of (i) the date when the Investors may sell all Registrable Securities under Rule 144 without volume or other restrictions or limits (the “Unrestricted Sale Date”) or (ii) the date the Investors no longer own any of the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading;

(b) Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement;

(c) Permit a single firm of counsel designated by the Initial Investors (which, until further notice, shall be deemed to be Krieger & Prager LLP, Attn: Samuel M. Krieger, Esq.,

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which firm has requested to receive such notification; each, an “Investor’s Counsel”) to review the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than three (3) business days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects.

(d) Notify each Investor and the Investor’s Counsel and any managing underwriters immediately (and, in the case of (i) (A) below, not less than three (3) business days prior to such filing) and (if requested by any such person) confirm such notice in writing no later than one (1) business day following the day (i) (A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) whenever the SEC notifies the Company whether there will be a “review” of such Registration Statement; (C) whenever the Company receives (or a representative of the Company receives on its behalf) any oral or written comments from the SEC in respect of a Registration Statement (copies or, in the case of oral comments, summaries of such comments shall be promptly furnished by the Company to the Investors); and (D) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any proceedings for that purpose; (iv) if at any time any of the representations or warranties of the Company contained in any agreement (including any underwriting agreement) contemplated hereby ceases to be true and correct in all material respects; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; and (vi) of the occurrence of any event that to the best knowledge of the Company makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In addition, the Company shall communicate with the Investor’s Counsel with regard to its proposed written responses to the comments contemplated in clause (C) of this Section 3(d), so that, to the extent practicable, the Investors shall have the opportunity to comment thereon;

(e) Furnish to each Investor and to Investor’s Counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and prospectus, and each amendment or supplement thereto, and (ii) such number of copies of a prospectus, and all amendments and supplements thereto and such other documents, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor;

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(f) As promptly as practicable after becoming aware thereof, notify each Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request;

(g) As promptly as practicable after becoming aware thereof, notify each Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time;

(h) Comply with Regulation FD or any similar rule or regulation regarding the dissemination of information regarding the Company, and in furtherance of the foregoing, and not in limitation thereof, not disclose to the Investor any non-public material information regarding the Company;

(i) Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of the Registration Statement, the Company notifies the Investors in writing that the effectiveness of the Registration Statement is suspended for any reason, whether due to a Potential Material Event or otherwise, the Investors shall not offer or sell any Registrable Securities, or engage in any other transaction involving or relating to the Registrable Securities, from the time of the giving of such notice until such Investor receives written notice from the Company that such the effectiveness of the Registration Statement has been restored, whether because the Potential Material Event has been disclosed to the public or it no longer constitutes a Potential Material Event or otherwise; provided, however, that the Company may not so suspend the right to such holders of Registrable Securities during the periods the Registration Statement is required to be in effect other than during a Permitted Suspension Period (and the applicable provisions of Section 2(b) shall apply with respect to any such suspension other than during a Permitted Suspension Period);

(j) Use its reasonable efforts to secure and maintain the designation of all the Registrable Securities covered by the Registration Statement on the Principal Trading Market and the quotation of the Registrable Securities on the Principal Trading Market;

(k) Provide a transfer agent (“Transfer Agent”) and registrar, which may be a single entity, for the Registrable Securities not later than the initial Effective Date;

(1) Cooperate with the Investors who hold Registrable Securities being offered to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable

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Securities to be in such denominations or amounts as the case may be, as the Investors may reasonably request, and, within five (5) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the Transfer Agent for the Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) an appropriate instruction and opinion of such counsel, which shall include, without limitation, directions to the Transfer Agent to issue certificates of Registrable Securities (including certificates for Registrable Securities to be issued after the Effective Date and replacement certificates for Registrable Securities previously issued) without legends or other restrictions, subject to compliance with applicable law and other rules and regulations, including, without limitation, prospectus delivery requirements;

(m) Take all other reasonable administrative steps and actions (including the participation of Company counsel) necessary to expedite and facilitate disposition by the Investor of the Registrable Securities pursuant to the Registration Statement; provided, however, that the foregoing does not require that the Company take any steps whatsoever regarding the identification or selection of a broker to sell the Registrable Securities, the identification of buyers of the Registrable Securities, or the negotiation of the sale terms of the Registrable Securities; and

(n) Not file any other registration statement (other than the Registration Statement and amendments thereto) during the period commencing on the Closing Date and ending on the Effective Date.

4. Obligations of the Investors. In connection with the registration of the Registrable Securities, the Investors shall have the following obligations:

(a) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from the Registration Statement; and

(b) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f), (g) or (i) above, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f), (g) or (i), and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Investor’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

5. Expenses of Registration. All reasonable expenses (other than underwriting discounts and commissions of the Investor) incurred in connection with registrations, filings or qualifications pursuant to Section 3, but including, without limitation, all registration, listing, and

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qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company shall be borne by the Company. In addition, a fee for a single counsel for the Investors (as a group and not individually) equal to $4,500 for the review of the initial Registration Statement (and pre-effective amendments thereto) and $2,000 for the review of each post-effective amendment to a Registration Statement shall be borne by the Company.

6. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a) To the extent permitted by law, the Company will indemnify and hold harmiess each Investor who holds such Registrable Securities, the directors, if any, of such Investor, the officers, if any, of such Investor, and each Lender Control Person (each, an “Indemnified Party”), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, “Claims”) to which any of them may become subject under the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being, collectively referred to as “Violations”). Subject to clause (b) of this Section 6, the Company shall reimburse the Investors, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (I) apply to any Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Indemnified Party expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (II) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company or the amendment or supplement thereto made available by the Company; (III) be available to the extent such Claim is based on the delivery of a prospectus by the Investor after receiving notice from the Company under Section 3(f), (g) or (i) hereof (other than a notice regarding the effectiveness of the Registration Statement or any amendment or supplement thereto), or (IV) apply to amounts paid in settlement of any Claim if such settlement is effected without the

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prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. The Investor will indemnify the Company and its officers, directors and agents (each, an “Indemnified Party”) against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of such Investor, expressly for use in connection with the preparation of the Registration Statement or the amendment or supplement thereto, subject to such limitations and conditions as are applicable to the indemnification provided by the Company to this Section 6; provided, however, that except where the Investor has committed fraud (other than a fraud by reason of the information included or omitted from the Registration Statement as to which the Company has not given notice as contemplated under Section 3 hereof) or intentional misconduct, such indemnification by the Investor shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9; provided, however, that the Investor shall not obligated to make any indemnification payment to the Company under this Section 6 unless and until there has been a final adjudication of liability on the part of the Investor.

(b) Promptly after receipt by an Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Party, as the case may be. In case any such action is brought against any Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party under this Section 6 for any legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Party provided such counsel is of the opinion that all defenses available to the Indemnified Party can be maintained without prejudicing the rights of the indemnifying party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount

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thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.

7. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fuflest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation; and (c) except where the seller has committed fraud (other than a fraud by reason of the information included or omitted from the Registration Statement as to which the Company has not given notice as contemplated under Section 3 hereof) or intentional misconduct, contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

8. Reports under Securities Act and Exchange Act. With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without Registration (“Rule 144”), the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144;

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c) until the Unrestricted Sale Date, furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) if not available on the SEC’s EDGAR system, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without Registration; and

(d) at the request of any Investor holding Registrable Securities (a “Holder”), give its Transfer Agent instructions (supported by an opinion of Company counsel, if required or requested by the Transfer Agent) to the effect that, upon the Transfer Agent’s receipt from such Holder of

(i) a certificate (a “Rule 144 Certificate”) certifying (A) that the Holder’s holding period (as determined in accordance with the provisions of Rule 144) for the shares of Registrable Securities which the Holder proposes to sell (the “Securities Being

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Sold”) is not less than (1) year and (B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act, and

(ii) an opinion of counsel acceptable to the Company (for which purposes it is agreed that the initial Investor’s Counsel shall be deemed acceptable if not given by Company Counsel) that, based on the Rule 144 Certificate, Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective Registration Statement,

the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent’s books and records (except to the extent any such legend or restriction results from facts other than the identity of the Holder, as the seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while held by the Holder). If the Transfer Agent reasonably requires any additional documentation at the time of the transfer, the Company shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate.

9.

Assignment of the Registration Rights. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Investor to any transferee of the Registrable Securities or other Securities (such transfer or assignment being subject to the provisions of Section 4(a) of the Securities Purchase Agreement) only if the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee and (b) the securities with respect to which such registration rights are being transferred or assigned.

10. No Inconsistent Agreements. Except as and to the extent specifically set forth in Schedule 10 attached hereto, neither the Company nor any of its subsidiaries has, as of the date hereof, nor shall the Company nor any of its subsidiaries, on or after the date of this Agreement, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as and to the extent specifically set forth in Schedule 10 attached hereto, neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person. Without limiting the generality of the foregoing, without the written consent of the Holders of a majority of the then outstanding Registrable Securities, the Company shall not grant to any person the right to request the Company to register any securities of the Company under the Securities Act unless the rights so granted are subject in all respects to the prior rights in full of the Holders set forth herein, and are not otherwise in conflict or inconsistent with the provisions of this Agreement.

11. Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance

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and either retroactively or prospectively), only with the written consent of the Company and Investors who hold an eighty (80%) percent interest of the Registrable Securities (as calculated by the principal of the Unconverted Debentures then held by the Investors). Any amendment or waiver effected in accordance with this Section 11 shall be binding upon each Investor and the Company.

12. Miscellaneous.

(a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

(b) Notices required or permitted to be given hereunder shall be given in the manner contemplated by the Securities Purchase Agreement, (i) if to the Company or to the Initial Investor, to their respective address contemplated by the Securities Purchase Agreement, and (ii) if to any other Investor, at such address as such Investor shall have provided in writing to the Company, or at such other address as each such party furnishes by notice given in accordance with this Section 12(b).

(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

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

(ii)

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

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(e) The Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out of or in connection with this Agreement or any of the other Transaction Agreements.

(f) If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.

(g) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

(h) All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

(i) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning thereof.

(j) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by telephone line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

(k) The Company acknowledges that any failure by the Company to perform its obligations under Section 3(a) hereof, or any delay in such performance could result in loss to the Investors, and the Company agrees that, in addition to any other liability the Company may have by reason of such failure or delay, the Company shall be liable for all direct damages caused by any such failure or delay, unless the same is the result of force majeure. Neither party shall be liable for consequential damages.

(1) This Agreement (including to the extent relevant the provisions of other Transaction Agreements) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANKI

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

COMPANY:

INFINIUM LABS, INC.

By:________________________________

Name_______________________________

Title: _______________________________

INITIAL INVESTOR:

____________________________________

[Print Name of Initial Investor]

By: ________________________________

Name:______________________________

Title:_______________________________

SCHEDULE 1

A. Specific shares

Shares

Warrant Shares

Total

Hazinu Ltd.

500,000

500,000

1,000,000

JM Investors, LLC

125,000

125,000

250,000

Fennmore Holdings, LLC

125,000

125,000

250,000

Viscount Investments Limited

83,333

83,333

166,666

Congregation Mishkan Sholom

166,667

166,667

333,334

Total

1,000,000

1,000,000

2,000,000

B. Other shares

The Company may include other shares of other selling shareholders provided all but not less than all of the following conditions are satisfied:

1. The shares represent shares derived from a New Transaction which is a Permitted Transaction (as defined below).

2. A “Permitted Transaction” is one which meets all, and not less than all, of the following conditions: (i) the gross amount of the funding (before deductions for fees and other expenses or disbursements relating to such transaction) provided by the investors in such transaction does not exceed the amount of $4,000,000 less the Total Purchase Price; (ii) the transaction is consummated and fully funded by the earlier of the filing of the Registration Statement or the Required Filing Date; (iii) the transaction provides for the sale of shares of Common Stock or of a convertible security convertible into Common Stock and is not an equity line or credit line transaction (howsoever denominated); (iv) the transaction may (but is not required to) provide for the issuance of warrants convertible into Common Stock; (v) the transaction may (but is not required to) provide for any one or more of the following: provisions similar to Section 4(g) of the Agreement, but not Section 4(h) of the Agreement; and registration rights similar to those provided in this Registration Rights Agreement (other than the right to permit shares to be included in the Registration Statement not permitted by the Registration Rights Agreement), provided that none of such terms contemplated by this clause (v) or any terms not contemplated by clauses (i) through (iv) provided to the investors in such transaction are better (for the investor) than the corresponding terms of the Transaction Agreements; and (vi) the offering and consummation of such transaction will not adversely affect the exemption from registration available for the transactions contemplated by the Transaction Agreements.

3. If the Permitted Transaction is a Lower Price Transaction, the provisions of Section 4(g) will apply to the Permitted Transaction.

12/09/04ANNEX I TO

Exhibit 4.3

ANNEX I TO

SECURITIES PURCHASE AGREEMENT

<PROTOTYPE FOR EACH ISSUANCE>

FORM OF DEBENTURE

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

No. 04-02-___(1)

US $____________

INFINIUM LABS, INC.

8% CONVERTIBLE DEBENTURE SERIES 04-02 DUE DECEMBER ___, 2005(2)

THIS DEBENTURE is one of a duly authorized issue of up to $_______ in Debentures of INFINIUM LABS, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”) designated as its 8% Convertible Debentures Series 04-02.

FOR VALUE RECEIVED, the Company promises to pay to _______________, the registered holder hereof (the “Holder”), the principal sum of ______________________and 00/100 Dollars (US $________) on December , 2005(3) (the “Maturity Date”) and to pay interest on the principal sum outstanding from time to time in arrears at the rate of 8% per annum, accruing from December ___, 2004(4), the date of initial issuance of this Debenture (the “Issue Date”), on the date (each, an “Interest Payment Date”) which is the earlier of (i) a Conversion Date (as defined below) or (ii) the Maturity Date, as the case may be. Accrual of interest shall commence on the Issue Date and shall continue to accrue on a daily basis until payment and/or conversion in full of the principal sum has been made or duly provided for. Additional provisions regarding the payment

____________________________

(1) Insert unique Debenture number for each issuance.

(2)  Insert date which is the first anniversary of the Closing Date.

(3)  Insert Total Purchase Price

(4)  Insert the Closing Date.

1

of interest are provided in Section 4(D) below (the terms of which shall govern as if this sentence were not included in this Debenture).

This Debenture is being issued pursuant to the terms of the Securities Purchase Agreement, dated as of December 13, 2004 (the “Securities Purchase Agreement”), to which the Company and the Holder (or the Holder’s predecessor in interest) are parties. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement.

This Debenture is subject to the following additional provisions:

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

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

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

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

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(ii)

The term “Conversion Price” means seventy-five percent (75%; the “Current Percentage”) of the lowest Closing Price during the five (5) Trading Days ending on the Trading Day immediately before the Conversion Date; provided, however, that in no event will the Conversion Price be (x) more than $ ___________(5)  (the “Maximum Conversion Price”) or (y) until the earliest of (I) the date which is the four (4) months after the Closing Date, (II) the date after the Closing Date on which the Company files a registration statement on Form S-8, or (III) the date on which the Company first issues a Mandatory Conversion Notice (as defined below), lower than $ _______ (6) (the “Minimum Conversion Price”) (as each such amount may be adjusted from time to time as provided herein).

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

B.

Conversion shall be effectuated either by delivery to the Company or by facsimile transmission (as provided in Section 12 hereof) of a completed and duly executed Notice of Conversion (as defined below) to the address or facsimile number provided in the Notice of Exercise (as such address or facsimile number may be revised by notice given by the Company as contemplated by the Section headed “NOTICES” in the Securities Purchase Agreement). The notice of conversion (“Notice of Conversion”) shall be executed by the Holder of this Debenture and shall evidence such Holder’s intention to convert this Debenture or a specified portion hereof in the form annexed hereto as Exhibit A. If paid in Common Stock as contemplated hereby, interest accrued or accruing from the Issue Date to the relevant Interest Payment Date shall be paid in Common Stock at the Conversion Price applicable as of such Interest Payment Date. No fractional shares of Common Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which Notice of Conversion is given (the “Conversion Date”) shall be deemed to be the date on which the Holder faxes or otherwise delivers the Notice of Conversion to the Company so that it is received by the Company on or before such specified date, provided that, if such conversion would convert the entire remaining principal of this Debenture, the Holder shall deliver to the Company the original Debentures being converted no later than five (5) Trading Days thereafter. Facsimile delivery of the Notice of Conversion shall be accepted by the Company by hand, mail or courier delivery at the address specified in said Exhibit A or at the facsimile number specified in said Exhibit A (each of such address or facsimile number may be changed by notice given to the Holder in the manner provided in the Securities Purchase Agreement). Certificates representing Common Stock upon conversion (“Conversion Certificates”) will be delivered to the Holder at the address specified in the Notice of Conversion (which may be the Holder’s address for notices as contemplated by the Securities Purchase Agreement or a different address), via express courier, by electronic transfer

______________________________

(5)  Insert amount which is equal to 125% of the average Closing Price for the 3 Trading Days ending on the Trading Day immediately preceding the Closing Date.

(6)  Insert amount which is equal to 50% of the average Closing Price for the 3 Trading Days ending on the Trading Day immediately preceding the Closing Date.

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or otherwise, within three (3) Trading Days (such third Trading Day, the “Delivery Date”) after the date on which the Notice of Conversion is delivered to the Company as contemplated in this paragraph B, and, if interest is paid by Common Stock, the Interest Payment Date. The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 4(B) on the Conversion Date.

C.

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

D.

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

(ii)

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

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

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12/09/04

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

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

E.

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

F.

(i) Subject to the terms and conditions of this Section 4(F), on each Mandatory Conversion Date (as defined below), without further action by the Holder, the outstanding principal and accrued but unpaid interest on this Debenture equal to the Mandatory Conversion Amount (as defined below) shall be deemed converted into Common Stock at the Conversion Price in effect on such Mandatory Conversion Date. The Mandatory Conversion Date shall be a Conversion Date for all purposes of this Debenture and the other Transaction Agreements, except that the provisions of Section 4(C) shall not apply on the Mandatory Conversion Date. Any such mandatory conversion shall be subject to the following terms and conditions of this Section F to the extent relevant.

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

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

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

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

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(d) “Mandatory Conversion Period” means, if the Company issues a Mandatory Conversion Notice, the period beginning on the calendar day after the last Trading Day of the most recent Trading Week and ending on the last Trading Day of the following calendar week.(7)

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

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

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

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

(a)

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

(b)

the Company is not in default of any material obligation under any of the

Transaction Agreements on the date the Company issues a Mandatory Conversion

Notice and on the relevant Mandatory Conversion Date , and

(c)

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

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

(iv) The Mandatory Conversion Notice shall specify the Mandatory Conversion Amount and provide information supporting the calculation of such Mandatory

______________________

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

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

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

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

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

B.

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

C.

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

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

(ii) No later than five (5) business days after the date the Redemption Notice is given to the Holder, the Company will send a notice (the “Confirmation Notice”) to the Holder that funds (the “Redemption Funds”) equal to the Redemption Amount (calculated as of the Scheduled Redemption Payment Date) have been deposited with the Prepayment Bank, together

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with confirmation of such deposit by the Redemption Payment Bank. The Confirmation Notice will also include instructions for the method by which the Holder can provide instructions to the Redemption Payment Bank to make payment by check or wire, as specified by the Holder, on the Scheduled Redemption Payment Date.

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

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

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

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

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

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

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

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

10. If, at any time while any portion of this Debenture remains outstanding, the Company effectuates a stock split, combination or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock, the Conversion Price and any other

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

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

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

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

B.

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

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

15.  The following shall constitute an “Event of Default”:

a.

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

b.

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

c.

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

d.

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

e.

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

f.

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

g.

Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the

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whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or

h.

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

j.

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

k.

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

1.

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

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

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

17.

(i)

As evidenced by his signature below, the Guarantor (as defined below) is personally guarantying to the Holder the timely and full fulfillment of all of the obligations of the Company under this Debenture (each, an “Obligation” and collectively, the “Obligations”) on the

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terms provided above and in the Personal Guarantee attached to this Debenture. Such guaranty is further evidenced by the Personal Guarantee of Guarantor (the “Guarantee”) attached hereto executed by the Guarantor in favor of and delivered to the Holder.

(ii)

The term “Guarantor” means Timothy M. Roberts, an officer and director of the Company.

[Balance of page intentionally left blank]

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

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

Dated: _________________________, 20___

INFINIUM LABS, INC.

By: _______________________________

__________________________________

(Print Name)

__________________________________

(Title)

PERSONAL GUARANTEE OF GUARANTOR

The undersigned has executed the attached Personal Guarantee.

_______________________________________

Timothy M. Roberts

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PERSONAL GUARANTEE OF GUARANTOR

Reference is made to the 8% Convertible Debenture Series 04-02 Due December ~, 2005 (the “Debenture”) of Infinium Labs, Inc. to ______________________________. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Debenture.

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

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

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

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

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

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

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

(i)

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

(ii)

if the Company enters into an agreement pursuant to which it is to be acquired by or merged into another entity (which other entity was not an affiliate of the Company or of any of Company Control Person for at least three months prior to the execution of such agreement or for at least one year after the consummation of such transaction) and such agreement provides that, upon consummation of the

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transaction contemplated by such agreement, the Guarantor will no longer be an officer, director, consultant or employee of Company, the date on which the Guarantor ceases to be all of an officer, director, consultant or employee of the Company.

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

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

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

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

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

____________________________

Timothy M. Roberts

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EXHIBIT A

NOTICE OF CONVERSION

OF

8% CONVERTIBLE DEBENTURE SERIES 04-02 DUE DECEMBER ___, 2005

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

TO: INFINIUM LABS, INC.

VIA TELECOPIER TO:

2033 Main Street, Suite 1309

(941) 917-0782

Sarasota, FL 34237

Attn: President

FROM:  _________________________________________________ (“Holder”)

DATE:  __________________________________________________ (the “Conversion Date”)

RE:

Conversion of $___________  principal amount (the “Converted Debenture”) of the 8%

Convertible Debenture Series 04-02-___ Due December ____,  2005 (the “Debenture”) of

INFINIUM LABS, INC. (the “Company”) into _______________ shares (the “Conversion Shares”) of Common Stock (defined below)

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

$ ________________ representing the original Conversion Price (as defined in the Debenture)

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

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

Name and Record Address

Conversion Shares

_______________________________

_______________

_______________________________

_______________

_______________________________

_______________

It is the intention of the Holder to comply with the provisions of Section 4(C) of the Debenture regarding certain limits on the Holder’s right to convert thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder believe this conversion complies with the provisions of said Section 4(C). Nonetheless, to the extent that, pursuant to the conversion effected hereby, the Holder would have more shares than permitted under said Section, this notice should be amended and revised, ab initio, to refer to the conversion which would result in the issuance of shares consistent with such provision. Any conversion above such amount is hereby deemed void and revoked.

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

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

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

__ via express courier or

__ by electronic transfer (DTC)

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

___________________________________

___________________________________

___________________________________

___________________________________

___________________________________

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

--

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

--

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

________________________________

(Print name of Holder)

By:  ____________________________

        (Signature of Authorized Person)

________________________________

(Printed Name and Title)

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NOTICE OF CONVERSION

WORKSHEET SCHEDULE

1. Current Common Stock holdings of Holder and Affiliates

__________

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

__________

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

__________

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

__________

5. Total [sum of Lines 1 through 4]

__________

6. Outstanding shares of Common Stock(3)

__________

7. Adjustments to Outstanding

a.

Shares known to Holder as previously issued to Holder 

or others but not included in Line 6

__________

b.

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

__________

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

__________

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

__________

9. Holder’s Percentage [Line 5 divided by Line 8]

_________%

[Note: Line 9 not to be above 4.99%]

_______________________________

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

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

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

12/09/04

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