Document:

THIS
        NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
        COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
        FOR
        SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
        SATISFACTORY TO INNOFONE.COM, INCORPORATED THAT SUCH REGISTRATION IS NOT
        REQUIRED.

    

     

    
      	
              Principal
                Amount: $1,000,000.00

            	
              Issue
                Date: January 16, 2007

            
	
              Purchase
                Price: $800,000.00

            	 

    

    

    NOTE

    

    FOR
      VALUE
      RECEIVED, INNOFONE.COM, INCORPORATED, a Nevada corporation (hereinafter called
      "Borrower"), hereby promises to pay to LAKEWOOD GROUP LLC, 152 West
      57th
      Street,
      54th
      Floor,
      New York, NY 10019, Fax: (732) 364-3555 (the "Holder") or order, without demand,
      the sum of One Million Dollars ($1,000,000.00), without interest accruing
      thereon, on September 16, 2007 (the "Maturity Date"), if not sooner
      paid.

    

    This
      Note
      has been entered into pursuant to the terms of a subscription agreement between
      the Borrower and the Holder, dated of even date herewith (the “Subscription
      Agreement”), and shall be governed by the terms of such Subscription Agreement.
      Unless otherwise separately defined herein, all capitalized terms used in this
      Note shall have the same meaning as is set forth in the Subscription Agreement.
      The following terms shall apply to this Note:

    

    ARTICLE
      I

    

    INTEREST;
      AMORTIZATION

    

    1.1 Default
      Interest Rate.
      Following the Maturity Date (accelerated or otherwise), the annual interest
      rate
      on this Note shall (subject to Section 4.7) be fifteen percent (15%) and
      calculated on a 360 day year.

    

    1.2 Monthly
      Principal Payments.
      Cash
      amortizing payments of the outstanding Principal Amount of this Note shall
      commence on the fifth month anniversary date of this Note and on the same day
      of
      each month thereafter (each a “Repayment Date”) until the Principal Amount has
      been repaid in full. On each Repayment Date, the Borrower shall make payments
      to
      the Holder in the amount of twenty-five percent (25%) of the Principal Amount,
      and any other amounts (the "Monthly Amount"). All payments received on this
      Note
      shall be applied first against outstanding fees and damages, then against
      accrued interest and then to Principal Amount. Any Principal Amount, interest
      and any other sum arising under the Subscription Agreement or any other
      Transaction Document that remains outstanding on the Maturity Date shall be
      due
      and payable on the Maturity Date.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    ARTICLE
      II

    

    OPTIONAL
      AND MANDATORY PREPAYMENT

    

    2.1. Optional
      Prepayment of Principal Amount.
      Provided an Event of Default or an event which with the passage of time or
      the
      giving of notice could become an Event of Default has not occurred, whether
      or
      not such Event of Default has been cured, until thirty (30) calendar days after
      the Issue Date, the Borrower will have the option of prepaying the outstanding
      Principal amount of this Note ("Optional Prepayment") and accrued interest
      (if
      any), in whole, by paying to the Holder a sum of money equal to 110% of the
      Purchase Price, together with accrued but unpaid interest thereon and any and
      all other sums due, accrued or payable to the Holder arising under this Note
      or
      any Transaction Document through the Redemption Payment Date as defined below
      (the "Redemption Amount"). Borrower’s election to exercise its right to prepay
      must be by notice in writing (“Notice of Redemption”). The Notice of Redemption
      shall specify the date for such Optional Redemption (the "Redemption Payment
      Date"), which date must be not later than three (3) business days after the
      date
      Notice of Redemption is served on Holder. On the Redemption Payment Date, which
      must be not later than thirty (30) calendar days after the Issue Date, the
      Redemption Amount shall be paid in good funds to the Holder. In the event the
      Borrower fails to pay the Redemption Amount on the Redemption Payment Date
      as
      set forth herein, then (i) such Notice of Redemption will be null and void,
      (ii)
      Borrower will not have the right to deliver another Notice of Redemption, and
      (iii) Borrower’s failure may be deemed by Holder to be a non-curable Event of
      Default. 

    

    2.2. Mandatory
      Prepayment.
      In the
      event the Borrower raises funds from the sale of debt instruments, equity or
      instruments convertible into equity in excess of $2,500,000 of gross proceeds
      (“Excess Proceeds”), then the Maturity Date of this Note with respect to an
      amount of Principal Amount equal to the Excess Proceeds shall be automatically
      accelerated to the fifth business day after the date the Borrower receives
      the
      actual or beneficial Excess Proceeds and the Borrower must use such Excess
      Proceeds to pay amounts payable under this Note.

    

    ARTICLE
      III

    

    EVENT
      OF DEFAULT

    

    The
      occurrence of any of the following events of default ("Event of Default") shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

    

    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of principal, interest or other sum due
      under this Note when due and such failure continues for a period of five (5)
      business days after the due date.

    

    3.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of the
      Subscription Agreement or this Note in any material respect and such breach,
      if
      subject to cure, continues for a period of ten (10) business days after written
      notice to the Borrower from the Holder.

    

    3.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Subscription Agreement, or in any agreement, statement or certificate given
      in
      writing pursuant hereto or in connection therewith shall be false or misleading
      in any material respect as of the date made and the Closing Date.

    

    3.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business; or such a receiver or trustee shall otherwise
      be appointed.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    3.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      Borrower or any of its property or other assets for more than $200,000, and
      shall remain unpaid, unvacated, unbonded or unstayed for a period of forty-five
      (45) days.

    

    3.6 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower and if instituted against Borrower are
      not
      dismissed within 45 days of initiation.

    

    3.7 Delisting.
      Delisting of the Common Stock from any Principal Market; failure to comply
      with
      the requirements for continued listing on a Principal Market for a period of
      seven consecutive trading days; or notification from a Principal Market that
      the
      Borrower is not in compliance with the conditions for such continued listing
      on
      such Principal Market.

    

    3.8 Non-Payment.
      A
      default by the Borrower under any one or more obligations in an aggregate
      monetary amount in excess of $300,000 for more than twenty days after the due
      date, unless the Borrower is contesting the validity of such obligation in
      good
      faith and the Borrower has reserved and segregated liquid assets equal to the
      contested obligation.

    

    3.9 Stop
      Trade.
      An SEC
      or judicial stop trade order or trading market trading suspension with respect
      to Borrower’s Common Stock that lasts for five or more consecutive trading
      days.

    

    3.10 Pledgor
      Default.
      The
      Pledgor breaches any material covenant or other terms or conditions of the
      Stock
      Pledge Agreement in any material respect and such breach, if subject to cure,
      continues beyond any applicable cure period allowed pursuant to the Stock Pledge
      Agreement.

    

    3.11 Pledgor
      Breach.
      Any
      material representation or warranty of the Pledgor made in the Stock Pledgor
      agreement or in any certificate given in writing by Pledgor pursuant thereto
      shall be false or misleading in any material respect as of the date made and
      the
      Closing Date.

    

    3.12 Cross
      Default.
      A
      default by the Borrower of a material term, covenant, warranty or undertaking
      of
      any other agreement to which the Borrower and Holder are parties, or the
      occurrence of a material event of default under any such other agreement which
      is not cured after any required notice and/or cure period.

    

    ARTICLE
      IV

    

    MISCELLANEOUS

    

    4.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    

    4.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Borrower to: Innofone.com, Incorporated,
      1431 Ocean Avenue, Suite 1500, Santa Monica, CA 90401, Attn: Alex Lightman,
      CEO
      and President, telecopier: (310) 458-2844, with a copy by telecopier only to:
      Arthur Marcus, Esq., and Peter J. Gennuso, Esq., Gersten Savage LLP, 600
      Lexington Avenue, New York, NY 10022, telecopier (212) 980-5192, and (ii) if
      to
      the Holder, to the name, address and telecopy number set forth on the front
      page
      of this Note, with a copy by telecopier only to Grushko & Mittman, P.C., 551
      Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number: (212)
      697-3575.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.3 Amendment
      Provision.
      The
      term "Note" and all reference thereto, as used throughout this instrument,
      shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

    

    4.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and
      assigns.

    

    4.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys'
      fees.

    

    4.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York. Any action brought by either party against the other concerning
      the
      transactions contemplated by this Agreement shall be brought only in the state
      courts of New York or in the federal courts located in the state of New York.
      Both parties and the individual signing this Agreement on behalf of the Borrower
      agree to submit to the jurisdiction of such courts. The prevailing party shall
      be entitled to recover from the other party its reasonable attorney's fees
      and
      costs. In the event that any provision of this Note is invalid or unenforceable
      under any applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or unenforceability of any other provision of this Note. Nothing contained
      herein shall be deemed or operate to preclude the Holder from bringing suit
      or
      taking other legal action against the Borrower in any other jurisdiction to
      collect on the Borrower's obligations to Holder, to realize on any collateral
      or
      any other security for such obligations, or to enforce a judgment or other
      court
      in favor of the Holder. This
      Note shall be deemed an unconditional obligation of Borrower for the payment
      of
      money and, without limitation to any other remedies of Holder, may be enforced
      against Borrower by summary proceeding pursuant to New York Civil Procedure
      Law
      and rules Section 3213 or any similar rule or statute in the jurisdiction where
      enforcement is sought.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    4.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

    

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the 16 day of January, 2007.

    

    

    
      	 	
              INNOFONE.COM,
                INCORPORATED

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Alex Lightman

            
	 	
              Name:
                Alex Lightman

            
	 	
              Title:
                President and CEO

            

    

    

    

    WITNESS:

    

     

    
      
        

      

       

      
        
           

        

        
          5SUBSCRIPTION
      AGREEMENT

     

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
“Agreement”),
      dated
      as of January 16, 2007, by and between Innofone.com, Incorporated, a Nevada
      corporation (the “Company”),
      and
      Lakewood Group LLC (“Subscriber”).

     

    WHEREAS,
      the
      Company and the Subscriber are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscriber, as provided herein,
      and the Subscribers, in the aggregate, shall subscribe to One Million Dollars
      ($1,000,000) (the "Principal
      Amount")
      of
      promissory notes of the Company with an original discount of twenty percent
      (20%) (“Note”
or
      if
      more than one, “Notes”),
      a
      form of which is annexed hereto as Exhibit
      A.
      The
      original discount shall be reduced to ten percent (10%) as described in the
      Note, should the Company prepay the Note in full within 45 days of the Closing
      Date as defined below. The Notes are sometimes referred to herein as the
      "Securities";
      and

     

    WHEREAS,
      the
      aggregate proceeds of the sale of the Notes contemplated hereby shall be held
      in
      escrow pursuant to the terms of a Funds Escrow Agreement to be executed by
      the
      parties substantially in the form attached hereto as Exhibit
      B
      (the
      "Escrow
      Agreement").

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscriber hereby agree as follows:

     

    1. Closing.
      Subject
      to the satisfaction or waiver of the terms and conditions of this Agreement,
      on
      the Closing Date, Subscriber shall purchase and the Company shall sell to
      Subscriber a Note in the Principal Amount of $1,000,000 for the purchase price
      of $800,000 (“Purchase
      Price”).
      The
      consummation of the transactions contemplated herein shall take place at the
      offices of Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York,
      New York 10176, as soon as practicable following the satisfaction or waiver
      of
      all conditions to closing set forth in this Agreement (the “Closing
      Date”).

    

    2. Additional
      Transactions With Company Chief Executive Officer and President.

    

    (a) Stock
      Pledge.
      Alex
      Lightman, the Chief Executive Officer and President of the Company
      (“Pledgor”)
      will
      pledge 4,000,000 Shares (subject to increase) of the Company’s $.001 par value
      Common Stock (“Common
      Stock”
and
      “Pledged
      Shares”)
      as
      security for the Company’s obligations to the Subscriber. The pledge will be
      memorialized in a Stock Pledge Agreement, a form of which is annexed hereto
      as
Exhibit
      C.
      Pledgor
      will also provide a personally guaranty the payment of the Note. The personal
      guaranty will be memorialized in a Guaranty, a form of which is annexed hereto
      as Exhibit
      D.

    

    (b) Stock
      Sale.
      Contemporaneously with the Closing, Pledgor will sell to the Subscriber 825,000
      Shares of Common Stock (“Purchased
      Shares”)
      for
      the consideration stated in a stock purchase agreement to be entered into
      between Mr. Lightman and Sellers.

    

    3. Subscriber's
      Representations and Warranties.
      Subscriber hereby represents and warrants to and agrees with the Company
      that:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (a) Organization
      and Standing of the Subscriber.
      Subscriber is duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its organization and has the requisite power to
      own
      its assets and to carry on its business.

    

    (b) Authorization
      and Power.
      Subscriber has the requisite power and authority to enter into and perform
      this
      Agreement and to purchase the Notes being sold to it hereunder. The execution,
      delivery and performance of this Agreement by Subscriber and the consummation
      by
      it of the transactions contemplated hereby and thereby have been duly authorized
      by all necessary action, and no further consent or authorization of such
      Subscriber, its Board of Managers or members is required. This Agreement has
      been duly authorized, executed and delivered by Subscriber and constitutes,
      or
      shall constitute when executed and delivered, a valid and binding obligation
      of
      the Subscriber enforceable against the Subscriber in accordance with the term
      hereof.

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the consummation
      by
      Subscriber of the transactions contemplated hereby or relating hereto do not
      and
      will not (i) result in a violation of such Subscriber’s charter documents or
      bylaws or other organizational documents or (ii) conflict with, or constitute
      a
      default (or an event which with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of any agreement, indenture or instrument or
      obligation to which Subscriber is a party or by which its properties or assets
      are bound, or result in a violation of any law, rule, or regulation, or any
      order, judgment or decree of any court or governmental agency applicable to
      Subscriber or its properties (except for such conflicts, defaults and violations
      as would not, individually or in the aggregate, have a material adverse effect
      on Subscriber). Subscriber is not required to obtain any consent, authorization
      or order of, or make any filing or registration with, any court or governmental
      agency in order for it to execute, deliver or perform any of its obligations
      under this Agreement or to purchase the Notes in accordance with the terms
      hereof, provided that for purposes of the representation made in this sentence,
      Subscriber is assuming and relying upon the accuracy of the relevant
      representations and agreements of the Company herein.

    

    (d) Information
      on Company.
      The
      Subscriber has been furnished with or has had access at the EDGAR Website of
      the
      Commission to the Company's Form 10-KSB for the year ended June 30, 2006 and
      all
      periodic reports filed with the Commission thereafter but not later than five
      days before the Closing Date (hereinafter referred to as the "Reports").
      In
      addition, the Subscriber has received in writing from the Company such other
      information concerning its operations, financial condition and other matters
      as
      the Subscriber has requested in writing (such other information is collectively,
      the "Other
      Written Information"),
      and
      considered all factors the Subscriber deems material in deciding on the
      advisability of investing in the Securities. 

     

    (e) Information
      on Subscriber.
      The
      Subscriber is, and will be on the Closing Date, an "accredited investor", as
      such term is defined in Regulation D promulgated by the Commission under the
      1933 Act, is experienced in investments and business matters, has made
      investments of a speculative nature and has purchased securities of United
      States publicly-owned companies in private placements in the past and, with
      its
      representatives, has such knowledge and experience in financial, tax and other
      business matters as to enable the Subscriber to utilize the information made
      available by the Company to evaluate the merits and risks of and to make an
      informed investment decision with respect to the proposed purchase of the Note,
      which represents a speculative investment. The Subscriber has the authority
      and
      is duly and legally qualified to purchase and own the Note. The Subscriber
      is
      able to bear the risk of such investment for an indefinite period and to afford
      a complete loss thereof. The information set forth on the signature page hereto
      regarding the Subscriber is accurate.

     

    (f) Purchase
      of Note.
      On the
      Closing Date, the Subscriber will purchase the Note as principal for its own
      account for investment only and not with a view toward, or for resale in
      connection with, the public sale or any distribution thereof, but Subscriber
      does not agree to hold the Note for any minimum amount of time.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (g) Compliance
      with Securities Act.
      The
      Subscriber understands and agrees that the Note has not been registered under
      the 1933 Act or any applicable state securities laws, by reason of their
      issuance in a transaction that does not require registration under the 1933
      Act
      (based in part on the accuracy of the representations and warranties of
      Subscriber contained herein), and that such Note must be held indefinitely
      unless a subsequent disposition is registered under the 1933 Act or any
      applicable state securities laws or is exempt
      from such registration. Notwithstanding anything to the contrary contained
      in
      this Agreement, Subscriber may transfer (without restriction and without the
      need for an opinion of counsel) the Note to its Affiliates (as defined below)
      provided that each such Affiliate is an “accredited investor” under Regulation D
      and such Affiliate agrees to be bound by the terms and conditions of this
      Agreement. For the purposes of this Agreement, an “Affiliate”
of
      any
      person or entity means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      person or entity. Affiliate when employed in connection with the Company
      includes each Subsidiary [as defined in Section 4(a)] of the Company. For
      purposes of this definition, “control”
means
      the power to direct the management and policies of such person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

     

    (h) Note
      Legend.
      The
      Note shall bear the following legend:

     

    "THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO INNOFONE.COM, INCORPORATED THAT SUCH REGISTRATION IS NOT
      REQUIRED."

     

    (i) Communication
      of Offer.
      The
      offer to sell the Note was directly communicated to the Subscriber by the
      Company. At no time was the Subscriber presented with or solicited by any
      leaflet, newspaper or magazine article, radio or television advertisement,
      or
      any other form of general advertising or solicited or invited to attend a
      promotional meeting otherwise than in connection and concurrently with such
      communicated offer.

     

    (j) No
      Governmental Review.
      Subscriber understands that no United States federal or state agency or any
      other governmental or state agency has passed on or made recommendations or
      endorsement of the Note or the suitability of the investment in the Note nor
      have such authorities passed upon or endorsed the merits of the offering of
      the
      Note.

    

    (k) Correctness
      of Representations.
      Subscriber represents that the foregoing representations and warranties are
      true
      and correct as of the date hereof and, unless such Subscriber otherwise notifies
      the Company prior to the Closing Date shall be true and correct as of the
      Closing Date.

    

    (l) Survival.
      The
      foregoing representations and warranties shall survive the Closing Date for
      a
      period of three years after the Closing Date.

     

    4. Company
      Representations and Warranties.
      The
      Company represents and warrants to and agrees with Subscriber that except as
      set
      forth in the Reports or the Other Written Information and as otherwise qualified
      in the Transaction Documents [as defined in Section 4(c)]:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (a) Due
      Incorporation.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation and has the requisite
      corporate power to own its properties and to carry on its business is disclosed
      in the Reports.
      The
      Company is duly qualified as a foreign corporation to do business and is in
      good
      standing in each jurisdiction where the nature of the business conducted or
      property owned by it makes such qualification necessary, other than those
      jurisdictions in which the failure to so qualify would not have a Material
      Adverse Effect. For purpose of this Agreement, a “Material
      Adverse Effect”
shall
      mean a material adverse effect on the financial condition, results of
      operations, properties or business of the Company taken individually, or in
      the
      aggregate, as a whole. For purposes of this Agreement, “Subsidiary”
means,
      with respect to any entity at any date, any corporation, limited or general
      partnership, limited liability company, trust, estate, association, joint
      venture or other business entity) of which more than 50% of (i) the
      outstanding capital stock having (in the absence of contingencies) ordinary
      voting power to elect a majority of the board of directors or other managing
      body of such entity, (ii) in the case of a partnership or limited liability
      company, the interest in the capital or profits of such partnership or limited
      liability company or (iii) in the case of a trust, estate, association,
      joint venture or other entity, the beneficial interest in such trust, estate,
      association or other entity business is, at the time of determination, owned
      or
      controlled directly or indirectly through one or more intermediaries, by such
      entity. All the Company’s Subsidiaries as of the Closing Date are set forth on
Schedule
      4(a)
      hereto.

     

    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company have been duly
      authorized and validly issued and are fully paid and nonassessable.

     

    (c) Authority;
      Enforceability.
      This
      Agreement, the Note, the Escrow Agreement, Stock Pledge Agreement, and any
      other
      agreements delivered together with this Agreement or in connection herewith
      including in connection with the transactions described in Section 3 above
      (collectively “Transaction
      Documents”)
      have
      been duly authorized, executed and delivered by the Company and are valid and
      binding agreements enforceable against the Company in accordance with their
      respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors' rights generally and to general principles of equity.
      The Company has full corporate power and authority necessary to enter into
      and
      deliver the Transaction Documents and to perform its obligations
      thereunder.

     

    (d) Additional
      Issuances.
      There
      are no outstanding agreements or preemptive or similar rights affecting the
      Company's or any of its Subsidiaries’ Common Stock or other equity and no
      outstanding rights, warrants or options to acquire, or instruments convertible
      into or exchangeable for, or agreements or understandings with respect to the
      sale or issuance of any Common Stock or equity of the Company except as
      described on Schedule
      4(d).
      The
      Common Stock and all other equity of the Company and its Subsidiaries on a
      fully
      diluted basis outstanding as of the last trading day preceding the Closing
      Date
      is set forth on Schedule
      4(d).

     

    (e) Consents.
      No
      consent, approval, authorization or order of any court, governmental agency
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      Affiliates, any Principal Market (as defined in Section 9(b) of this Agreement),
      nor the Company's shareholders is required for the execution by the Company
      of
      the Transaction Documents and compliance and performance by the Company of
      its
      obligations under the Transaction Documents, including, without limitation,
      the
      issuance and sale of the Note.

     

    (f) No
      Violation or Conflict.
      Assuming the representations and warranties of the Subscriber in Section 3
      are
      true and correct, neither the issuance and sale of the Note nor the performance
      of the Company’s obligations under this Agreement and all other agreements
      entered into by the Company relating thereto by the Company will:

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (i) violate,
      conflict with, result in a breach of, or constitute a default (or an event
      which
      with the giving of notice or the lapse of time or both would be reasonably
      likely to constitute a default in any material respect) under (A) the articles
      or certificate of incorporation, charter or bylaws of the Company, (B) to the
      Company's knowledge, any decree, judgment, order, law, treaty, rule, regulation
      or determination applicable to the Company of any court, governmental agency
      or
      body, or arbitrator having jurisdiction over the Company or over the properties
      or assets of the Company or any of its Affiliates, (C) the terms of any bond,
      debenture, note or any other evidence of indebtedness, or any agreement, stock
      option or other similar plan, indenture, lease, mortgage, deed of trust or
      other
      instrument to which the Company or any of its Affiliates is a party, by which
      the Company or any of its Affiliates is bound, or to which any of the properties
      of the Company or any of its Affiliates is subject, or (D) the terms of any
      "lock-up" or similar provision of any underwriting or similar agreement to
      which
      the Company, or any of its Affiliates is a party except the violation, conflict,
      breach, or default of which would not have a Material Adverse Effect;
      or

     

    (ii) result
      in
      the creation or imposition of any Lien (as defined in Section 9(o)(i)) upon
      the
      Note or any of the assets of the Company or any of its Affiliates other then
      a
      Permitted Lien (as defined in Section 9(o)(i)); or

     

    (iii) result
      in
      the activation of any anti-dilution rights or a reset or repricing of any debt
      or security instrument of any other creditor or equity holder of the Company,
      nor result in the acceleration of the due date of any obligation of the Company;
      or

     

    (iv) result
      in
      the activation of any piggy-back registration rights of any person or entity
      holding securities or debt of the Company or having the right to receive
      securities of the Company.

     

    (g) The
      Note.
      Each of
      the Note upon issuance; the Purchased Shares upon the Closing Date and the
      Pledged Shares upon release or sale by or on behalf of Subscriber (if
      ever):

     

    (i) is,
      or
      will be, free and clear of any security interests, liens, claims or other
      encumbrances, subject to restrictions upon transfer under the 1933 Act and
      any
      applicable state securities laws;

    

    (ii) has
      been,
      or will be, duly and validly authorized and on the date of issuance of will
      be
      or will have been duly and validly issued and fully paid and nonassessable
      and,
      if registered pursuant to the 1933 Act and resold pursuant to an effective
      registration statement, will be free trading and unrestricted except to the
      extent of any restrictions pursuant to the 1933 Act or the Exchange Act that
      may
      be applicable to any Subscriber due to such Subscriber’s affiliate or insider
      status with respect to the Company or such Subscriber’s possession of material
      non-public information with respect to the Company;

     

    (iii) will
      not
      have been issued or sold in violation of any preemptive, right of first offer,
      right of first refusal or other similar rights of the holders of any securities
      or debt of the Company or any other person having such rights;

     

    (iv) will
      not
      subject the holders thereof to personal liability by reason of being such
      holders provided Subscriber’s representations herein are true and accurate and
      Subscriber takes no actions or fails to take any actions required by Subscriber
      for such purchase to be in compliance with applicable laws and regulations;
      and

     

    (v) will
      have
      been issued in reliance upon an exemption from the registration requirements
      of
      and will not result in a violation of Section 5 under the 1933 Act provided
      Subscriber’s representations herein are true and accurate and Subscriber takes
      no actions or fails to take any actions required for their purchase to be in
      compliance with applicable laws and regulations.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (h) Litigation.
      Except
      as described in the Reports, there is no pending or, to the best knowledge
      of
      the Company, basis for or threatened action, suit, proceeding or investigation
      before any court, governmental agency or body, or arbitrator having jurisdiction
      over the Company, or any of its Affiliates that would affect the execution
      by
      the Company of any of the Transaction Documents or the performance by the
      Company of its obligations under the Transaction Documents except as described
      in the Reports. There is no pending or, to the best knowledge of the Company,
      basis for or threatened action, suit, proceeding or investigation before any
      court, governmental agency or body, or arbitrator having jurisdiction over
      the
      Company, or any of its Affiliates which litigation if adversely determined
      would
      have a Material Adverse Effect.

     

    (i) Reporting
      Company.
      The
      Company is a publicly-held company subject to reporting obligations pursuant
      to
      Section 13 of the Securities Exchange Act of 1934 (the “1934
      Act”)
      and
      has a
      class of common shares registered pursuant to Section 12(g) of the 1934 Act.
      Pursuant to the provisions of the 1934 Act, except as disclosed on Schedule
      4(i)
      hereto,
      the Company has timely filed all reports and other materials required to be
      filed thereunder with the Commission during the preceding thirty-six
      months.

     

    (j) No
      Market Manipulation.
      The
      Company and its Affiliates have not taken, and will not take, directly or
      indirectly, any action designed to, or that might reasonably be expected to,
      cause or result in stabilization or manipulation of the price of the Common
      Stock or
      affect
      the price at which Common Stock may be issued or resold, provided, however,
      that
      this provision shall not prevent the Company from engaging in investor
      relations/public relations activities consistent with past
      practices.

     

    (k) Information
      Concerning Company.
      The
      Reports contain all material information relating to the Company and its
      operations and financial condition as of their respective dates and all the
      information required to be disclosed therein. Since the last day of the fiscal
      year of the most recent audited financial statements included in the Reports
      (“Latest
      Financial Date”),
      and
      except as modified in the Other Written Information or in the Schedules hereto,
      there has been no Material Adverse Event relating to the Company's business,
      financial condition or affairs not disclosed in the Reports. The Reports
      including the financial statements therein do 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 not misleading in light
      of
      the circumstances when made. Subscriber acknowledges the Company’s disclosure
      made in a Form 8-K filed by the Company with the Commission on December 29,
      2006
      relating to its financial statements.

     

    (l) Stop
      Transfer.
      The
      Company will not issue any stop transfer order or other order impeding the
      sale,
      resale or delivery of any of the Pledged Shares or Purchased Shares, except
      as
      may be required by any applicable federal or state securities laws and unless
      contemporaneous notice of such instruction is given to the
      Subscriber.

     

    (m) Defaults.
      The
      Company is not in violation of its certificate of incorporation or bylaws.
      The
      Company is (i) not in default under or in violation of any other material
      agreement or instrument to which it is a party or by which it or any of its
      properties are bound or affected, which default or violation would have a
      Material Adverse Effect,
      (ii)
      not in default with respect to any order of any court, arbitrator or
      governmental body or subject to or party to any order of any court or
      governmental authority arising out of any action, suit or proceeding under
      any
      statute or other law respecting antitrust, monopoly, restraint of trade, unfair
      competition or similar matters, or (iii) to the Company’s knowledge not in
      violation of any statute, rule or regulation of any governmental authority
      which
      violation would have a Material Adverse Effect.

     

    (n) Not
      an
      Integrated Offering.
      Neither
      the Company, nor any of its Affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offer of the Note pursuant to this Agreement to be integrated with prior
      offerings by the Company for purposes of the 1933 Act or any applicable
      stockholder approval provisions, including, without limitation, under the rules
      and regulations of the OTC Bulletin Board (“Bulletin
      Board”)
      which
      would impair the exemptions relied upon herein or the Company’s ability to
      timely comply with its obligations hereunder. Nor will the Company or any of
      its
      Affiliates take any action or steps that would cause the offer or issuance
      of
      the Note to be integrated with other offerings which would impair the exemptions
      relied upon herein or the Company’s ability to timely comply with their
      obligations set forth in the Transaction Documents. The Company will not conduct
      any offering other than the transactions contemplated hereby that will be
      integrated with the offer or issuance of the Note, which would impair the
      exemptions relied upon herein or the Company’s or Pledgor’s ability to timely
      comply with their respective obligations.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (o) No
      General Solicitation.
      Neither
      the Company, nor any of its Affiliates, nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Note, Pledged Stock or Purchased
      Stock.

     

    (p) Listing.
      The
      Company's common stock is quoted on the Bulletin Board under the symbol IMEN.OB.
      The Company has not received any oral or written notice that its common stock
      is
      not eligible nor will become ineligible for quotation on the Bulletin Board
      nor
      that its common stock does not meet all requirements for the continuation of
      such quotation. The Company satisfies all the requirements for the continued
      quotation of its common stock on the Bulletin Board.

     

    (q) No
      Undisclosed Liabilities.
      The
      Company has no liabilities or obligations which are material, individually
      or in
      the aggregate, which are not disclosed in the Reports and Other Written
      Information, other than those incurred in the ordinary course of the Company’s
      businesses since the Latest Financial Date and which, individually or in the
      aggregate, would reasonably be expected to have a Material Adverse
      Effect,
      except
      as disclosed on Schedule
      4(q).

     

    (r) No
      Undisclosed Events or Circumstances.
      Since
      the Latest Financial Date, no event or circumstance has occurred or exists
      with
      respect to the Company or its businesses, properties, operations or financial
      condition, that, under applicable law, rule or regulation, requires public
      disclosure or announcement prior to the date hereof by the Company but which
      has
      not been so publicly announced or disclosed in the Reports.

     

    (s) Capitalization.
      The
      authorized and outstanding capital stock of the Company and each Subsidiary
      as
      of the date of this Agreement and the Closing Date are set forth on Schedule
      4(d).
      Except
      as set forth on Schedule
      4(d),
      there
      are no options, warrants, or rights to subscribe to, securities, rights or
      obligations convertible into or exchangeable for or giving any right to
      subscribe for any shares of capital stock of the Company or any of its
      Subsidiaries. All of the outstanding shares of Common Stock of the Company
      and
      Subsidiaries have been duly and validly authorized and issued and are fully
      paid
      and nonassessable.

     

    (t) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company, including but not limited to
      disputes or conflicts over payment owed to such accountants and lawyers, nor
      have there been any such disagreements during the two years prior to the Closing
      Date.

    

    (u) Transfer
      Agent/DTC Status.
      The
      Company’s transfer agent is a participant in and the Common Stock is eligible
      for transfer pursuant to the Depository Trust Company Automated Securities
      Transfer Program. The name, address, telephone number, fax number, contact
      person and email address of the Company transfer agent is set forth on
Schedule
      4(u)
      hereto.

    

    (v) Investment
      Company.
      Neither
      the Company nor any Affiliate is an “investment company” within the meaning of
      the Investment Company Act of 1940, as amended.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (w) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the Note,
      (i) the Company’s fair saleable value of its assets exceeds the amount that will
      be required to be paid on or in respect of the Company’s existing debts and
      other liabilities (including known contingent liabilities) as they mature;
      (ii)
      the Company’s assets do not constitute unreasonably small capital to carry on
      its business for the current fiscal year as now conducted and as proposed to
      be
      conducted including its capital needs taking into account the particular capital
      requirements of the business conducted by the Company, and projected capital
      requirements and capital availability thereof; and (iii) the current cash flow
      of the Company, together with the proceeds the Company would receive, were
      it to
      liquidate all of its assets, after taking into account all anticipated uses
      of
      the cash, would be sufficient to pay all amounts on or in respect of its debt
      when such amounts are required to be paid. The Company does not intend to incur
      debts beyond its ability to pay such debts as they mature (taking into account
      the timing and amounts of cash to be payable on or in respect of its
      debt).

    

    (x) Subsidiary
      Representations.
      The
      Company makes each of the representations contained in Sections 4(a), (b),
      (c),
      (d), (e), (f), (h), (k), (m), (q), (r), (t), (v) and (w) of this Agreement,
      as
      same relate to each Subsidiary of the Company.

    

    (y) Company
      Predecessor.
      All
      representations made by or relating to the Company of a historical or
      prospective nature and all undertakings described in Sections 9(g) through
      9(l)
      shall relate, apply and refer to the Company, Subsidiaries and their
      predecessors, if any.

    

    (z) Correctness
      of Representations.
      The
      Company represents that the foregoing representations and warranties are true
      and correct as of the date hereof in all material respects, and, unless the
      Company otherwise notifies the Subscriber prior to the Closing Date, shall
      be
      true and correct in all material respects as of the Closing Date.

     

    (AA) Survival.
      The
      foregoing representations and warranties shall survive for a period of three
      years after the Closing Date.

     

    5. Regulation
      D Offering.
      The
      offer, issuance and sale of the Note and Purchased Shares to the Subscriber
      is
      being made pursuant to the exemption from the registration provisions of the
      1933 Act afforded by Section 4(2) or Section 4(6) of the 1933 Act and/or Rule
      506 of Regulation D promulgated thereunder. On the Closing Date, the Company
      will provide an opinion reasonably acceptable to Subscriber from the Company's
      legal counsel opining on the availability of an exemption from registration
      under the 1933 Act as it relates to the offer and issuance of the Note and
      other
      matters reasonably requested by Subscriber. A form of the legal opinion is
      annexed hereto as Exhibit
      E.
      At the
      Company’s option, the Company will provide, at the Company's expense or
      reimburse Subscriber, for such other legal opinions in the future as are
      reasonably necessary for the issuance and resale of the Note, Pledged Shares,
      and Purchased Shares pursuant to an effective registration statement, Rule
      144
      under the 1933 Act or an exemption from registration.

    6. Broker’s
      Commission.
      The
      Company on the one hand, and Subscriber on the other hand, agrees to indemnify
      the other against and hold the other harmless from any and all liabilities
      to
      any persons claiming brokerage commissions or similar fees on account of
      services purported to have been rendered on behalf of the indemnifying party
      in
      connection with this Agreement or the transactions contemplated hereby and
      arising out of such party’s actions. The Company represents that there are no
      parties entitled to receive fees, commissions, or similar payments in connection
      with the offering described in this Agreement.

    

    7. Due
      Diligence Fee.
      The
      Company will pay a due diligence fee of $25,000 (“Due
      Diligence Fee”).
      The
      Due Diligence Fee will be paid at the Subscriber’s election out of the funds
      deposited pursuant to the Escrow Agreement or at the Subscriber’s election
      withheld from the Purchase Price. The Subscriber will not receive additional
      Common Stock as an additional due diligence fee.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    8. Legal
      Fees.
      The
      Company shall pay to Grushko & Mittman, P.C., a cash fee of $20,000
      (“Legal
      Fees”)
      (of
      which $10,000 has been paid prior to Closing) as reimbursement for services
      rendered to the Subscriber in connection with this Agreement and the purchase
      and sale of the Note (the “Offering”).
      The
      Legal Fees and reimbursement for estimated UCC searches, credit and background
      investigations, if any (less any amounts paid prior to a Closing Date), will
      be
      payable on the Closing Date out of funds held pursuant to the Escrow
      Agreement.

     

    9. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscriber as follows:

     

    (a) Stop
      Orders.
      The
      Company will advise the Subscriber, within two business days after the Company
      receives notice of issuance by the Commission, any state securities commission
      or any other regulatory authority of any stop order or of any order preventing
      or suspending any offering of any securities of the Company, or of the
      suspension of the qualification of the Common Stock of the Company for offering
      or sale in any jurisdiction, or the initiation of any proceeding for any such
      purpose.

     

    (b) Listing.
      The
      Company will maintain the listing or quotation of its Common Stock on the
      American Stock Exchange, Nasdaq Capital Market, Nasdaq National Market System,
      Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at
      the
      time the principal trading exchange or market for the Common Stock (the
“Principal
      Market”)),
      and
      will comply in all respects with the Company's reporting, filing and other
      obligations under the bylaws or rules of the Principal Market, as applicable.
      For so long as the Subscriber owns any Purchased Shares or Pledged Shares remain
      subject to the Stock Pledge Agreement, the Company will provide the Subscriber
      copies of all notices it receives notifying the Company of the threatened and
      actual delisting or exclusion from quotation of the Common Stock from any
      Principal Market. As of the date of this Agreement, the Bulletin Board is the
      Principal Market.

     

    (c) Market
      Regulations.
      The
      Company shall notify the Commission, the Principal Market and applicable state
      authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Note to the Subscriber
      and
      promptly provide copies thereof to Subscriber.

     

    (d) Filing
      Requirements.
      From
      the date of this Agreement and until the sooner of (i) two (2) years after
      the
      Closing Date, or (ii) until all the Purchased Shares have been resold or
      transferred by all the Subscriber pursuant to a registration statement or
      pursuant to Rule 144, without regard to volume limitations and no sum remains
      outstanding under the Note (“Compliance
      Period”),
      the
      Company will (A) cause its Common Stock to continue to be registered under
      Section 12(b) or 12(g) of the 1934 Act, (B) comply in all respects with its
      reporting and filing obligations under the 1934 Act, (C) voluntarily comply
      with
      all reporting requirements that are applicable to an issuer with a class of
      shares registered pursuant to Section 12(g) of the 1934 Act, if Company is
      not
      subject to such reporting requirements, and (D) comply with all requirements
      related to any registration statement filed pursuant to this Agreement. The
      Company will use its best efforts not to take any action or file any document
      (whether or not permitted by the 1933 Act or the 1934 Act or the rules
      thereunder) to terminate or suspend its reporting and filing obligations under
      said acts during the Compliance Period. During the Compliance Period, the
      Company will continue the listing or quotation of the Common Stock on a
      Principal Market and will comply in all respects with the Company's reporting,
      filing and other obligations under the bylaws or rules of the Principal Market.
      The Company agrees to timely file a Form D with respect to the Note if required
      under Regulation D and to provide a copy thereof to each Subscriber promptly
      after such filing.

     

    (e) Use
      of
      Proceeds.
      The
      proceeds of the Offering will be employed by the Company for the purposes set
      forth on Schedule
      9(e)
      hereto.
      Except as set forth on Schedule
      9(e),
      the
      Purchase Price may not and will not be used for accrued and unpaid officer
      and
      director salaries, payment of financing related debt, redemption of outstanding
      notes or equity instruments of the Company, litigation related expenses or
      settlements, brokerage fees, nor non-trade obligations outstanding on a Closing
      Date.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (f) Taxes.
      During
      the Compliance Period, the Company will promptly pay and discharge, or cause
      to
      be paid and discharged, when due and payable, all lawful taxes, assessments
      and
      governmental charges or levies imposed upon the income, profits, property or
      business of the Company; provided, however, that any such tax, assessment,
      charge or levy need not be paid if the validity thereof shall currently be
      contested in good faith by appropriate proceedings and if the Company shall
      have
      set aside on its books adequate reserves with respect thereto, and provided,
      further, that the Company will pay all such taxes, assessments, charges or
      levies forthwith upon the commencement of proceedings to foreclose any lien
      which may have attached as security therefore.

     

    (g) Insurance.
      During
      the Compliance Period, the Company will keep its assets which are of an
      insurable character insured by financially sound and reputable insurers against
      loss or damage by fire, explosion and other risks customarily insured against
      by
      companies in the Company’s line of business, in amounts sufficient to prevent
      the Company from becoming a co-insurer and not in any event less than one
      hundred percent (100%) of the insurable value of the property insured less
      reasonable deductible amounts; and the Company will maintain, with financially
      sound and reputable insurers, insurance against other hazards and risks and
      liability to persons and property to the extent and in the manner customary
      for
      companies in similar businesses similarly situated and to the extent available
      on commercially reasonable terms.

     

    (h) Books
      and Records.
      During
      the Compliance Period, the Company will keep true records and books of account
      in which full, true and correct entries will be made of all dealings or
      transactions in relation to its business and affairs in accordance with
      generally accepted accounting principles applied on a consistent
      basis.

     

    (i) Governmental
      Authorities.
      During
      the Compliance Period, the Company shall duly observe and conform in all
      material respects to all valid requirements of governmental authorities relating
      to the conduct of its business or to its properties or assets.

     

    (j) Intellectual
      Property.
      During
      the Compliance Period, the Company shall maintain in full force and effect
      its
      corporate existence, rights and franchises and all licenses and other rights
      to
      use intellectual property owned or possessed by it and reasonably deemed to
      be
      necessary to the conduct of its business, unless it is sold for
      value.

     

    (k) Properties.
      During
      the Compliance Period, the Company will keep its properties in good repair,
      working order and condition, reasonable wear and tear excepted, and from time
      to
      time make all necessary and proper repairs, renewals, replacements, additions
      and improvements thereto; and the Company will at all times comply with each
      provision of all leases to which it is a party or under which it occupies
      property if the breach of such provision could reasonably be expected to have
      a
      Material Adverse Effect.

     

    (l) Confidentiality/Public
      Announcement.
      During
      the Compliance Period, the Company agrees that except in connection with a
      Form
      8-K or the Registration Statement or as otherwise required in any other
      Commission filing or as required by law, it will not disclose publicly or
      privately the identity of the Subscriber unless expressly agreed to in writing
      by Subscriber, only to the extent required by law and then only upon five days
      prior notice to Subscriber. In any event and subject to the foregoing, the
      Company shall file
      a
      Form 8-K or make a public announcement describing the Offering not later than
      the first business day after the Closing Date. In the Form 8-K or public
      announcement, the Company will specifically disclose the amount of common stock
      outstanding immediately after the Closing. A form of the proposed Form 8-K
      or
      public announcement to be employed in connection with the Closing is annexed
      hereto as Exhibit
      F.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (m) Non-Public
      Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf will provide Subscriber or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Subscriber shall have agreed in writing to receive such
      information. The Company understands and confirms that each Subscriber shall
      be
      relying on the foregoing representations in effecting transactions in securities
      of the Company. The Company will offer to the Subscriber an opportunity to
      review and comment on the Registration Statement thereto between three and
      five
      business days prior to the proposed filing date thereof.

    

    (n) Additional
      Negative Covenants.
      So long
      as the Notes are outstanding and during the pendency of an Event of Default
      (as
      defined in the Note), without the consent of the Subscriber, the Company will
      not and will not permit any of its Subsidiaries to directly or
      indirectly:

    

    (i) create,
      incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
      arrangement, lien, charge, claim, security interest, security title, mortgage,
      security deed or deed of trust, easement or encumbrance, or preference, priority
      or other security agreement or preferential arrangement of any kind or nature
      whatsoever (including any lease or title retention agreement, any financing
      lease having substantially the same economic effect as any of the foregoing,
      and
      the filing of, or agreement to give, any financing statement perfecting a
      security interest under the Uniform Commercial Code or comparable law of any
      jurisdiction) (each, a “Lien”)
      upon
      any of its property, whether now owned or hereafter acquired except for (i)
      the
      Excepted Issuances [as defined on Schedule
      9(n)],
      (ii)
      (a) Liens imposed by law for taxes that are not yet due or are being contested
      in good faith and for which adequate reserves have been established in
      accordance with generally accepted accounting principles; (b) carriers’,
      warehousemen’s, mechanics’, material men’s, repairmen’s and other like Liens
      imposed by law, arising in the ordinary course of business and securing
      obligations that are not overdue by more than 30 days or that are being
      contested in good faith and by appropriate proceedings; (c) pledges and deposits
      made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
      regulations; (d) deposits to secure the performance of bids, trade contracts,
      leases, statutory obligations, surety and appeal bonds, performance bonds and
      other obligations of a like nature, in each case in the ordinary course of
      business; (e) Liens created with respect to the financing of the purchase of
      new
      property in the ordinary course of the Company’s business up to the amount of
      the purchase price of such property, or (f) easements, zoning restrictions,
      rights-of-way and similar encumbrances on real property imposed by law or
      arising in the ordinary course of business that do not secure any monetary
      obligations and do not materially detract from the value of the affected
      property (each of (a) through (g), a “Permitted
      Lien”)
      and
      (iii) indebtedness for borrowed money which is not senior or pari passu in
      right
      of payment to the payment of the Notes;

     

    (ii) amend
      its
      certificate of incorporation or bylaws so as to adversely affect any rights
      of
      the Subscriber;

     

    (iii) repay,
      repurchase or offer to repay, repurchase or otherwise acquire or make any
      dividend or distribution in respect of any of its Common Stock, preferred stock,
      or other equity securities other than to the extent permitted or required under
      the Transaction Documents or as described on Schedule
      9(n) subpart
      (vi);

     

    (iv) prepay
      any financing related or other outstanding debt obligations except as described
      on Schedule
      9(n), subpart (vi);
      or

     

    (v) engage
      in
      any transactions with any officer, director, employee or any Affiliate of the
      Company, including any contract, agreement or other arrangement providing for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $50,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (o) Sale
      of Pledged Shares and Purchased Shares.
      Upon the
      transfer of Pledged Shares or Purchased Shares, the Company shall, at its own
      cost and expense, take all necessary action, including obtaining and delivering,
      an opinion of counsel to assure that the Company's transfer agent shall issue
      stock certificates in the name of transferee, or its permitted nominee or such
      other persons as designated by Subscriber and in such denominations to be
      specified upon transfer representing the number of shares of Common Stock
      issuable upon such Pledged Shares and Purchased Shares. The Company warrants
      that no instructions other than these instructions have been or will be given
      to
      the transfer agent of the Company's Common Stock and that the certificates
      representing such shares shall contain no legend other than the required 1933
      Act restriction from transfer legend. If and when the Subscriber transfers
      the
      Pledged Shares and Purchased Shares, assuming (i) a registration statement
      is
      effective and the prospectus, as supplemented or amended, contained therein
      is
      current and (ii) the Subscriber confirms in writing to the transfer agent that
      the Subscriber has complied with the prospectus delivery requirements, the
      restrictive legend will be removed and such Pledged Shares and Purchased Shares
      will be free trading, and freely transferable. In the event that the Pledged
      Shares and Purchased Shares are sold in a manner that complies with an exemption
      from registration, the Company will promptly instruct its counsel to issue
      to
      the transfer agent an opinion permitting removal of the legend (indefinitely,
      if
      pursuant to Rule 144(k) of the 1933 Act).

     

    (p) Preservation
      of Corporate Existence.
      The
      Company shall preserve and maintain its corporate existence, rights, privileges
      and franchises in the jurisdiction of its incorporation, and qualify and remain
      qualified, as a foreign corporation in each jurisdiction in which such
      qualification is necessary in view of its business or operations and where
      the
      failure to qualify or remain qualified might reasonably have a Material Adverse
      Effect upon the financial condition, business or operations of the Company
      and
      its Subsidiaries taken as a whole.

     

    10. Covenants
      of the Company and Subscriber Regarding Indemnification.

     

    (a) The
      Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber,
      the Subscriber’s officers, directors, agents, Affiliates, control persons, and
      principal shareholders, against any claim, cost, expense, liability, obligation,
      loss or damage (including reasonable legal fees) of any nature, incurred by
      or
      imposed upon the Subscriber or any such person which results, arises out of
      or
      is based upon (i) any material misrepresentation by Company or material breach
      of any warranty by Company in this Agreement or in any Exhibits or Schedules
      attached hereto, or other agreement delivered pursuant hereto; or (ii) after
      any
      applicable notice and/or cure periods, any material breach or default in
      performance by the Company of any covenant or undertaking to be performed by
      the
      Company hereunder, or any other agreement entered into by the Company and
      Subscriber relating hereto.

     

    (b) Subscriber
      agrees to indemnify, hold harmless, reimburse and defend the Company and each
      of
      the Company’s officers, directors, agents, Affiliates, control persons against
      any claim, cost, expense, liability, obligation, loss or damage (including
      reasonable legal fees) of any nature, incurred by or imposed upon the Company
      or
      any such person which results, arises out of or is based upon (i) any material
      misrepresentation by such Subscriber in this Agreement or in any Exhibits or
      Schedules attached hereto, or other agreement delivered pursuant hereto; or
      (ii)
      after any applicable notice and/or cure periods, any material breach or default
      in performance by such Subscriber of any covenant or undertaking to be performed
      by such Subscriber hereunder, or any other agreement entered into by the Company
      and Subscriber, relating hereto.

     

    (c) In
      no
      event shall the liability of any Subscriber or permitted successor hereunder
      or
      under any Transaction Document or other agreement delivered in connection
      herewith be greater in amount than the dollar amount of the net proceeds
      actually received by such Subscriber upon the sale of the Purchased
      Shares.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (d) The
      procedures set forth in Section 11.6 shall apply to the indemnification set
      forth in Sections 10(a) and 10(b) above.

     

    11.1. Registration
      Rights.
      The
      Company hereby grants the following registration rights to holders of the
      Purchased Shares and Pledged Shares. Other than for the exclusive registration
      of the securities underlying that certain equity swap by and between the Company
      and Cogent Capital, LLC as described in the Reports, if the Company at any
      time
      proposes to register any of its securities under the 1933 Act for sale to the
      public, whether for its own account or for the account of other security holders
      or both, except with respect to registration statements on Forms S-4, S-8 or
      another form not available for registering the Warrant Shares and the other
      shares of Common Stock held by or purchaseable by Subscriber as set forth on
      Schedule
      11.1
      (“Registrable
      Securities”)
      for
      sale to the public, provided the Registrable Securities are not otherwise
      registered for resale by the Subscribers or Holder pursuant to an effective
      registration statement, each such time it will give at least fifteen (15) days'
      prior written notice to the record holder of the Registrable Securities of
      its
      intention so to do. Upon the written request of the holder, received by the
      Company within ten (10) days after the giving of any such notice by the Company,
      to register any of the Registrable Securities not previously registered, the
      Company will cause such Registrable Securities as to which registration shall
      have been so requested to be included with the securities to be covered by
      the
      registration statement proposed to be filed by the Company, all to the extent
      required to permit the sale or other disposition of the Registrable Securities
      so registered by the holder of such Registrable Securities (the “Seller”
or
      “Sellers”).
      The
      Subscriber or any transferee of the Pledged Shares (as the case may be) will
      be
      deemed the holder or Seller of the Pledged Shares for so long as the Pledged
      Shares remain subject to the Stock Pledge Agreement. Unless instructed in
      writing to the contrary, the Subscribers hereby automatically exercise the
      registration rights granted in this Section 11.1. The Seller is hereby given
      the
      same rights and benefits as any other party identified in such registration.
      In
      the event that any registration pursuant to this Section 11.1 shall be, in
      whole
      or in part, an underwritten public offering of common stock of the Company,
      the
      number of shares of Registrable Securities to be included in such an
      underwriting may be reduced by the managing underwriter if and to the extent
      that the Company and the underwriter shall reasonably be of the opinion that
      such inclusion would adversely affect the marketing of the securities to be
      sold
      by the Company therein; provided, however, that the Company shall notify the
      Seller in writing of any such reduction. Notwithstanding the foregoing
      provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
      a delay of any registration statement referred to in this Section 11.1 without
      thereby incurring any liability to the Seller due to such withdrawal or delay.
      The holder of Registrable Securities may elect to receive the registration
      rights applicable to any other holder of securities (except the Company)
      included for resale in a Registration Statement in lieu of the registration
      rights granted to such holder as described in Sections 11.2 through 11.6
      hereto.

     

    11.2. Registration
      Procedures.
      If and
      whenever the Company is required by the provisions of Section 11.1 to effect
      the
      registration of any Registrable Securities under the 1933 Act, the Company
      will,
      as expeditiously as possible: 

     

    (a) subject
      to the timelines provided in this Agreement, prepare and file with the
      Commission a registration statement required by Section 11, with respect to
      such
      securities and use its best efforts to cause such registration statement to
      become and remain effective for the period of the distribution contemplated
      thereby (determined as herein provided), promptly provide to the holders of
      the
      Registrable Securities copies of all filings and Commission letters of comment
      and notify Subscribers (by telecopier and by e-mail addresses provided by
      Subscribers) and Grushko & Mittman, P.C. (by telecopier and by email to
Counslers@aol.com)
      on or
      before the first business day thereafter that the Company receives notice that
      (i) the Commission has no comments or no further comments on the Registration
      Statement, and (ii) the registration statement has been declared effective
      (failure to timely provide notice as required by this Section 11.2(a) shall
      be a
      material breach of the Company’s obligation and an Event of Default as defined
      in the Notes
      and
      a Non-Registration Event as defined in Section 11.4 of this Agreement);

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (b) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective until such registration
      statement has been effective for a period of two (2) years, and comply with
      the
      provisions of the 1933 Act with respect to the disposition of all of the
      Registrable Securities covered by such registration statement in accordance
      with
      the Sellers’ intended method of disposition set forth in such registration
      statement for such period; 

     

    (c) furnish
      to the Sellers, at the Company’s expense, such number of copies of the
      registration statement and the prospectus included therein (including each
      preliminary prospectus) as such persons reasonably may request in order to
      facilitate the public sale or their disposition of the securities covered by
      such registration statement or make them electronically available; 

     

    (d) use
      its
commercially
      reasonable best efforts to register or qualify the Registrable Securities
      covered by such registration statement under the securities or “blue sky” laws
      of New York and such jurisdictions as the Sellers shall request in writing,
      provided, however, that the Company shall not for any such purpose be required
      to qualify generally to transact business as a foreign corporation in any
      jurisdiction where it is not so qualified or to consent to general service
      of
      process in any such jurisdiction; 

     

    (e) if
      applicable, list the Registrable Securities covered by such registration
      statement with any securities exchange on which the Common Stock of the Company
      is then listed; 

     

    (f) notify
      the Subscribers within twenty-four hours of the Company’s becoming aware that a
      prospectus relating thereto is required to be delivered under the 1933 Act,
      of
      the happening of any event of which the Company has knowledge as a result of
      which the prospectus contained in such 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 not misleading in light of the circumstances then existing or which
      becomes subject to a Commission, state or other governmental order suspending
      the effectiveness of the registration statement covering any of the Registrable
      Securities;

     

    (g) provided
      same would not be in violation of the provision of Regulation FD under the
      1934
      Act, make available for inspection by the Sellers, and any attorney, accountant
      or other agent retained by the Seller or underwriter, all publicly available,
      non-confidential financial and other records, pertinent corporate documents
      and
      properties of the Company, and cause the Company's officers, directors and
      employees to supply all publicly available, non-confidential information
      reasonably requested by the seller, attorney, accountant or agent in connection
      with such registration statement; and 

     

    (h) provide
      to the Sellers copies of the Registration Statement and amendments thereto
      five
      business days prior to the filing thereof with the Commission. 

     

    11.3. Provision
      of Documents.
      In
      connection with each registration described in this Section 11, each Seller
      will
      furnish to the Company in writing such information and representation letters
      reasonably requested by the Company with respect to itself and the proposed
      distribution by it as reasonably shall be necessary in order to assure
      compliance with federal and applicable state securities laws. 

     

    11.4. Non-Registration
      Events.
      The
      Company and the Subscriber agree that the Sellers will suffer damages if the
      Company does not comply with its obligations set forth in Section
      11.1.

     

    11.5. Expenses.
      All
      expenses incurred by the Company in complying with Section 11, including,
      without limitation, all registration and filing fees, printing expenses, fees
      and disbursements of counsel and independent public accountants for the Company,
      fees and expenses (including reasonable counsel fees) incurred in connection
      with complying with state securities or “blue sky” laws, fees of the National
      Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
      and registrars, costs of insurance and fee of one counsel for all Sellers are
      called “Registration
      Expenses.”
All
      underwriting discounts and selling commissions applicable to the sale of
      Registrable Securities, including any fees and disbursements of any additional
      counsel to the Seller, are called "Selling
      Expenses."
      The
      Company will pay all Registration Expenses in connection with the registration
      statement under Section 11. Selling Expenses in connection with each
      registration statement under Section 11 shall be borne by the Seller and may
      be
      apportioned among the Sellers in proportion to the number of shares sold by
      the
      Seller relative to the number of shares sold under such registration statement
      or as all Sellers thereunder may agree.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    11.6. Indemnification
      and Contribution.

     

    (a) In
      the
      event of a registration of any Registrable Securities under the 1933 Act
      pursuant to Section 11, the Company will, to the extent permitted by law,
      indemnify and hold harmless the Seller, each officer of the Seller, each
      director of the Seller, each underwriter of such Registrable Securities
      thereunder and each other person, if any, who controls such Seller or
      underwriter within the meaning of the 1933 Act, against any losses, claims,
      damages or liabilities, joint or several, to which the Seller, or such
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in any registration statement
      under which such Registrable Securities were registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon 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
      in light of the circumstances when made, and will subject to the provisions
      of
      Section 11.6(c) reimburse the Seller, each such underwriter and each such
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action; provided, however, that the Company shall not be liable
      to
      the Seller to the extent that any such damages arise out of or are based upon an
      untrue statement or omission made in any preliminary prospectus if (i) the
      Seller failed to send or deliver a copy of the final prospectus delivered by
      the
      Company to the Seller with or prior to the delivery of written confirmation
      of
      the sale by the Seller to the person asserting the claim from which such damages
      arise, (ii) the final prospectus would have corrected such untrue statement
      or
      alleged untrue statement or such omission or alleged omission, or (iii) to
      the
      extent that any such loss, claim, damage or liability arises out of or is based
      upon an untrue statement or alleged untrue statement or omission or alleged
      omission so made in conformity with information furnished by any such Seller,
      or
      any such controlling person in writing specifically for use in such registration
      statement or prospectus. 

     

    (b) In
      the
      event of a registration of any of the Registrable Securities under the 1933
      Act
      pursuant to Section 11, each Seller severally but not jointly will, to the
      extent permitted by law, indemnify and hold harmless the Company, and each
      person, if any, who controls the Company within the meaning of the 1933 Act,
      each officer of the Company who signs the registration statement, each director
      of the Company, each underwriter and each person who controls any underwriter
      within the meaning of the 1933 Act, against all losses, claims, damages or
      liabilities, joint or several, to which the Company or such officer, director,
      underwriter or controlling person may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in the registration statement
      under which such Registrable Securities were registered under the 1933 Act
      pursuant to Section 11, any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon 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,
      and will reimburse the Company and each such officer, director, underwriter
      and
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action, provided, however, that the Seller will be liable hereunder
      in any such case if and only to the extent that any such loss, claim, damage
      or
      liability arises out of or is based upon an untrue statement or alleged untrue
      statement or omission or alleged omission made in reliance upon and in
      conformity with information pertaining to such Seller, as such, furnished in
      writing to the Company by such Seller specifically for use in such registration
      statement or prospectus, and provided, further, however, that the liability
      of
      the Seller hereunder shall be limited to the net proceeds actually received
      by
      the Seller from the sale of Purchased Shares covered by such registration
      statement.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (c) Promptly
      after receipt by an indemnified party hereunder of notice of the commencement
      of
      any action, such indemnified party shall, if a claim in respect thereof is
      to be
      made against the indemnifying party hereunder, notify the indemnifying party
      in
      writing thereof, but the omission so to notify the indemnifying party shall
      not
      relieve it from any liability which it may have to such indemnified party other
      than under this Section 11.6(c) and shall only relieve it from any liability
      which it may have to such indemnified party under this Section 11.6(c), except
      and only if and to the extent the indemnifying party is prejudiced by such
      omission. In case any such action shall be brought against any indemnified
      party
      and it shall notify the indemnifying party of the commencement thereof, the
      indemnifying party shall be entitled to participate in and, to the extent it
      shall wish, to assume and undertake the defense thereof with counsel reasonably
      satisfactory to such indemnified party, and, after notice from the indemnifying
      party to such indemnified party of its election so to assume and undertake
      the
      defense thereof, the indemnifying party shall not be liable to such indemnified
      party under this Section 11.6(c) for any legal expenses subsequently incurred
      by
      such indemnified party in connection with the defense thereof other than
      reasonable costs of investigation and of liaison with counsel so selected,
      provided, however, that, if the defendants in any such action include both
      the
      indemnified party and the indemnifying party and the indemnified party shall
      have reasonably concluded that there may be reasonable defenses available to
      it
      which are different from or additional to those available to the indemnifying
      party or if the interests of the indemnified party reasonably may be deemed
      to
      conflict with the interests of the indemnifying party, the indemnified parties,
      as a group, shall have the right to select one separate counsel and to assume
      such legal defenses and otherwise to participate in the defense of such action,
      with the reasonable expenses and fees of such separate counsel and other
      expenses related to such participation to be reimbursed by the indemnifying
      party as incurred.

     

    (d) In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the 1933 Act in any case in which either (i) a Seller, or any controlling
      person of a Seller, makes a claim for indemnification pursuant to this Section
      11.6 but it is judicially determined (by the entry of a final judgment or decree
      by a court of competent jurisdiction and the expiration of time to appeal or
      the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 11.6 provides
      for indemnification in such case, or (ii) contribution under the 1933 Act may
      be
      required on the part of the Seller or controlling person of the Seller in
      circumstances for which indemnification is not provided under this Section
      11.6;
      then, and in each such case, the Company and the Seller will contribute to
      the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that the Seller is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the registration statement bears
      to
      the public offering price of all securities offered by such registration
      statement, provided, however, that, in any such case, (y) the Seller will not
      be
      required to contribute any amount in excess of the public offering price of
      all
      such securities sold by it pursuant to such registration statement; and (z)
      no
      person or entity guilty of fraudulent misrepresentation (within the meaning
      of
      Section 11(f) of the 1933 Act) will be entitled to contribution from any person
      or entity who was not guilty of such fraudulent misrepresentation.

     

    11.7. Delivery
      of Unlegended Shares.

     

    (a) Within
      three (3) business days (such third business day being the “Unlegended
      Shares Delivery Date”)
      after
      the business day on which the Company has received (i) a notice that Registrable
      Securities have been sold pursuant to a registration statement or Rule 144
      under
      the 1933 Act, (ii) a representation that the prospectus delivery requirements,
      or the requirements of Rule 144, as applicable and if required, have been
      satisfied, and (iii) the original share certificates representing the shares
      of
      Common Stock that have been sold, and (iv) in the case of sales under Rule
      144,
      customary representation letters of the Subscriber and/or Subscriber’s broker
      regarding compliance with the requirements of Rule 144, the Company, at its
      expense, (y) shall deliver, and shall cause legal counsel selected by the
      Company to deliver to its transfer agent (with copies to Subscriber) an
      appropriate instruction and opinion of such counsel, directing the delivery
      of
      shares of Common Stock without any legends including the legend set forth in
      Section 4
      above,
      reissuable pursuant to any effective and current Registration Statement
      described in Section 11 of this Agreement or pursuant to Rule 144 under the
      1933
      Act (the “Unlegended
      Shares”);
      and
      (z) cause the transmission of the certificates representing the Unlegended
      Shares together with a legended certificate representing the balance of the
      submitted Common Stock certificate, if any, to the Subscriber at the address
      specified in the notice of sale, via express courier, by electronic transfer
      or
      otherwise on or before the Unlegended Shares Delivery Date. 

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (b) In
      lieu
      of delivering physical certificates representing the Unlegended Shares, if
      the
      Company’s transfer agent is participating in the Depository Trust Company
      (“DTC”)
      Fast
      Automated Securities Transfer program, upon request of a Subscriber, so long
      as
      the certificates therefor do not bear a legend and the Subscriber is not
      obligated to return such certificate for the placement of a legend thereon,
      the
      Company must cause its transfer agent to electronically transmit the Unlegended
      Shares by crediting the account of Subscriber’s prime Broker with DTC through
      its Deposit Withdrawal Agent Commission system. Such delivery must be made
      on or
      before the Unlegended Shares Delivery Date.

    

    (c) The
      Company understands that a delay in the delivery of the Unlegended Shares
      pursuant to Section 11 hereof after the Unlegended Shares Delivery Date could
      result in economic loss to Subscriber. As compensation for such loss, the
      Company agrees to pay late payment fees (as liquidated damages and not as a
      penalty) to the Subscriber for late delivery of Unlegended Shares in the amount
      of $100 per business day after the Delivery Date for each $10,000 of sales
      price
      anticipated to have been received by Subscriber in connection with such sale
      of
      the Unlegended Shares subject to the delivery default. If during any 360 day
      period, the Company fails to deliver Unlegended Shares as required by this
      Section 11.7 for an aggregate of thirty (30) days, then each Subscriber or
      assignee holding Registrable Securities subject to such default may, at its
      option, require the Company to redeem all or any portion of such Registrable
      Securities subject to such default at a price per share equal to 120% of the
      sales price anticipated to have been received by Subscriber in connection with
      such sale (“Unlegended
      Redemption Amount”).

     

    (d) In
      addition to any other rights available to a Subscriber, if the Company fails
      to
      deliver to a Subscriber Unlegended Shares as required pursuant to this
      Agreement, within seven (7) business days after the Unlegended Shares Delivery
      Date and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an
      open market transaction or otherwise) shares of common stock to deliver in
      satisfaction of a sale by such Subscriber of the shares of Common Stock which
      the Subscriber was entitled to receive from the Company (a "Buy-In"), then
      the
      Company shall pay in cash to the Subscriber (in addition to any remedies
      available to or elected by the Subscriber) the amount by which (A) the
      Subscriber's total purchase price (including brokerage commissions, if any)
      for
      the shares of Common Stock so purchased exceeds (B) the aggregate purchase
      price
      of the shares of Common Stock delivered to the Company for reissuance as
      Unlegended Shares
      together
      with interest thereon at a rate of 15% per annum, accruing until such amount
      and
      any accrued interest thereon is paid in full (which amount shall be paid as
      liquidated damages and not as a penalty). For example, if a Subscriber purchases
      shares of Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to $10,000 of purchase price of shares of Common Stock
      delivered to the Company for reissuance as Unlegended Shares, the Company shall
      be required to pay the Subscriber $1,000,
      plus interest. The
      Subscriber shall provide the Company written notice indicating the amounts
      payable to the Subscriber in respect of the Buy-In.

    

    (e) In
      the
      event a Subscriber shall request delivery of Unlegended Shares as described
      in
      Section 11.7 and the Company is required to deliver such Unlegended Shares
      pursuant to Section 11.7, the Company may not refuse to deliver Unlegended
      Shares based on any claim that such Subscriber or any one associated or
      affiliated with such Subscriber has been engaged in any violation of law, or
      for
      any other reason, unless, an injunction or temporary restraining order from
      a
      court, on notice, restraining and or enjoining delivery of such Unlegended
      Shares shall have been sought and obtained by the Company or at the Company’s
      request or with the Company’s assistance, and the Company has posted a surety
      bond for the benefit of such Subscriber in the amount of 120% of the amount
      of
      the aggregate market value of the Common Stock which are subject to the
      injunction or temporary restraining order, which bond shall remain in effect
      until the completion of arbitration/litigation of the dispute and the proceeds
      of which shall be payable to such Subscriber to the extent Subscriber obtains
      judgment in Subscriber’s favor. Market Value shall mean the highest Ask price of
      the Common Stock during the three hundred and sixty-five days preceding the
      date
      the injunction or temporary restraining order is requested from a
      court.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    12. Miscellaneous.

     

    (a) Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Company, to: Innofone.com,
      Incorporated, 1431 Ocean Avenue, Suite 1500, Santa Monica, CA 90401, Attn:
      Alex
      Lightman, CEO and President, telecopier: (310) 458-2844, with a copy by
      telecopier only to: Arthur Marcus, Esq., and Peter J. Gennuso, Esq., Gersten
      Savage LLP, 600 Lexington Avenue, New York, NY 10022, telecopier (212) 980-5192,
      and (ii) if to the Subscriber, to: the one or more addresses and telecopier
      numbers indicated on the signature pages hereto, with an additional copy by
      telecopier only to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601,
      New York, New York 10176, telecopier number: (212) 697-3575.

     

    (b) Entire
      Agreement; Assignment.
      This
      Agreement and the Transaction Documents delivered in connection herewith
      represent the entire agreement between the parties hereto with respect to the
      subject matter hereof and may be amended only by a writing executed by both
      parties. Neither the Company nor the Subscribers have relied on any
      representations not contained or referred to in this Agreement and the documents
      delivered herewith. No right or obligation of the Company shall be assigned
      without prior notice to and the written consent of the Subscribers.

     

    (c) 
      Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission.

     

    (d) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to conflicts
      of laws
      principles that would result in the application of the substantive laws of
      another jurisdiction. Any action brought by either party against the other
      concerning the transactions contemplated by this Agreement shall be brought
      only
      in the civil or state courts of New York or in the federal courts located in
      New
      York County. The
      parties and the individuals executing this Agreement and other agreements
      referred to herein or delivered in connection herewith on behalf of the Company
      agree to submit to the jurisdiction of such courts and waive trial by
      jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (e) Specific
      Enforcement, Consent to Jurisdiction.
      To the
      extent permitted by law, the Company and Subscriber 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 one or more preliminary and final 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. Subject to Section 12(d) hereof, each
      of
      the Company, Subscriber and any signator hereto in his personal capacity hereby
      waives, and agrees not to assert in any such suit, action or proceeding, any
      claim that it is not personally subject to the jurisdiction in New York of
      such
      court, that the suit, action or proceeding is brought in an inconvenient forum
      or that the venue of the suit, action or proceeding is improper. Nothing in
      this
      Section shall affect or limit any right to serve process in any other manner
      permitted by law.

     

    (f) Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law. In the event that the rate of interest or dividends required
      to
      be paid or other charges hereunder exceed the maximum permitted by such law,
      any
      payments in excess of such maximum shall be credited against amounts owed by
      the
      Company to the Subscriber and thus refunded to the Company.

     

    

     

    

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT

     

    

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

    

    
      	 	
              INNOFONE.COM,
                INCORPORATED

            
	 	
              a
                Nevada corporation

            
	 	 
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Alex Lightman

            
	 	
              Name:
                Alex Lightman

            
	 	
              Title:
                CEO and President

            
	 	 
	 	
              Dated:
                January 16, 2007

            

    

    

    

    
      	
              SUBSCRIBER

            	
              NOTE
                PRINCIPAL AMOUNT

            	
              PURCHASE
                PRICE

            
	
              LAKEWOOD
                GROUP LLC

              152
                West 57th
                Street, 54th
                Floor

              New
                York, NY 10019

              Fax:
                (732) 364-3555

               

               

               

               

              /s/
                

              (Signature)

              By:
                

            	
              $1,000,000.00

            	
              $800,000.00

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    LIST
      OF EXHIBITS AND SCHEDULES

     

     

    
      	 	
              Exhibit
                A

            	
              Form
                of Note

            

    

     

    
      	 	
              Exhibit
                B

            	
              Escrow
                Agreement

            

    

     

    
      	 	
              Exhibit
                C

            	
              Form
                of Stock Pledge Agreement

            

    

     

    
      	 	
              Exhibit
                D

            	
              Form
                of Guaranty

            

    

     

    
      	 	
              Exhibit
                E

            	
              Form
                of Legal Opinion

            

    

     

    
      	 	
              Exhibit
                F

            	
              Form
                of 8-K or Public Announcement

            

    

     

    
      	 	
              Schedule
                4(a)

            	
              Subsidiaries

            

    

     

    
      	 	
              Schedule
                4(d)

            	
              Additional
                Issuances / Capitalization

            

    

     

    
      	 	
              Schedule
                4(q)

            	
              Undisclosed
                Liabilities

            

    

     

    
      	 	
              Schedule
                4(u)

            	
              Transfer
                Agent

            

    

     

    
      	 	
              Schedule
                9(e)

            	
              Use
                of Proceeds

            

    

     

    
      	 	
              Schedule
                9(n)

            	
              Excepted
                Issuances

            

    

     

    
      	 	
              Schedule
                11.1

            	
              Other
                Registrable Securities

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]