NOTE
      AND WARRANT PURCHASE

    


    AGREEMENT

    


    Dated
      as of June 29, 2007

    


    by
      and among

    


    TECHNOCONCEPTS
      INC.


    and

    


    THE
      PURCHASERS LISTED ON EXHIBIT A


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      TABLE
        OF
        CONTENTS

       

    

    
      	
               

            	
               

            	
               

            	
               

            	
              Page 

            
	
              NOTE
                AND WARRANT PURCHASE AGREEMENT

            	
               

            	
              1

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                I

            	
               

            	
              PURCHASE
                AND SALE OF NOTES AND WARRANTS

            	
               

            	
              1

            
	
              Section
                1.1

            	
               

            	
              Purchase
                and Sale of Notes and Warrants.

            	
               

            	
              1

            
	
              Section
                1.2

            	
               

            	
              Purchase
                Price and Closing

            	
               

            	
              1

            
	
              Section
                1.3

            	
               

            	
              Warrant
                Shares

            	
               

            	
              2

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                II

            	
               

            	
              REPRESENTATIONS
                AND WARRANTIES

            	
               

            	
              2

            
	
              Section
                2.1

            	
               

            	
              Representations
                and Warranties of the Company

            	
               

            	
              2

            
	
              Section
                2.2

            	
               

            	
              Representations
                and Warranties of the Purchasers

            	
               

            	
              13

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                III

            	
               

            	
              COVENANTS

            	
               

            	
              15

            
	
              Section
                3.1

            	
               

            	
              Securities
                Compliance

            	
               

            	
              15

            
	
              Section
                3.2

            	
               

            	
              Registration
                and Listing

            	
               

            	
              15

            
	
              Section
                3.3

            	
               

            	
              Inspection
                Rights

            	
               

            	
              15

            
	
              Section
                3.4

            	
               

            	
              Compliance
                with Laws

            	
               

            	
              16

            
	
              Section
                3.5

            	
               

            	
              Keeping
                of Records and Books of Account

            	
               

            	
              16

            
	
              Section
                3.6

            	
               

            	
              Reporting
                Requirements

            	
               

            	
              16

            
	
              Section
                3.7

            	
               

            	
              Other
                Agreements

            	
               

            	
              16

            
	
              Section
                3.8

            	
               

            	
              Use
                of Proceeds

            	
               

            	
              16

            
	
              Section
                3.9

            	
               

            	
              Reporting
                Status

            	
               

            	
              16

            
	
              Section
                3.10

            	
               

            	
              Disclosure
                of Transaction

            	
               

            	
              17

            
	
              Section
                3.11

            	
               

            	
              Disclosure
                of Material Information

            	
               

            	
              17

            
	
              Section
                3.12

            	
               

            	
              Pledge
                of Securities

            	
               

            	
              17

            
	
              Section
                3.13

            	
               

            	
              Amendments

            	
               

            	
              17

            
	
              Section
                3.14

            	
               

            	
              Distributions

            	
               

            	
              17

            
	
              Section
                3.15

            	
               

            	
              Reservation
                of Shares

            	
               

            	
              17

            
	
              Section
                3.16

            	
               

            	
              Transfer
                Agent Instructions

            	
               

            	
              18

            
	
              Section
                3.17

            	
               

            	
              Disposition
                of Assets

            	
               

            	
              18

            
	
              Section
                3.18

            	
               

            	
              Form
                SB-2 Eligibility

            	
               

            	
              18

            
	
              Section
                3.19

            	
               

            	
              Chief
                Executive Officer Search

            	
               

            	
              18

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                IV

            	
               

            	
              CONDITIONS

            	
               

            	
              19

            
	
              Section
                4.1

            	
               

            	
              Conditions
                Precedent to the Obligation of the Company to Close and to Sell the
                Securities

            	
               

            	
              19

            
	
              Section
                4.2

            	
               

            	
              Conditions
                Precedent to the Obligation of the Purchasers to Close and to Purchase
                the
                Securities

            	
               

            	
              19

            
	
              Section
                4.3

            	
               

            	
              Post-Closing
                Conditions

            	
               

            	
              21

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                V

            	
               

            	
              CERTIFICATE
                LEGEND

            	
               

            	
              22

            
	
              Section
                5.1

            	
               

            	
              Legend

            	
               

            	
              22

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              ARTICLE
                VI

            	
               

            	
              INDEMNIFICATION

            	
               

            	
              23

            
	
              Section
                6.1

            	
               

            	
              Company
                Indemnity

            	
               

            	
              23

            
	
              Section
                6.2

            	
               

            	
              Indemnification
                Procedure

            	
               

            	
              23

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
      OF
      CONTENTS

    (continued)

     

    
      	
               

            	
               

            	
               

            	
               

            	
              Page  

            
	
              ARTICLE
                VII

            	
               

            	
              MISCELLANEOUS

            	
               

            	
              24

            
	
              Section
                7.1

            	
               

            	
              Fees
                and Expenses

            	
               

            	
              24

            
	
              Section
                7.2

            	
               

            	
              Specific
                Performance; Consent to Jurisdiction; Venue.

            	
               

            	
              24

            
	
              Section
                7.3

            	
               

            	
              Entire
                Agreement; Amendment

            	
               

            	
              25

            
	
              Section
                7.4

            	
               

            	
              Notices

            	
               

            	
              25

            
	
              Section
                7.5

            	
               

            	
              Waivers

            	
               

            	
              26

            
	
              Section
                7.6

            	
               

            	
              Headings

            	
               

            	
              26

            
	
              Section
                7.7

            	
               

            	
              Successors
                and Assigns

            	
               

            	
              26

            
	
              Section
                7.8

            	
               

            	
              No
                Third Party Beneficiaries

            	
               

            	
              27

            
	
              Section
                7.9

            	
               

            	
              Governing
                Law

            	
               

            	
              27

            
	
              Section
                7.10

            	
               

            	
              Survival

            	
               

            	
              27

            
	
              Section
                7.11

            	
               

            	
              Counterparts

            	
               

            	
              27

            
	
              Section
                7.12

            	
               

            	
              Publicity

            	
               

            	
              27

            
	
              Section
                7.13

            	
               

            	
              Severability

            	
               

            	
              27

            
	
              Section
                7.14

            	
               

            	
              Further
                Assurances

            	
               

            	
              27

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    NOTE
      AND WARRANT PURCHASE AGREEMENT

    


    This
      NOTE
      AND WARRANT PURCHASE AGREEMENT dated as of June 29, 2007 (this “Agreement”)
      by and
      among TechnoConcepts Inc., a Colorado corporation (the “Company”),
      and
      each of the purchasers of the secured promissory notes of the Company whose
      names are set forth on Exhibit
      A
      attached
      hereto (each a “Purchaser,”
and
      collectively, the “Purchasers”).
      

    


    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF NOTES AND WARRANTS

     

    Section
      1.1  Purchase
      and Sale of Notes and Warrants.

     

    (a)  Upon
      the
      following terms and conditions, the Company shall issue and sell to the
      Purchasers, and the Purchasers shall purchase (in the amounts set forth in
      Exhibit
      A
      hereto)
      from the Company, secured promissory notes in the aggregate principal amount
      of
      up to Three Million Dollars ($3,000,000), in substantially the form attached
      hereto as Exhibit
      B
      (the
“Notes”).
      The
      Company and the Purchasers are executing and delivering this Agreement in
      accordance with and in reliance upon the exemption from securities registration
      afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and
      the
      rules and regulations promulgated thereunder (the “Securities
      Act”),
      including Regulation D (“Regulation
      D”),
      and/or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to any or all of the investments
      to be made hereunder. 

     

    (b)  Upon
      the
      following terms and conditions and for no additional consideration, each of
      the
      Purchasers shall be issued at the Initial Closing Date (as defined below)
      Warrants, in substantially the form attached hereto as Exhibit
      C
      (the
“Warrants”),
      to
      purchase an aggregate of up to 2,000,000 shares of the Company’s common stock,
      no par value (the “Common
      Stock”).
      The
      Warrants shall expire seven (7) years following the Initial Closing Date and
      shall have an exercise price per share equal to the Warrant Price (as defined
      in
      the Warrant). 

     

    Section
      1.2  Purchase
      Price and Closing.
      Subject
      to the terms and conditions hereof, the Company agrees to issue and sell to
      the
      Purchasers and, in consideration of and in express reliance upon the
      representations, warranties, covenants, terms and conditions of this Agreement,
      the Purchasers, severally but not jointly, agree to purchase the Notes and
      Warrants for an aggregate purchase price of up to Three Million Dollars
      ($3,000,000) (the “Purchase
      Price”).
      The
      Notes shall be sold and funded in two separate closings (each a “Closing”).
      The
      initial Closing under this Agreement (the “Initial
      Closing”)
      shall
      be funded in the amount of $2,000,000 and shall take place on the date hereof
      (the “Initial
      Closing Date”).
      The
      second closing under this Agreement (the “Second
      Closing”)
      shall
      be funded in the amount of $1,000,000 and shall take place on or before August
      1, 2007; provided,
      that
      the Company has not closed a financing of its debt or equity securities prior
      to
      such date (the “Second
      Closing Date”).
      The
      Initial Closing Date and the Second Closing Date are sometimes referred to
      in
      this Agreement as the “Closing
      Date”.
      Each
      Closing of the purchase and sale of the Notes to be acquired by the Purchasers
      from the Company under this Agreement shall take place at the offices of Kramer
      Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New
      York 10036 at 10:00 a.m., New York time; provided,
      that
      all of the conditions set forth in Article IV hereof and applicable to such
      Closing shall have been fulfilled or waived in accordance herewith. Subject
      to
      the terms and conditions of this Agreement, at each Closing the Company shall
      deliver or cause to be delivered to each Purchaser (x) its Notes for the
      principal amount set forth opposite the name of such Purchaser on Exhibit
      A
      hereto,
      (y) its Warrants to purchase such number of shares of Common Stock as is set
      forth opposite the name of such Purchaser on Exhibit
      A
      attached
      hereto and (z) any other documents required to be delivered pursuant to Article
      IV hereof. At each Closing, each Purchaser shall deliver its Purchase Price
      by
      wire transfer to an escrow account designated by the escrow agent. 

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    Section
      1.3  Warrant
      Shares.
      The
      Company has authorized and has reserved and covenants to continue to reserve,
      free of preemptive rights and other similar contractual rights of stockholders,
      a sufficient number of its authorized but unissued shares of Common Stock to
      effect the exercise of the Warrants as of the Initial Closing Date. Any shares
      of Common Stock issuable upon exercise of the Warrants (and such shares when
      issued) are herein referred to as the “Warrant
      Shares”.
      The
      Notes, the Warrants and the Warrant Shares are sometimes collectively referred
      to herein as the “Securities”.

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES

     

    Section
      2.1  Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Purchasers, as of the date hereof
      and each Closing Date (except as set forth on the Schedule of Exceptions
      attached hereto with each numbered Schedule corresponding to the section number
      herein), as follows:

     

    (a)  Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Colorado and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. The Company does not have any
      Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in
      any
      other entity except as set forth on Schedule
      2.1(g)
      hereto.
      The Company and each such Subsidiary (as defined in Section 2.1(g)) is duly
      qualified as a foreign corporation to do business and is in good standing in
      every jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary except for any jurisdiction(s)
      (alone or in the aggregate) in which the failure to be so qualified will not
      have a Material Adverse Effect. For the purposes of this Agreement,
“Material
      Adverse Effect”
means
      any material adverse effect on the business, operations, properties, or
      financial condition of the Company and its Subsidiaries and/or any condition,
      circumstance, or situation that would prohibit or otherwise materially interfere
      with the ability of the Company to perform any of its obligations under this
      Agreement in any material respect.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)  
      Authorization; Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, the Note, the Warrants,
the
      Security Agreement by and among the Company and the Purchaser, dated as of
      the
      date hereof, substantially in the form of Exhibit
      D
      attached
      hereto (the “Security
      Agreement”),
      and
      the
      Irrevocable Transfer Agent Instructions (as defined in Section 3.16 hereof)
      (collectively, the “Transaction
      Documents”)
      and to
      issue and sell the Securities in accordance with the terms hereof. The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by it of the transactions contemplated thereby have been
      duly and validly authorized by all necessary corporate action, and, except
      as
      set forth on Schedule
      2.1(b),
      no
      further consent or authorization of the Company, its Board of Directors or
      stockholders is required. When executed and delivered by the Company, each
      of
      the Transaction Documents shall constitute a valid and binding obligation of
      the
      Company enforceable against the Company in accordance with its terms, except
      as
      such enforceability may be limited by applicable bankruptcy, reorganization,
      moratorium, liquidation, conservatorship, receivership or similar laws relating
      to, or affecting generally the enforcement of, creditor’s rights and remedies or
      by other equitable principles of general application.

     

    (c)  Capitalization.
      The
      authorized capital stock of the Company as of the date hereof is set forth
      on
Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Common Stock and any other outstanding
      security of the Company have been duly and validly authorized and validly
      issued, fully paid and nonassessable and were issued in accordance with the
      registration or qualification provisions of the Securities Act, or pursuant
      to
      valid exemptions therefrom. Except as set forth in this Agreement and as set
      forth on Schedule
      2.1(c)
      hereto,
      no shares of Common Stock or any other security of the Company are entitled
      to
      preemptive rights, registration rights, rights of first refusal or similar
      rights and there are no outstanding options, warrants, scrip, rights to
      subscribe to, call or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company. Furthermore, except as set forth in this Agreement and as set forth
      on
Schedule
      2.1(c)
      hereto,
      there are no contracts, commitments, understandings, or arrangements by which
      the Company is or may become bound to issue additional shares of the capital
      stock of the Company or options, securities or rights convertible into shares
      of
      capital stock of the Company. Except for customary transfer restrictions
      contained in agreements entered into by the Company in order to sell restricted
      securities or as provided on Schedule
      2.1(c)
      hereto,
      the Company is not a party to or bound by any agreement or understanding
      granting registration or anti-dilution rights to any person with respect to
      any
      of its equity or debt securities. Except as set forth on Schedule
      2.1(c),
      the
      Company is not a party to, and it has no knowledge of, any agreement or
      understanding restricting the voting or transfer of any shares of the capital
      stock of the Company. Except as disclosed on Schedule
      2.1(c)
      or in
      the Commission Documents, (i) there are no outstanding debt securities, or
      other
      form of material debt of the Company or any of its Subsidiaries, (ii) there
      are
      no contracts, commitments, understandings, agreements or arrangements under
      which the Company or any of its Subsidiaries is required to register the sale
      of
      any of their securities under the Securities Act, (iii) there are no outstanding
      securities of the Company or any of its Subsidiaries which contain any
      redemption or similar provisions, and there are no contracts, commitments,
      understandings, agreements or arrangements by which the Company or any of its
      Subsidiaries is or may become bound to redeem a security of the Company or
      any
      of its Subsidiaries, (iv) there are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      the Securities, (v) the Company does not have any stock appreciation rights
      or
“phantom stock” plans or agreements, or any similar plan or agreement and (vi)
      as of the date of this Agreement, except as disclosed on Schedule
      2.1(c),
      to the
      Company’s and each of its Subsidiaries’ knowledge, no Person (as defined below)
      or group of related Persons beneficially owns (as determined pursuant to Rule
      13d-3 promulgated under the Exchange Act) or has the right to acquire by
      agreement with or by obligation binding upon the Company, beneficial ownership
      of in excess of 5% of the Common Stock. Any
      Person with any right to purchase securities of the Company that would be
      triggered as a result of the transactions contemplated hereby or by any of
      the
      other Transaction Documents has waived such rights or the time for the exercise
      of such rights has passed, except where failure of the Company to receive such
      waiver would not have a Material Adverse Effect. Except as set forth on
Schedule
      2.1(c),
      there
      are no
      options, warrants or other outstanding securities of the Company (including,
      without limitation, any equity securities issued pursuant to any Company stock
      option or incentive plan) the vesting of which will be accelerated by the
      transactions contemplated hereby or by any of the other Transaction Documents.
      Except as set forth in Schedule
      2.1(c),
      none of
      the transactions contemplated by this Agreement or by any of the other
      Transaction Documents shall cause, directly or indirectly, the acceleration
      of
      vesting of any options issued pursuant the Company’s stock option
      plans. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (d)  Issuance
      of Securities.
      The
      Notes and the Warrants to be issued at each Closing have been duly authorized
      by
      all necessary corporate action and, when paid for or issued in accordance with
      the terms hereof, the Notes shall be validly issued and outstanding, free and
      clear of all liens, encumbrances and rights of refusal of any kind. When the
      Warrant Shares are issued and paid for in accordance with the terms of this
      Agreement and as set forth in the Warrants, such shares will be duly authorized
      by all necessary corporate action and validly issued and outstanding, fully
      paid
      and nonassessable, free and clear of all liens, encumbrances and rights of
      refusal of any kind and the holders shall be entitled to all rights accorded
      to
      a holder of Common Stock. 

     

    (e)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the performance by the Company of its obligations under the Notes and the
      consummation by the Company of the transactions contemplated hereby and thereby,
      (including the issuance of the Securities as contemplated hereby) do not and
      will not (i) violate or conflict with any provision of the Company’s Articles of
      Incorporation (the “Articles”)
      or
      Bylaws (the “Bylaws”),
      each
      as amended to date, or any Subsidiary’s comparable charter documents, (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,
      mortgage, deed of trust, indenture, note, bond, license, lease agreement,
      instrument or obligation to which the Company or any of its Subsidiaries is
      a
      party or by which the Company or any of its Subsidiaries’ respective properties
      or assets are bound, or (iii) result in a violation of any federal, state,
      local
      or foreign statute, rule, regulation, order, judgment or decree (including
      federal and state securities laws and regulations) applicable to the Company
      or
      any of its Subsidiaries or by which any property or asset of the Company or
      any
      of its Subsidiaries are bound or affected, except, with respect to clauses
      (ii)
      and (iii) above for such conflicts, defaults, terminations, amendments,
      acceleration, cancellations and violations as would not, individually or in
      the
      aggregate, have a Material Adverse Effect (excluding with respect to federal
      and
      state securities laws)). Neither
      the Company nor any of its Subsidiaries is required under federal, state,
      foreign or local law, rule or regulation 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 the Transaction Documents or issue and sell the Securities in accordance
      with the terms hereof (other than any filings, consents and approvals which
      may
      be required to be made by the Company under applicable state and federal
      securities laws, rules or regulations).

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (f)  Commission
      Documents, Financial Statements.
      The
Common
      Stock of the Company is registered pursuant to Section 15(d) of the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      and
      the Company
      has timely filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the Commission pursuant to the reporting
      requirements of the Exchange Act (all of the foregoing including filings
      incorporated by reference therein being referred to herein as the “Commission
      Documents”).
      At
      the times of their respective filings, the Form 10-QSB for the fiscal quarters
      ended March 31, 2007, December 31, 2006 and June 30, 2006 (collectively, the
      “Form
      10-QSB”)
      and
      the Form 10-KSB for the fiscal year ended September 30, 2006, as amended (the
      “Form
      10-KSB”),
      complied in all material respects with the requirements of the Exchange Act
      and
      the rules and regulations of the Commission promulgated thereunder, and the
      Form
      10-QSB and Form 10-KSB did not contain any untrue statement of a material fact
      or omit to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. As of their respective dates, the financial
      statements of the Company included in the Commission Documents complied as
      to
      form in all material respects with applicable accounting requirements and the
      published rules and regulations of the Commission. Such financial statements
      have been prepared in accordance with generally accepted accounting principles
      (“GAAP”)
      applied on a consistent basis during the periods involved (except (i) as may
      be
      otherwise indicated in such financial statements or the notes thereto or (ii)
      in
      the case of unaudited interim statements, to the extent they may not include
      footnotes or may be condensed or summary statements), and fairly present in
      all
      material respects the financial position of the Company and its Subsidiaries
      as
      of the dates thereof and the results of operations and cash flows for the
      periods then ended (subject, in the case of unaudited statements, to normal
      year-end audit adjustments). 

     

    (g)  Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each Subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership of the outstanding stock or other interests of such Subsidiary. For
      the purposes of this Agreement, “Subsidiary”
shall
      mean any corporation or other entity of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other Subsidiaries. All of the outstanding shares of capital
      stock of each Subsidiary have been duly authorized and validly issued, and
      are
      fully paid and nonassessable. Except as set forth on Schedule
      2.1(g)
      hereto,
      there are no outstanding preemptive, conversion or other rights, options,
      warrants or agreements granted or issued by or binding upon any Subsidiary
      for
      the purchase or acquisition of any shares of capital stock of any Subsidiary
      or
      any other securities convertible into, exchangeable for or evidencing the rights
      to subscribe for any shares of such capital stock. Neither the Company nor
      any
      Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
      or otherwise acquire or retire any shares of the capital stock of any Subsidiary
      or any convertible securities, rights, warrants or options of the type described
      in the preceding sentence except as set forth on Schedule
      2.1(g)
      hereto.
      Neither the Company nor any Subsidiary is party to, nor has any knowledge of,
      any agreement restricting the voting or transfer of any shares of the capital
      stock of any Subsidiary.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (h)  No
      Material Adverse Change.
      Since
      September 30, 2006, the Company has not experienced or suffered any Material
      Adverse Effect, except as disclosed on Schedule
      2.1(h)
      hereto
      and as disclosed in its Commission Documents.

     

    (i)  No
      Undisclosed Liabilities.
      Except
      as disclosed on Schedule
      2.1(i)
      hereto,
      neither the Company nor any of its Subsidiaries has incurred any liabilities,
      obligations, claims or losses (whether liquidated or unliquidated, secured
      or
      unsecured, absolute, accrued, contingent or otherwise) other than those incurred
      in the ordinary course of the Company’s or its Subsidiaries respective
      businesses or which, individually or in the aggregate, are not reasonably likely
      to have a Material Adverse Effect.

     

    (j)  No
      Undisclosed Events or Circumstances.
      Since
      September 30, 2006, except as disclosed on Schedule
      2.1(j)
      hereto,
      no event or circumstance has occurred or exists with respect to the Company
      or
      its Subsidiaries or their respective businesses, properties, prospects,
      operations or financial condition, which, under applicable law, rule or
      regulation, requires public disclosure or announcement by the Company but which
      has not been so publicly announced or disclosed. 

     

    (k)  Indebtedness.
      Schedule
      2.1(k)
      hereto
      sets forth as of the date hereof all outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or Indebtedness for which the
      Company or any Subsidiary has commitments. For the purposes of this Agreement,
      “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed
      in excess of $100,000 (other than trade accounts payable incurred in the
      ordinary course of business); (b) all guaranties, endorsements and other
      contingent obligations in respect of Indebtedness of others, whether or not
      the
      same are or should be reflected in the Company’s balance sheet (or the notes
      thereto), except guaranties by endorsement of negotiable instruments for deposit
      or collection or similar transactions in the ordinary course of business; and
      (c) the present value of any lease payments in excess of $25,000 due under
      leases required to be capitalized in accordance with GAAP. Neither the Company
      nor any Subsidiary is in default with respect to any Indebtedness.

     

    (l)  Title
      to Assets.
      Each of
      the Company and the Subsidiaries has good and valid title to all of its real
      and
      personal property reflected in the Commission Documents, free and clear of
      any
      mortgages, pledges, charges, liens, security interests or other encumbrances,
      except for those indicated on Schedule
      2.1(l)
      hereto
      or such that, individually or in the aggregate, do not cause a Material Adverse
      Effect. Any leases of the Company and each of its Subsidiaries are valid and
      subsisting and, to the Company’s knowledge, in full force and
      effect.

     

    (m)  Actions
      Pending.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or other proceeding pending or, to the knowledge of the
      Company, threatened against the Company or any Subsidiary which questions the
      validity of this Agreement or any of the other Transaction Documents or any
      of
      the transactions contemplated hereby or thereby or any action taken or to be
      taken pursuant hereto or thereto. Except as set forth in the Commission
      Documents or on Schedule
      2.1(m)
      hereto,
      there is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or other proceeding pending or, to the knowledge of the
      Company, threatened against or involving the Company, any Subsidiary or any
      of
      their respective properties or assets, which individually or in the aggregate,
      would reasonably be expected, if adversely determined, to have a Material
      Adverse Effect. There are no outstanding orders, judgments, injunctions, awards
      or decrees of any court, arbitrator or governmental or regulatory body against
      the Company or any Subsidiary or any officers or directors of the Company or
      Subsidiary in their capacities as such, which individually or in the aggregate,
      could reasonably be expected to have a Material Adverse Effect. 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (n)  Compliance
      with Law.
      The
      business of the Company and the Subsidiaries has been and is presently being
      conducted in accordance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances, except as set forth in
      the
      Commission Documents or on Schedule
      2.1(n)
      hereto
      or such that, individually or in the aggregate, the noncompliance therewith
      could not reasonably be expected to have a Material Adverse Effect. The Company
      and each of its Subsidiaries have all franchises, permits, licenses, consents
      and other governmental or regulatory authorizations and approvals necessary
      for
      the conduct of its business as now being conducted by it unless the failure
      to
      possess such franchises, permits, licenses, consents and other governmental
      or
      regulatory authorizations and approvals, individually or in the aggregate,
      could
      not reasonably be expected to have a Material Adverse Effect.

     

    (o)  Taxes.
      The
      Company and each of the Subsidiaries has accurately prepared and filed all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the Subsidiaries for all current
      taxes and other charges to which the Company or any Subsidiary is subject and
      which are not currently due and payable. Except as disclosed on Schedule
      2.1(o)
      hereto
      or in the Commission Documents, none of the federal income tax returns of the
      Company or any Subsidiary have been audited by the Internal Revenue Service.
      The
      Company has no knowledge of any additional assessments, adjustments or
      contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any Subsidiary for any
      period, nor of any basis for any such assessment, adjustment or
      contingency.

     

    (p)  Certain
      Fees.
      Except
      as set forth on Schedule
      2.1(p)
      hereto,
      the Company has not employed any broker or finder or incurred any liability
      for
      any brokerage or investment banking fees, commissions, finders’ structuring
      fees, financial advisory fees or other similar fees in connection with the
      Transaction Documents.

     

    (q)  Disclosure.
      Except
      for the transactions contemplated by this Agreement, the Company confirms that
      neither it nor any other person acting on its behalf has provided any of the
      Purchasers or their agents or counsel with any information that constitutes
      or
      might constitute material, nonpublic information. To the Company’s knowledge,
      neither the representations and warranties contained in Section
      2.1
      of this
      Agreement or the Schedules hereto nor any other documents, certificates or
      instruments furnished to the Purchasers by or on behalf of the Company or any
      Subsidiary in connection with the transactions contemplated by this Agreement
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, in the light
      of the circumstances under which they were made herein or therein, not
      misleading.

     

    
      
         

      

      
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    (r)  Operation
      of Business.
      Except
      as set forth on Schedule
      2.1(r)
      hereto,
      the Company and each of the Subsidiaries owns or possesses the rights to all
      patents, trademarks, domain names (whether or not registered) and any patentable
      improvements or copyrightable derivative works thereof, websites and
      intellectual property rights relating thereto, service marks, trade names,
      copyrights, licenses and authorizations which are necessary for the conduct
      of
      its business as now conducted without any conflict with the rights of
      others.

     

    (s)  Environmental
      Compliance.
      Except
      as set forth on Schedule
      2.1(s)
      hereto
      or in the Commission Documents, the Company and each of its Subsidiaries have
      obtained all material approvals, authorization, certificates, consents,
      licenses, orders and permits or other similar authorizations of all governmental
      authorities, or from any other person, that are required under any Environmental
      Laws. “Environmental Laws” shall mean all applicable laws relating to the
      protection of the environment including, without limitation, all requirements
      pertaining to reporting, licensing, permitting, controlling, investigating
      or
      remediating emissions, discharges, releases or threatened releases of hazardous
      substances, chemical substances, pollutants, contaminants or toxic substances,
      materials or wastes, whether solid, liquid or gaseous in nature, into the air,
      surface water, groundwater or land, or relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling of
      hazardous substances, chemical substances, pollutants, contaminants or toxic
      substances, material or wastes, whether solid, liquid or gaseous in nature.
      To
      the Company’s knowledge, the Company has all necessary governmental approvals
      required under all Environmental Laws as necessary for the Company’s business or
      the business of any of its subsidiaries. Except for such instances as would
      not
      individually or in the aggregate have a Material Adverse Effect and to the
      knowledge of the Company, there are no past or present events, conditions,
      circumstances, incidents, actions or omissions relating to or in any way
      affecting the Company or its Subsidiaries that violate or may violate any
      Environmental Law after the Closing Date or that may give rise to any
      environmental liability, or otherwise form the basis of any claim, action,
      demand, suit, proceeding, hearing, study or investigation (i) under any
      Environmental Law, or (ii) based on or related to the manufacture, processing,
      distribution, use, treatment, storage (including without limitation underground
      storage tanks), disposal, transport or handling, or the emission, discharge,
      release or threatened release of any hazardous substance. 

     

    (t)  Books
      and Records; Internal Accounting Controls.
      The
      records and documents of the Company and its Subsidiaries accurately reflect
      in
      all material respects the information relating to the business of the Company
      and the Subsidiaries, the location of their assets, and the nature of all
      transactions giving rise to the obligations or accounts receivable of the
      Company or any Subsidiary. Except as set forth on Schedule
      2.1(t)
      hereto,
      the Company and each of its Subsidiaries maintain a system of internal
      accounting controls sufficient, in the judgment of the Company’s board of
      directors, to provide reasonable assurance that (i) transactions are executed
      in
      accordance with management’s general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate actions are taken with respect to any
      differences.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (u)  Material
      Agreements.
      Except
      for the Transaction Documents (with respect to clause (i) below only), as
      disclosed in the Commission Documents, or as would not be reasonably likely
      to
      have a Material Adverse Effect, (i) the Company and each of its Subsidiaries
      have performed all obligations required to be performed by them to date under
      any written or oral contract, instrument, agreement, commitment, obligation,
      plan or arrangement, filed or required to be filed with the Commission (the
      “Material
      Agreements”),
      (ii)
      neither the Company nor any of its Subsidiaries has received any notice of
      default under any Material Agreement and, (iii) to the Company’s knowledge,
      neither the Company nor any of its Subsidiaries is in default under any Material
      Agreement now in effect. 

     

    (v)  Transactions
      with Affiliates.
      Except
      as set forth in the Commission Documents, there are no loans, leases,
      agreements, contracts, royalty agreements, management contracts or arrangements
      or other continuing transactions between (a) the Company, any Subsidiary or
      any
      of their respective customers or suppliers on the one hand, and (b) on the
      other
      hand, any officer, employee, consultant or director of the Company, or any
      of
      its Subsidiaries, or any person owning at least 5% of the outstanding capital
      stock of the Company or any Subsidiary or any member of the immediate family
      of
      such officer, employee, consultant, director or stockholder or any corporation
      or other entity controlled by such officer, employee, consultant, director
      or
      stockholder, or a member of the immediate family of such officer, employee,
      consultant, director or stockholder which, in each case, is required to be
      disclosed in the Commission Documents or in the Company’s most recently filed
      definitive proxy statement on Schedule 14A, that is not so disclosed in the
      Commission Documents or in such proxy statement.

     

    (w)  Securities
      Act of 1933.
      Based
      in material part upon the representations herein of the Purchasers, the Company
      has complied and will comply with all applicable federal and state securities
      laws in connection with the offer, issuance and sale of the Securities
      hereunder. Neither the Company nor anyone acting on its behalf, directly or
      indirectly, has or will sell, offer to sell or solicit offers to buy any of
      the
      Securities or similar securities to, or solicit offers with respect thereto
      from, or enter into any negotiations relating thereto with, any person, or
      has
      taken or will take any action so as to bring the issuance and sale of any of
      the
      Securities under the registration provisions of the Securities Act and
      applicable state securities laws. Neither the Company nor any of its affiliates,
      nor 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 Securities Act) in connection with the offer or sale of any of the
      Securities.

     

    (x)  Employees.
      Neither
      the Company nor any Subsidiary has any collective bargaining arrangements or
      agreements covering any of its employees, except as set forth on Schedule
      2.1(x)
      hereto.
      Except as set forth on Schedule
      2.1(x)
      hereto,
      neither the Company nor any Subsidiary has any employment contract, agreement
      regarding proprietary information, non-competition agreement, non-solicitation
      agreement, confidentiality agreement, or any other similar contract or
      restrictive covenant, relating to the right of any officer, employee or
      consultant to be employed or engaged by the Company or such Subsidiary required
      to be disclosed in the Commission Documents that is not so disclosed. No
      officer, consultant or key employee of the Company or any Subsidiary whose
      termination, either individually or in the aggregate, would be reasonably likely
      to have a Material Adverse Effect, has terminated or, to the knowledge of the
      Company, has any present intention of terminating his or her employment or
      engagement with the Company or any Subsidiary.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (y)  Absence
      of Certain Developments.
      Except
      as set forth in the Commission Documents or provided on Schedule
      2.1(y)
      hereto,
      since September 30, 2006, neither the Company nor any Subsidiary
      has:

     

    (i)  issued
      any stock, bonds or other corporate securities or any right, options or warrants
      with respect thereto;

     

    (ii)  borrowed
      any amount in excess of $100,000 or incurred or become subject to any other
      liabilities in excess of $100,000 (absolute or contingent) except current
      liabilities incurred in the ordinary course of business which are comparable
      in
      nature and amount to the current liabilities incurred in the ordinary course
      of
      business during the comparable portion of its prior fiscal year, as adjusted
      to
      reflect the current nature and volume of the business of the Company and its
      Subsidiaries;

     

    (iii)  discharged
      or satisfied any lien or encumbrance in excess of $100,000 or paid any
      obligation or liability (absolute or contingent) in excess of $100,000, other
      than current liabilities paid in the ordinary course of business;

     

    (iv)  declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock, in each case in excess
      of $50,000 individually or $100,000 in the aggregate;

     

    (v)  sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, in each case in excess of $100,000, except in the ordinary course of
      business;

     

    (vi)  sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights in
      excess of $100,000, or disclosed any proprietary confidential information to
      any
      person except to customers in the ordinary course of business or to the
      Purchasers or their representatives;

     

    (vii)  suffered
      any material losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii)  made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    (ix)  made
      capital expenditures or commitments therefor that aggregate in excess of
      $100,000;

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (x)  entered
      into any material transaction, whether or not in the ordinary course of business
      which has not been disclosed in the Commission Documents;

     

    (xi)  made
      charitable contributions or pledges in excess of $10,000;

     

    (xii)  suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xiii)  experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment; or 

     

    (xiv)  entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    (z)  Investment
      Company Act Status.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (aa)  ERISA.
      No
      liability to the Pension Benefit Guaranty Corporation has been incurred with
      respect to any Plan (as defined below) by the Company or any of its Subsidiaries
      which is or would be materially adverse to the Company and its Subsidiaries.
      The
      execution and delivery of this Agreement and the issuance and sale of the
      Securities will not involve any transaction which is subject to the prohibitions
      of Section 406 of the Employee Retirement Income Security Act of 1974, as
      amended (“ERISA”) or in connection with which a tax could be imposed pursuant to
      Section 4975 of the Internal Revenue Code of 1986, as amended, provided that,
      if
      any of the Purchasers, or any person or entity that owns a beneficial interest
      in any of the Purchasers, is an “employee pension benefit plan” (within the
      meaning of Section 3(2) of ERISA) with respect to which the Company is a “party
      in interest” (within the meaning of Section 3(14) of ERISA), the requirements of
      Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
      this
      Section 2.1(aa), the term “Plan” shall mean an “employee pension benefit plan”
(as defined in Section 3 of ERISA) which is or has been established or
      maintained, or to which contributions are or have been made, by the Company
      or
      any Subsidiary or by any trade or business, whether or not incorporated, which,
      together with the Company or any Subsidiary, is under common control, as
      described in Section 414(b) or (c) of the Code.

     

    (bb)  Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that it has been advised the decision of
      each Purchaser to purchase securities pursuant to this Agreement has been made
      by such Purchaser independently of any other purchase and independently of
      any
      information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company or of its Subsidiaries
      which may have made or given by any other Purchaser or by any agent or employee
      of any other Purchaser, and no Purchaser or any of its agents or employees
      shall
      have any liability to any Purchaser (or any other person) relating to or arising
      from any such information, materials, statements or opinions. The Company
      acknowledges that nothing contained herein, or in any Transaction Document,
      and
      no action taken by any Purchaser pursuant hereto or thereto, shall be deemed
      to
      constitute the Purchasers as a partnership, an association, a joint venture
      or
      any other kind of entity, or create a presumption that the Purchasers are in
      any
      way acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Documents. The Company acknowledges
      that each Purchaser shall be entitled to independently protect and enforce
      its
      rights, including without limitation, the rights arising out of this Agreement
      or out of the other Transaction Documents, and it shall not be necessary for
      any
      other Purchaser to be joined as an additional party in any proceeding for such
      purpose. The Company acknowledges that for reasons of administrative convenience
      only, the Transaction Documents have been prepared by counsel for one of the
      Purchasers and such counsel does not represent all of the Purchasers but only
      such Purchaser and the other Purchasers have retained their own individual
      counsel with respect to the transactions contemplated hereby.  The Company
      acknowledges that it has elected to provide all Purchasers with the same terms
      and Transaction Documents for the convenience of the Company and not because
      it
      was required or requested to do so by the Purchasers. 

     

    
      
         

      

      
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    (cc)  No
      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 offering of the Securities pursuant to this Agreement to be integrated
      with
      prior offerings by the Company for purposes of the Securities Act in a manner
      that would prevent the Company from selling the Securities pursuant to
      Regulation D and Rule 506 thereof under the Securities Act, nor will the Company
      or any of its affiliates or subsidiaries take any action or steps that would
      cause the offering of the Securities to be integrated with other
      offerings.
      The
      Company does not have any registration statement pending before the Commission
      or currently under the Commission’s review. Except as set forth on Schedule
      2.1(cc)
      hereto,
      since December 1, 2006, the Company has not offered or sold any of its equity
      securities or debt securities convertible into shares of Common
      Stock.

     

    (dd)  Sarbanes-Oxley
      Act.
      The
      Company is in compliance with the applicable provisions of the Sarbanes-Oxley
      Act of 2002 (the “Sarbanes-Oxley
      Act”),
      and
      the rules and regulations promulgated thereunder, that are effective and
      presently applicable to the Company, and intends to comply with (and at such
      time required by) other applicable provisions of the Sarbanes-Oxley Act, and
      the
      rules and regulations promulgated thereunder, upon the effectiveness and
      applicability of such provisions with respect to the Company.

     

    (ee)  Dilutive
      Effect.
      The
      Company understands and acknowledges that its obligation to issue the Warrant
      Shares upon the exercise of the Warrants in accordance with the Warrants, is
      absolute and unconditional regardless of the dilutive effect that such issuance
      may have on the ownership interest of other stockholders of the
      Company.

     

    (ff)  DTC
      Status.
      The
      Company’s current 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’s transfer agent is set forth on
Schedule
      2.1(ff)
      hereto.

     

    
      
         

      

      
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    Section
      2.2  Representations
      and Warranties of the Purchasers.
      Each of
      the Purchasers hereby represents and warrants to the Company with respect solely
      to itself and not with respect to any other Purchaser as follows as of the
      date
      hereof and as of each Closing Date:

     

    (a)  Organization
      and Standing of the Purchasers.
      If the
      Purchaser is an entity, such Purchaser is a corporation, limited liability
      company or partnership duly incorporated or organized, validly existing and
      in
      good standing under the laws of the jurisdiction of its incorporation or
      organization.

     

    (b)  Authorization
      and Power.
      Each
      Purchaser has the requisite power and authority to enter into and perform its
      obligations under the Transaction Documents and to purchase the Securities
      being
      sold to it hereunder. The execution, delivery and performance of the Transaction
      Documents by each Purchaser and the consummation by it of the transactions
      contemplated hereby have been duly authorized by all necessary corporate or
      partnership action, and no further consent or authorization of such Purchaser
      or
      its Board of Directors, stockholders, or partners, as the case may be, is
      required. When executed and delivered by the Purchasers, the other Transaction
      Documents shall constitute valid and binding obligations of each Purchaser
      enforceable against such Purchaser in accordance with their terms, except as
      such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor’s
      rights and remedies or by other equitable principles of general
      application.

     

    (c)  No
      Conflict.
      The
      execution, delivery and performance of the Transaction Documents by the
      Purchaser and the consummation by the Purchaser of the transactions contemplated
      thereby and hereby do not and will not (i) violate any provision of the
      Purchaser’s charter or organizational documents, (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, mortgage, deed of
      trust, indenture, note, bond, license, lease agreement, instrument or obligation
      to which the Purchaser is a party or by which the Purchaser’s respective
      properties or assets are bound, or (iii) result in a violation of any
      federal, state, local or foreign statute, rule, regulation, order, judgment
      or
      decree (including federal and state securities laws and regulations) applicable
      to the Purchaser or by which any property or asset of the Purchaser are bound
      or
      affected, except, in all cases, other than violations pursuant to clauses (i)
      or
      (iii) (with respect to federal and state securities laws) above, except, for
      such conflicts, defaults, terminations, amendments, acceleration, cancellations
      and violations as would not, individually or in the aggregate, materially and
      adversely affect the Purchaser’s ability to perform its obligations under the
      Transaction Documents. 

     

    (d)  Acquisition
      for Investment.
      Each
      Purchaser is purchasing the Securities solely for its own account and not with
      a
      view to, or for sale in connection with, public sale or distribution thereof.
      Each Purchaser does not have a present intention to sell any of the Securities,
      nor a present arrangement (whether or not legally binding) or intention to
      effect any distribution of any of the Securities to or through any person or
      entity; provided,
      however,
      that by
      making the representations herein, such Purchaser does not agree to hold the
      Securities for any minimum or other specific term and reserves the right to
      dispose of the Securities at any time in accordance with Federal and state
      securities laws applicable to such disposition. Each Purchaser acknowledges
      that
      it (i) has such knowledge and experience in financial and business matters
      such
      that Purchaser is capable of evaluating the merits and risks of Purchaser’s
      investment in the Company, (ii) is able to bear the financial risks associated
      with an investment in the Securities and (iii) has been given full access to
      such records of the Company and the Subsidiaries and to the officers of the
      Company and the Subsidiaries as it has deemed necessary or appropriate to
      conduct its due diligence investigation.

     

    
      
         

      

      
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    (e)  Rule
      144.
      Each
      Purchaser understands that the Securities must be held indefinitely unless
      such
      Securities are registered under the Securities Act or an exemption from
      registration is available. Each Purchaser acknowledges that such person is
      familiar with Rule 144 of the rules and regulations of the Commission, as
      amended, promulgated pursuant to the Securities Act (“Rule
      144”),
      and
      that such Purchaser has been advised that Rule 144 permits resales only under
      certain circumstances. Each Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell any Securities
      without either registration under the Securities Act or the existence of another
      exemption from such registration requirement.

     

    (f)  General.
      Each
      Purchaser understands that the Securities are being offered and sold in reliance
      on a transactional exemption from the registration requirements of federal
      and
      state securities laws and the Company is relying upon the truth and accuracy
      of
      the representations, warranties, agreements, acknowledgments and understandings
      of such Purchaser set forth herein in order to determine the applicability
      of
      such exemptions and the suitability of such Purchaser to acquire the Securities.
      Each Purchaser understands that no United States federal or state agency or
      any
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Securities. 

     

    (g)  No
      General Solicitation.
      Each
      Purchaser acknowledges that the Securities were not offered to such Purchaser
      by
      means of any form of general or public solicitation or general advertising,
      or
      publicly disseminated advertisements or sales literature, including (i) any
      advertisement, article, notice or other communication published in any
      newspaper, magazine, Internet website or similar media, or broadcast over
      television or radio, or transmitted by electronic mail over the Internet, (ii)
      any seminar or meeting to which such Purchaser was invited by any of the
      foregoing means of communications. Each Purchaser, in making the decision to
      purchase the Securities, has relied upon independent investigation made by
      it
      and has not relied on any information or representations made by third
      parties.

     

    (h)  Accredited
      Investor.
      Each
      Purchaser is an “accredited investor” (as defined in Rule 501 of Regulation
      D), and such Purchaser has such experience in business and financial matters
      that it is capable of evaluating the merits and risks of an investment in the
      Securities. Such Purchaser is not required to be registered as a broker-dealer
      under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer.
      Each Purchaser acknowledges that an investment in the Securities is speculative
      and involves a high degree of risk. 

     

    
      
         

      

      
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    (i)  Certain
      Fees.
      The
      Purchasers have not employed any broker or finder or incurred any liability
      for
      any brokerage or investment banking fees, commissions, finders’ structuring
      fees, financial advisory fees or other similar fees in connection with the
      Transaction Documents.

     

    (j)  Independent
      Investment.
      Except
      as may be disclosed in any filings made by a Purchaser with the Commission,
      no
      Purchaser has agreed to act with any other Purchaser for the purpose of
      acquiring, holding, voting or disposing of the Securities purchased hereunder
      for purposes of Section 13(d) under the Exchange Act, and each Purchaser is
      acting independently with respect to its investment in the Securities.


     

    ARTICLE
      III

     

    COVENANTS

     

    The
      Company covenants with each Purchaser as follows, which covenants are for the
      benefit of each Purchaser and their respective permitted assignees.

     

    Section
      3.1  Securities
      Compliance.
      The
      Company shall notify the Commission in accordance with its rules and
      regulations, of the transactions contemplated by any of the Transaction
      Documents 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 Securities to the Purchasers, or their respective
      subsequent holders.

     

    Section
      3.2  Registration
      and Listing.
      The
      Company shall cause its Common Stock to continue to be registered under Sections
      15(d) of the Exchange Act, to comply in all respects with its reporting and
      filing obligations under the Exchange Act, to comply with all requirements
      related to any registration statement filed pursuant to this Agreement, and
      to
      not take any action or file any document (whether or not permitted by the
      Securities Act or the rules promulgated thereunder) to terminate or suspend
      such
      registration or to terminate or suspend its reporting and filing obligations
      under the Exchange Act or Securities Act, except as permitted herein. The
      Company will take all action necessary to continue the listing or trading of
      its
      Common Stock on the OTC Bulletin Board or other exchange or market on which
      the
      Common Stock is trading. Subject to the terms of the Transaction Documents,
      the
      Company further covenants that it will take such further action as the
      Purchasers may reasonably request, all to the extent required from time to
      time
      to enable the Purchasers to sell the Securities without registration under
      the
      Securities Act within the limitation of the exemptions provided by Rule 144
      promulgated under the Securities Act. Upon the request of the Purchasers, the
      Company shall deliver to the Purchasers a written certification of a duly
      authorized officer as to whether it has complied with the issuer requirements
      of
      Rule 144.

     

    Section
      3.3  Inspection
      Rights.
      Provided the same would not be in violation of Regulation FD, the Company shall
      permit, during normal business hours and upon reasonable request and reasonable
      advance notice, each Purchaser or any employees, agents or representatives
      thereof, so long as such Purchaser shall hold the Notes or shall beneficially
      own any Warrant Shares, for purposes reasonably related to such Purchaser’s
      interests as a stockholder, to examine the publicly available, non-confidential
      records and books of account of, and visit and inspect the properties, assets,
      operations and business of the Company and any Subsidiary, and to discuss the
      publicly available, non-confidential affairs, finances and accounts of the
      Company and any Subsidiary with any of its officers, consultants, directors
      and
      key employees.

     

    
      
         

      

      
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    Section
      3.4  Compliance
      with Laws.
      The
      Company shall comply, and cause each Subsidiary to comply, with all applicable
      laws, rules, regulations and orders, noncompliance with which would be
      reasonably likely to have a Material Adverse Effect.

     

    Section
      3.5  Keeping
      of Records and Books of Account.
      The
      Company shall keep and cause each Subsidiary to keep adequate records and books
      of account, in which complete entries will be made in accordance with GAAP
      consistently applied, reflecting all financial transactions of the Company
      and
      its Subsidiaries, and in which, for each fiscal year, all proper reserves for
      depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
      purposes in connection with its business shall be made.

     

    Section
      3.6  Reporting
      Requirements.
      If the
      Commission ceases making the Company’s periodic reports available via the
      Internet without charge, then the Company shall furnish the following to each
      Purchaser so long as such Purchaser shall be obligated hereunder to purchase
      the
      Securities or shall beneficially own Securities:

     

    (a)  Quarterly
      Reports filed with the Commission on Form 10-QSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission;

     

    (b)  Annual
      Reports filed with the Commission on Form 10-KSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission; and

     

    (c)  Copies
      of
      all notices, information and proxy statements in connection with any meetings
      that are, in each case, provided to holders of shares of Common Stock,
      contemporaneously with the delivery of such notices or information to such
      holders of Common Stock.

     

    Section
      3.7  Other
      Agreements.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company or
      any
      Subsidiary under any Transaction Document.

     

    Section
      3.8  Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Securities hereunder shall be used by the Company
      for working capital and general corporate purposes and not to redeem any Common
      Stock or securities convertible, exercisable or exchangeable into Common Stock
      or to settle any outstanding litigation.

     

    Section
      3.9  Reporting
      Status. So
      long
      as a Purchaser beneficially owns any of the Securities, the Company shall timely
      file all reports required to be filed with the Commission pursuant to the
      Exchange Act, and the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would permit such termination.

     

    
      
         

      

      
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    Section
      3.10  Disclosure
      of Transaction.
      The
      Company shall issue a press release describing the material terms of the
      transactions contemplated hereby (the “Press
      Release”)
      on the
      day of each Closing but in no event later than one hour after the opening of
      the
      market on the business day next succeeding such Closing; provided,
      however,
      that if
      such Closing occurs after 4:00 P.M. Eastern Time on any Trading Day, the Company
      shall issue the Press Release no later than 9:00 A.M. Eastern Time on the first
      Trading Day following such Closing Date. The Company shall also file with the
      Commission a Current Report on Form 8-K (the “Form
      8-K”)
      describing the material terms of the transactions contemplated hereby (and
      attaching as exhibits thereto this Agreement, the form of Note, the Security
      Agreement, the form of Warrant and the Press Release) as soon as practicable
      following each Closing Date but in no event more than two (2) Trading Days
      following such Closing Date, which Press Release and Form 8-K shall be subject
      to prior review and reasonable comment by the Purchasers. “Trading
      Day”
means
      any day during which the principal exchange on which the Common Stock is traded
      shall be open for trading. 

     

    Section
      3.11  Disclosure
      of Material Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf has provided or will provide any Purchaser or its agents or counsel
      with
      any information that the Company believes constitutes material non-public
      information, unless prior thereto such Purchaser shall have executed a written
      agreement regarding the confidentiality and use of such information.  The
      Company understands and confirms that each Purchaser shall be relying on the
      foregoing representations in effecting transactions in securities of the
      Company.

     

    Section
      3.12  Pledge
      of Securities.
      The
      Company acknowledges that the Securities may be pledged by a Purchaser in
      connection with a bona fide
      margin
      agreement or other loan or financing arrangement that is secured by the
      Securities. The pledge of Securities shall not be deemed to be a transfer,
      sale
      or assignment of the Securities hereunder, and no Purchaser effecting a pledge
      of the Securities shall be required to provide the Company with any notice
      thereof or otherwise make any delivery to the Company pursuant to this Agreement
      or any other Transaction Document; provided,
      that a
      Purchaser and its pledgee shall be required to comply with the provisions of
      Article V hereof in order to effect a sale, transfer or assignment of Securities
      to such pledgee. At the Purchasers’ expense, the Company hereby agrees to
      execute and deliver such documentation as a pledgee of the Securities may
      reasonably request in connection with a pledge of the Securities to such pledgee
      by a Purchaser.

     

    Section
      3.13  Amendments.
      The
      Company shall not amend or waive any provision of the Articles or Bylaws of
      the
      Company in any way that would adversely affect exercise rights, voting rights,
      conversion rights, prepayment rights or redemption rights of the holder of
      the
      Notes.

     

    Section
      3.14  Distributions.
      So long
      as any Notes or Warrants remain outstanding, the Company agrees that it shall
      not (i) declare or pay any dividends or make any distributions to any holder(s)
      of Common Stock or (ii) purchase or otherwise acquire for value, directly or
      indirectly, any Common Stock or other equity security of the
      Company.

     

    Section
      3.15  Reservation
      of Shares.
      So long
      as any of the Warrants remain outstanding, the Company shall take all action
      necessary to at all times have authorized and reserved for the purpose of
      issuance of a sufficient number of shares of Common Stock needed to provide
      for
      the issuance of the Warrant Shares.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    Section
      3.16  Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Warrant Shares in such amounts
      as specified from time to time by each Purchaser to the Company upon conversion
      of the Notes or exercise of the Warrants in the form of Exhibit
      E
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Warrant Shares under the Securities Act, all such
      certificates shall bear the restrictive legend specified in Section 5.1 of
      this
      Agreement. The Company warrants that no instruction other than the Irrevocable
      Transfer Agent Instructions referred to in this Section 3.16 will be given
      by
      the Company to its transfer agent and that the Warrant Shares shall otherwise
      be
      freely transferable on the books and records of the Company as and to the extent
      provided in this Agreement. If a Purchaser provides the Company with an opinion
      of counsel, in a generally acceptable form, to the effect that a public sale,
      assignment or transfer of the Warrant Shares may be made without registration
      under the Securities Act or the Purchaser provides the Company with reasonable
      assurances that the Warrant Shares can be sold pursuant to Rule 144 without
      any
      restriction as to the number of securities acquired as of a particular date
      that
      can then be immediately sold, the Company shall permit the transfer, and, in
      the
      case of the Warrant Shares, promptly instruct its transfer agent to issue one
      or
      more certificates in such name and in such denominations as specified by such
      Purchaser and without any restrictive legend. The Company acknowledges that
      a
      breach by it of its obligations under this Section 3.16 will cause irreparable
      harm to the Purchasers by vitiating the intent and purpose of the transaction
      contemplated hereby. Accordingly, the Company acknowledges that the remedy
      at
      law for a breach of its obligations under this Section 3.16 will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Section 3.16, that the Purchasers shall be
      entitled, in addition to all other available remedies, to an order and/or
      injunction restraining any breach and requiring immediate issuance and transfer,
      without the necessity of showing economic loss and without any bond or other
      security being required. 

     

    Section
      3.17  Disposition
      of Assets.
      So long
      as the Notes remain outstanding, neither the Company nor any Subsidiary shall
      sell, transfer or otherwise dispose of any of its properties, assets and rights
      including, without limitation, its software and intellectual property, to any
      person except (i) for sales of obsolete assets and sales to customers in the
      ordinary course of business and (ii) with the prior written consent of the
      holders of a majority of the principal amount of the Notes then
      outstanding.

     

    Section
      3.18  Form
      SB-2 Eligibility.
      The
      Company currently meets the “registrant eligibility” and transaction
      requirements set forth in the general instructions to Form SB-2 applicable
      to
“resale” registrations on Form SB-2 and the Company shall file all reports
      required to be filed by the Company with the Commission in a timely
      manner.

     

    Section
      3.19  Chief
      Executive Officer Search.
      The
      Board of Directors of the Company shall adopt resolutions authorizing the formal
      establishment of a committee, consisting solely of independent board members,
      to
      conduct a search for a new Chief Executive Officer of the Company (the
“CEO
      Search”).

     

    
      
         

      

      
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    ARTICLE
      IV

     

    CONDITIONS

     

    Section
      4.1  Conditions
      Precedent to the Obligation of the Company to Close and to Sell the
      Securities.
      The
      obligation hereunder of the Company to close and issue and sell the Securities
      to the Purchasers at each Closing Date is subject to the satisfaction or waiver,
      at or before such Closing Date of the conditions set forth below. These
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion.

     

    (a)  Accuracy
      of the Purchasers’ Representations and Warranties.
      The
      representations and warranties of each Purchaser shall be true and correct
      in
      all material respects (except for those representations and warranties that
      are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of each Closing Date
      as
      though made at that time, except for representations and warranties that are
      expressly made as of a particular date, which shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of such date.

     

    (b)  Performance
      by the Purchasers.
      Each
      Purchaser shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by the Purchasers at or prior to each
      Closing Date.

     

    (c)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (d)  Delivery
      of Purchase Price.
      The
      Purchase Price for the Securities shall have been delivered to the Company
      on
      each Closing Date.

     

    (e)  Delivery
      of Transaction Documents.
      The
      Transaction Documents shall have been duly executed and delivered by the
      Purchasers and, with respect to the Escrow Agreement, the escrow agent, to
      the
      Company.

     

    Section
      4.2  Conditions
      Precedent to the Obligation of the Purchasers to Close and to Purchase the
      Securities.
      The
      obligation hereunder of the Purchasers to purchase the Securities and consummate
      the transactions contemplated by this Agreement is subject to the satisfaction
      or waiver, at or before each Closing, of each of the conditions set forth below.
      These conditions are for the Purchasers’ sole benefit and may be waived by the
      Purchasers at any time in their sole discretion.

     

    (a)  Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement and the
      other Transaction Documents shall be true and correct in all material respects
      (except for those representations and warranties that are qualified by
      materiality or Material Adverse Effect, which shall be true and correct in
      all
      respects) as of the date when made and as of each Closing Date as though made
      at
      that time, except for representations and warranties that are expressly made
      as
      of a particular date, which shall be true and correct in all material respects
      (except for those representations and warranties that are qualified by
      materiality or Material Adverse Effect, which shall be true and correct in
      all
      respects) as of such date.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    (b)  Performance
      by the Company.
      The
      Company shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by the Company at or prior to each Closing
      Date.

     

    (c)  No
      Suspension, Etc.
      Trading
      in the Common Stock shall not have been suspended by the Commission or the
      OTC
      Bulletin Board (except for any suspension of trading of limited duration agreed
      to by the Company, which suspension shall be terminated prior to each Closing),
      and, at any time prior to each Closing Date, trading in securities generally
      as
      reported by Bloomberg Financial Markets (“Bloomberg”)
      shall
      not have been suspended or limited, or minimum prices shall not have been
      established on securities whose trades are reported by Bloomberg, or on the
      New
      York Stock Exchange, nor shall a banking moratorium have been declared either
      by
      the United States or New York State authorities,
      nor
      shall there have occurred any material outbreak or escalation of hostilities
      or
      other national or international calamity or crisis of such magnitude in its
      effect on, or any material adverse change in any financial market which, in
      each
      case, in the judgment of such Purchaser, makes it impracticable or inadvisable
      to purchase the Securities.

     

    (d)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (e)  No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority,
      to the Company’s knowledge, shall have been threatened, against the Company or
      any Subsidiary, or any of the officers, directors or affiliates of the Company
      or any Subsidiary seeking to restrain, prevent or change the transactions
      contemplated by this Agreement, or seeking damages in connection with such
      transactions.

     

    (f)  Opinion
      of Counsel.
      The
      Purchasers shall have received an opinion of counsel to the Company, dated
      the
      date of each Closing, substantially in the form of Exhibit
      F
      hereto,
      with such exceptions and limitations as shall be reasonably acceptable to
      counsel to the Purchasers.

     

    (g)  Notes
      and Warrants.
      At or
      prior to each Closing Date, the Company shall have delivered to the Purchasers
      the Notes (in such denominations as each Purchaser may request). At or prior
      to
      the Initial Closing Date, the Company shall have delivered to the Purchasers
      the
      Warrants (in such denominations as each Purchaser may request). 

     

    (h)  Secretary’s
      Certificate.
      The
      Company shall have delivered to the Purchasers a secretary’s certificate, dated
      as of each Closing Date, as to (i) the resolutions adopted by the Board of
      Directors approving the transactions contemplated hereby and the CEO Search,
      (ii) the Articles, (iii) the Bylaws, each as in effect at each Closing, and
      (iv)
      the authority and incumbency of the officers of the Company executing the
      Transaction Documents and any other documents required to be executed or
      delivered in connection therewith.

     

    
      
         

      

      
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    (i)  Officer’s
      Certificate.
      On each
      Closing Date, the Company shall have delivered to the Purchasers a certificate
      signed by an executive officer on behalf of the Company, dated as of such
      Closing Date, confirming the accuracy of the Company’s representations,
      warranties and covenants as of such Closing Date (except those representations
      and warranties made as of a specific date) and confirming the compliance by
      the
      Company with the conditions precedent set forth in paragraphs (b)-(e) and (j)
      of
      this Section 4.2 as of such Closing Date (provided that, with respect to the
      matters in paragraphs (d) and (e) of this Section 4.2, such confirmation shall
      be based on the knowledge of the executive officer after due
      inquiry).

     

    (j)  Transfer
      Agent Instructions.
      As of
      the Initial Closing Date, the Irrevocable Transfer Agent Instructions, in the
      form of Exhibit
      E
      attached
      hereto, shall have been delivered to the Company’s transfer agent. 

     

    (k)  Security
      Agreement.
      At the
      Initial Closing Date, the Company shall have executed and delivered the Security
      Agreement to each Purchaser.

     

    (l)  UCC
      Financing Statements.
      At or
      prior to the Initial Closing Date, all UCC financing statements in form and
      substance satisfactory to the Purchasers shall have been filed at the
      appropriate offices.

     

    (m)  Resignation
      of Chief Executive Officer.
      At or
      prior to the Initial Closing Date, the Company shall have received a letter
      of
      resignation from the Chairman and Chief Executive Officer of the Company
      effective upon the completion of the CEO Search.

     

    (n)  Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred at or before each Closing
      Date.

     

    (o)  Subsequent
      Financing.
      The
      Company shall not have consummated a financing of its debt or equity securities.
      

     

    Section
      4.3  Post-Closing
      Conditions.
      The
      Company shall comply with the following post-closing conditions on or prior
      to
      thirty (30) days following the Initial Closing Date. 

     

    (a)  Termination
      of Silicon Valley Bank Lien.
      The
      Company shall cause to be filed a UCC-3 termination statement terminating the
      existing lien filed against the Company in favor of Silicon Valley
      Bank.

     

    (b)  Delivery
      of an Intellectual Property Security Agreement.
      The
      Company shall cause to be executed a security agreement with respect to all
      of
      the Company’s Intellectual Property (as defined in the Security Agreement) to be
      filed in the United States Patent and Trademark Office.

     

    
      
         

      

      
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    ARTICLE
      V

     

    CERTIFICATE
      LEGEND

     

    Section
      5.1  Legend.
      Each
      certificate representing the Securities shall be stamped or otherwise imprinted
      with a legend substantially in the following form (in addition to any legend
      required by applicable state securities or “blue sky” laws):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR INTELLIGENTIAS, INC. SHALL HAVE RECEIVED AN OPINION
      OF
      COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
      THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     

    The
      Company agrees to issue or reissue certificates representing any of the Warrant
      Shares, without the legend set forth above if at such time, prior to making
      any
      transfer of any such Warrant Shares, such holder thereof shall give written
      notice to the Company describing the manner and terms of such transfer and
      removal as the Company may reasonably request. Such proposed transfer and
      removal will not be effected until: (a) either (i) the Company has received
      an
      opinion of counsel reasonably satisfactory to the Company, to the effect that
      the registration of the Warrant Shares under the Securities Act is not required
      in connection with such proposed transfer, (ii) a registration statement under
      the Securities Act covering such proposed disposition has been filed by the
      Company with the Commission and has become effective under the Securities Act,
      (iii) the Company has received other evidence reasonably satisfactory to the
      Company that such registration and qualification under the Securities Act and
      state securities laws are not required (which may include an opinion of counsel
      provided by the Company), or (iv) the holder provides the Company with
      reasonable assurances that such security can be sold pursuant to Rule 144 under
      the Securities Act (which may include an opinion of counsel provided by the
      Company); and (b) either (i) the Company has received an opinion of counsel
      reasonably satisfactory to the Company, to the effect that registration or
      qualification under the securities or “blue sky” laws of any state is not
      required in connection with such proposed disposition, (ii) compliance with
      applicable state securities or “blue sky” laws has been effected, or (iii) the
      holder provides the Company with reasonable assurances that a valid exemption
      exists with respect thereto (which may include an opinion of counsel provided
      by
      the Company). The Company will respond to any such notice from a holder within
      three (3) business days. In the case of any proposed transfer under this Section
      5.1, the Company will use commercially reasonable efforts to comply with any
      such applicable state securities or “blue sky” laws, but shall in no event be
      required, (x) to qualify to do business in any state where it is not then
      qualified, (y) to take any action that would subject it to tax or to the general
      service of process in any state where it is not then subject, or (z) to comply
      with state securities or “blue sky” laws of any state for which registration by
      coordination is unavailable to the Company. The restrictions on transfer
      contained in this Section 5.1 shall be in addition to, and not by way of
      limitation of, any other restrictions on transfer contained in any other section
      of this Agreement. Whenever
      a
      certificate representing the Warrant Shares is required to be issued to a
      Purchaser without a legend, in lieu of delivering physical certificates
      representing the Warrant Shares, provided the Company’s transfer agent is
      participating in the Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer program, the Company shall use its reasonable
      best
      efforts to cause its transfer agent to electronically transmit the Warrant
      Shares to a Purchaser by crediting the account of such Purchaser’s Prime Broker
      with DTC through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      (to the extent not inconsistent with any provisions of this
      Agreement).

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    ARTICLE
      VI

     

    INDEMNIFICATION

     

    Section
      6.1  Company
      Indemnity.
      The
      Company agrees to indemnify and hold harmless the Purchasers (and their
      respective directors, officers, affiliates, agents, successors and assigns)
      from
      and against any and all losses, liabilities, deficiencies, costs, damages and
      expenses (including, without limitation, reasonable attorneys’ fees, charges and
      disbursements) incurred by the Purchasers as a result of any inaccuracy in
      or
      breach of the representations, warranties or covenants made by the Company
      herein. 

     

    Section
      6.2  Indemnification
      Procedure.
      Any
      party entitled to indemnification under this Article VI (an “indemnified party”)
      will give written notice to the indemnifying party of any matter giving rise
      to
      a claim for indemnification; provided, that the failure of any party entitled
      to
      indemnification hereunder to give notice as provided herein shall not relieve
      the indemnifying party of its obligations under this Article VI except to the
      extent that the indemnifying party is actually prejudiced by such failure to
      give notice. In case any such action, proceeding or claim is brought against
      an
      indemnified party in respect of which indemnification is sought hereunder,
      the
      indemnifying party shall be entitled to participate in and, unless in the
      reasonable judgment of the indemnifying party a conflict of interest between
      it
      and the indemnified party exists with respect to such action, proceeding or
      claim (in which case the indemnifying party shall be responsible for the
      reasonable fees and expenses of one separate counsel for the indemnified
      parties), to assume the defense thereof with counsel reasonably satisfactory
      to
      the indemnified party. In the event that the indemnifying party advises an
      indemnified party that it will contest such a claim for indemnification
      hereunder, or fails, within thirty (30) days of receipt of any indemnification
      notice to notify, in writing, such person of its election to defend, settle
      or
      compromise, at its sole cost and expense, any action, proceeding or claim (or
      discontinues its defense at any time after it commences such defense), then
      the
      indemnified party may, at its option, defend, settle or otherwise compromise
      or
      pay such action or claim. In any event, unless and until the indemnifying party
      elects in writing to assume and does so assume the defense of any such claim,
      proceeding or action, the indemnified party’s costs and expenses arising out of
      the defense, settlement or compromise of any such action, claim or proceeding
      shall be losses subject to indemnification hereunder. The indemnified party
      shall cooperate fully with the indemnifying party in connection with any
      negotiation or defense of any such action or claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the indemnified party which relates to such action or claim. The indemnifying
      party shall keep the indemnified party fully apprised at all times as to the
      status of the defense or any settlement negotiations with respect thereto.
      If
      the indemnifying party elects to defend any such action or claim, then the
      indemnified party shall be entitled to participate in such defense with counsel
      of its choice at its sole cost and expense. The indemnifying party shall not
      be
      liable for any settlement of any action, claim or proceeding effected without
      its prior written consent. Notwithstanding anything in this Article VI to the
      contrary, the indemnifying party shall not, without the indemnified party’s
      prior written consent, settle or compromise any claim or consent to entry of
      any
      judgment in respect thereof which imposes any future obligation on the
      indemnified party or which does not include, as an unconditional term thereof,
      the giving by the claimant or the plaintiff to the indemnified party of a
      release from all liability in respect of such claim. The indemnification
      obligations to defend the indemnified party required by this Article VI shall
      be
      made by periodic payments of the amount thereof during the course of
      investigation or defense, as and when bills are received or expense, loss,
      damage or liability is incurred, so long as the indemnified party shall refund
      such moneys if it is ultimately determined by a court of competent jurisdiction
      that such party was not entitled to indemnification. The indemnity agreements
      contained herein shall be in addition to (a) any cause of action or similar
      rights of the indemnified party against the indemnifying party or others, and
      (b) any liabilities the indemnifying party may be subject to pursuant to the
      law.
      No
      indemnifying party will be liable to the indemnified party under this Agreement
      to the extent, but only to the extent that a loss, claim, damage or liability
      is
      attributable to the indemnified party’s breach of any of the representations,
      warranties or covenants made by such party in this Agreement or in the other
      Transaction Documents.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    Section
      7.1  Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement and the other Transaction Documents,
      each party shall pay the fees and expenses of its advisors, counsel, accountants
      and other experts, if any, and all other expenses, incurred by such party
      incident to the negotiation, preparation, execution, delivery and performance
      of
      this Agreement; provided,
      that
      the Company shall pay all actual attorneys’ fees and expenses (including
      disbursements and out-of-pocket expenses) incurred by the Purchasers in
      connection with (i) the preparation, negotiation, execution and delivery of
      this
      Agreement and the other Transaction Documents and the transactions contemplated
      thereunder, which payment shall be made at the Closing and shall not exceed
      $35,000 (plus disbursements and out-of-pocket expenses), and (ii) any
      amendments, modifications or waivers of this Agreement or any of the other
      Transaction Documents. The Company shall also pay all reasonable fees and
      expenses incurred by the Purchasers in connection with the enforcement of this
      Agreement or any of the other Transaction Documents, including, without
      limitation, all reasonable attorneys’ fees and expenses. In addition, on the
      Maturity Date (as defined in the Note), the Company shall pay to Vision
      Opportunity Master Fund, Ltd. a loan fee of $300,000. 

     

    Section
      7.2  Specific
      Performance; Consent to Jurisdiction; Venue. 

     

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

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    (b)  The
      parties agree that venue for any dispute arising under this Agreement will
      lie
      exclusively in the state or federal courts located in New York County, New
      York,
      and the parties irrevocably waive any right to raise forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The parties irrevocably
      consent to personal jurisdiction in the state and federal courts of the state
      of
      New York. The Company and each Purchaser consent to process being served in
      any
      such suit, action or proceeding by mailing a copy thereof to such party at
      the
      address in effect for notices to it under this Agreement and agrees that such
      service shall constitute good and sufficient service of process and notice
      thereof. Nothing in this Section 7.2 shall affect or limit any right to serve
      process in any other manner permitted by law. The Company and the Purchasers
      hereby agree that the prevailing party in any suit, action or proceeding arising
      out of or relating to the Securities, this Agreement or the other Transaction
      Documents, shall be entitled to reimbursement for reasonable legal fees from
      the
      non-prevailing party. The parties hereby waive all rights to a trial by jury.
      

     

    Section
      7.3  Entire
      Agreement; Amendment.
      This
      Agreement and the Transaction Documents contain the entire understanding and
      agreement of the parties with respect to the matters covered hereby and, except
      as specifically set forth herein or in the other Transaction Documents, neither
      the Company nor any Purchaser make any representation, warranty, covenant or
      undertaking with respect to such matters, and they supersede all prior
      understandings and agreements with respect to said subject matter, all of which
      are merged herein. No provision of this Agreement may be waived or amended
      other
      than by a written instrument signed by the Company and the Purchasers holding
      at
      least a majority of the principal amount of the Notes then held by the
      Purchasers. Any amendment or waiver effected in accordance with this Section
      7.3
      shall be binding upon each Purchaser (and their permitted assigns) and the
      Company. 

     

    Section
      7.4  Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery by telecopy or facsimile at the address or number designated below
      (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the third 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:


    
      
         

      

      
        25

        
          

        

      

      
         

      

    


    If
      to the
      Company:                              
TechnoConcepts
      Inc. 

    6060
      Sepulveda Blvd. #202 

    Van
      Nuys,
      California 91411

    Attention:
      Chief Executive Officer 

    Tel.
      No.:
      (818) 988-3364

    Fax
      No.:
      (818) 981-4405

    


    with
      copies (which copies 

    shall
      not
      constitute notice 

    to
      the
      Company) to:  
       

    


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

    


    Kramer
      Levin Naftalis & Frankel LLP

    1177
      Avenue of the Americas

    New
      York,
      New York 10036

    Attention:
      Christopher S. Auguste

    Tel.
      No.:
      (212) 715-9100

    Fax
      No.:
      (212) 715-8000

    


    Any
      party
      hereto may from time to time change its address for notices by giving written
      notice of such changed address to the other party hereto pursuant to the
      provisions of this Section 7.4.

     

    Section
      7.5  Waivers.
      No
      waiver by either party of any default with respect to any provision, condition
      or requirement of this Agreement shall be deemed to be a continuing waiver
      in
      the future or a waiver of any other provision, condition or requirement hereof,
      nor shall any delay or omission of any party to exercise any right hereunder
      in
      any manner impair the exercise of any such right accruing to it thereafter.
      No
      consideration shall be offered or paid to any Purchaser to amend or consent
      to a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. This provision constitutes a separate right granted
      to
      each Purchaser by the Company and shall not in any way be construed as the
      Purchasers acting in concert or as a group with respect to the purchase,
      disposition or voting of Securities or otherwise.

     

    Section
      7.6  Headings.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    Section
      7.7  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. After the Closing, the assignment by a party
      to
      this Agreement of any rights hereunder shall not affect the obligations of
      such
      party under this Agreement. Subject to Section 5.1 hereof, the Purchasers may
      assign the Securities and its rights under this Agreement and the other
      Transaction Documents and any other rights hereto and thereto without the
      consent of the Company.

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    Section
      7.8  No
      Third Party Beneficiaries.
      Except
      as contemplated by Article VI hereof, this Agreement is intended for the benefit
      of the parties hereto and their respective permitted successors and assigns
      and
      is not for the benefit of, nor may any provision hereof be enforced by, any
      other person.

     

    Section
      7.9  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    Section
      7.10  Survival.
      The
      representations and warranties of the Company and the Purchasers shall survive
      the execution and delivery hereof and the Closing hereunder.

     

    Section
      7.11  Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same instrument and shall become effective
      when counterparts have been signed by each party and delivered to the other
      parties hereto, it being understood that all parties need not sign the same
      counterpart. 

     

    Section
      7.12  Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the names of the Purchasers without the consent of the Purchasers,
      which consent shall not be unreasonably withheld or delayed, or unless and
      until
      such disclosure is required by law, rule or applicable regulation, including
      without limitation any disclosure pursuant to the Registration Statement, and
      then only to the extent of such requirement. 

     

    Section
      7.13  Severability.
      The
      provisions of this Agreement are severable and, in the event that any court
      of
      competent jurisdiction shall determine that any one or more of the provisions
      or
      part of the provisions contained in this Agreement shall, for any reason, be
      held to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provision or part
      of a
      provision of this Agreement and this Agreement shall be reformed and construed
      as if such invalid or illegal or unenforceable provision, or part of such
      provision, had never been contained herein, so that such provisions would be
      valid, legal and enforceable to the maximum extent possible.

     

    Section
      7.14  Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of the Purchasers or
      the
      Company, the Company and each Purchaser shall execute and deliver such
      instruments, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement and the other Transaction Documents.


    
      
         

      

      
        27

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Note and Warrant Purchase
      Agreement to be duly executed by their respective authorized officers as of
      the
      date first above written.

     

    
      	 	 	 
	 	TECHNOCONCEPTS
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title:


    

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	
              VISION
                OPPORTUNITY MASTER FUND, LTD.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title:


    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	
              DYNAMIC
                DECISIONS GROWTH PREMIUM

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title:


    

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	
              DYNAMIC
                DECISIONS STRATEGIC GROWTH OPPORTUNITIES

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title:


    


    
      
         

      

      
        31

        
          

        

      

      
         

      

    


    EXHIBIT
      A 

    LIST
      OF PURCHASERS

    

      
        	
                Names
                  and Addresses

              	
                 

              	
                Investment
                  Amount and Number of

              
	
                of
                  Purchasers

              	 	
                Warrants
                  Purchased 

              
	 	 	 
	
                Initial
                  Closing:

              	 	 
	 	 	 
	
                Vision
                  Opportunity Master Fund, Ltd.

              	 	
                Investment
                  Amount: $1,000,000

              
	
                20
                  W. 55th Street, 5th floor 

              	 	
                Warrants:
                  1,000,000

              
	
                New
                  York, NY 10019

              	 	 
	 	 	 
	
                Dynamic
                  Decisions Growth Premium (Note)

              	 	
                Investment
                  Amount: $1,000,000

              
	
                Dynamic
                  Decisions Strategic Opportunities (Warrants)

              	 	
                Warrants:
                  1,000,000

              
	
                c/o
                  Morgan Stanley

              	 	 
	
                25
                  Cabot Square

              	 	 
	
                London,
                  E14 4QA U.K.

              	 	 


      

    


    
      
         

      

      
        32

        
          

        

      

      
         

      

    


    EXHIBIT
      B

    FORM
      OF NOTE 


    
      
         

      

      
        33

        
          

        

      

      
         

      

    


    EXHIBIT
      C

    FORM
      OF WARRANT


    
      
         

      

      
        34

        
          

        

      

      
         

      

    


    EXHIBIT
      D

    FORM
      OF SECURITY AGREEMENT

    



    
      
         

      

      
        35

        
          

        

      

      
         

      

    


    EXHIBIT
      E

    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

    


    TECHNOCONCEPTS
      INC.

    


     

    as
      of
      June 29, 2007

     

    [Name
      and
      address of Transfer Agent]

    Attn:
      _____________

    


    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Note and Warrant Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of June 29, 2007, by and among TechnoConcepts Inc., a Colorado corporation
      (the “Company”),
      and
      the purchasers named therein (collectively, the “Purchasers”)
      pursuant to which the Company is issuing to the Purchasers secured promissory
      notes (the “Notes”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, no par value (the “Common
      Stock”).
      This
      letter shall serve as our irrevocable authorization and direction to you
      (provided that you are the transfer agent of the Company at such time) to issue
      shares of Common Stock upon exercise of the Warrants (the “Warrant
      Shares”)
      to or
      upon the order of a Purchaser from time to time upon (i) surrender to you of
      a
      properly completed and duly executed Exercise Notice in the form attached hereto
      as Exhibit I, (ii) a copy of the Warrants being exercised (or, in each case,
      an
      indemnification undertaking with respect to such Notes or the Warrants in the
      case of their loss, theft or destruction), and (iii) delivery of a treasury
      order or other appropriate order duly executed by a duly authorized officer
      of
      the Company. So long as you have previously received written confirmation from
      counsel to the Company that a registration statement covering resales of the
      Warrant Shares has been declared effective by the Securities and Exchange
      Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      no subsequent notice by the Company or its counsel of the suspension or
      termination of its effectiveness, then certificates representing the Warrant
      Shares shall not bear any legend restricting transfer of the Warrant Shares
      thereby and should not be subject to any stop-transfer restriction. Provided,
      however, that if you have not previously received written confirmation from
      counsel to the Company that a registration statement covering resales of the
      Warrant Shares has been declared effective by the SEC under the 1933 Act, then
      the certificates for the Warrant Shares shall bear the following
      legend:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
      SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
      REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR
      INTELLIGENTIAS, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
      REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
      PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    and,
      provided further, that the Company may from time to time notify you to place
      stop-transfer restrictions on the certificates for the Warrant Shares in the
      event a registration statement covering the Warrant Shares is subject to
      amendment for events then current.

     

    Please
      be
      advised that the Purchasers are relying upon this letter as an inducement to
      enter into the Purchase Agreement and, accordingly, each Purchaser is a third
      party beneficiary to these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at ___________.

    
      	 	 	 
	 	
              Very truly yours,

               

              TECHNOCONCEPTS
                INC. 

            
	 
 	 
 	 
 
	Date: 	By:  	
            
	 	
              
                

              

              Name: 

              
                

              

              Title:   


              
                
 

            
	 	
               

            


    

    ACKNOWLEDGED
      AND AGREED:

     

    [TRANSFER
      AGENT]

     

    By:
      

    
      
        
          
    

      

    

    Name:

    
      
          

    Title:

    
      
        

    Date:

    
      
  

       


    
      
         

      

      
        37

        
          

        

      

      
         

      

    


    EXHIBIT
      I

     

    FORM
      OF EXERCISE NOTICE

     

    EXERCISE
      FORM

     

    TECHNOCONCEPTS
      INC.

     

    The
      undersigned _______________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase _____ shares of Common Stock of TechnoConcepts Inc.
      covered by the within Warrant.

    


    Dated:
      _________________   Signature _________________________________

    


    Address __________________________________

                    
      __________________________________

    


    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise: _________________________

    


    The
      undersigned is an “accredited investor” as defined in Regulation D under the
      Securities Act of 1933, as amended.

     

    The
      undersigned intends that payment of the Warrant Price shall be made as (check
      one): 

     

    Cash
      Exercise_______ 

     

    Cashless
      Exercise_______

     

    If
      the
      Holder has elected a Cash Exercise, the Holder shall pay the sum of $________
      by
      certified or official bank check (or via wire transfer) to the Issuer in
      accordance with the terms of the Warrant. 

     

    If
      the
      Holder has elected a Cashless Exercise, a certificate shall be issued to the
      Holder for the number of shares equal to the whole number portion of the product
      of the calculation set forth below, which is ___________. The Company shall
      pay
      a cash adjustment in respect of the fractional portion of the product of the
      calculation set forth below in an amount equal to the product of the fractional
      portion of such product and the Per Share Market Value on the date of exercise,
      which product is ____________.

     

    X
      = Y -
(A)(Y)

    B

    


    Where: 

    


    The
      number of shares of Common Stock to be issued to the Holder
      __________________(“X”).

    


    The
      number of shares of Common Stock purchasable upon exercise of all of the Warrant
      or, if only a portion of the Warrant is being exercised, the portion of the
      Warrant being exercised ___________________________ (“Y”). 

    


    The
      Warrant Price ______________ (“A”). 

    


    The
      Per
      Share Market Value of one share of Common Stock _______________________
      (“B”).

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    ASSIGNMENT

    


    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the within Warrant and all rights evidenced thereby and
      does
      irrevocably constitute and appoint _____________, attorney, to transfer the
      said
      Warrant on the books of the within named corporation.

    


    Dated:
      _________________  
Signature ____________________________________

    


    Address  
       ___________________________________

                       
      ___________________________________

    


    PARTIAL
      ASSIGNMENT

    


    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the right to purchase _________ shares of Warrant Stock
      evidenced by the within Warrant together with all rights therein, and does
      irrevocably constitute and appoint ___________________, attorney, to transfer
      that part of the said Warrant on the books of the within named
      corporation.

    


    Dated:
      _________________   Signature ____________________________________

    


    Address 
       ____________________________________

                     
      ____________________________________

    


    FOR
      USE
      BY THE ISSUER ONLY:

    


    This
      Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
      ___________, _____, shares of Common Stock issued therefor in the name of
      _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
      in
      the name of _______________.


    
      
         

      

      
        39

        
          

        

      

      
         

      

    


    EXHIBIT
      F

    FORM
      OF OPINION

    


    1. The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Colorado and has the requisite corporate
      power to own, lease and operate its properties and assets, and to carry on
      its
      business as presently conducted. The Company is duly qualified as a foreign
      corporation to do business and is in good standing in every jurisdiction in
      which the failure to so qualify would have a Material Adverse
      Effect.

     

    2. The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under the Transaction Documents and to issue the Notes,
      the Warrants and the Common Stock issuable upon exercise of the Warrants. The
      execution, delivery and performance of each of the Transaction Documents by
      the
      Company and the consummation by it of the transactions contemplated thereby
      have
      been duly and validly authorized by all necessary corporate action and no
      further consent or authorization of the Company, its Board of Directors or
      its
      stockholders is required. Each of the Transaction Documents have been duly
      executed and delivered, and the Notes and the Warrants have been duly executed,
      issued and delivered by the Company and each of the Transaction Documents
      constitutes a legal, valid and binding obligation of the Company enforceable
      against the Company in accordance with its respective terms. The Common Stock
      issuable upon conversion of the Notes and exercise of the Warrants are not
      subject to any preemptive rights under the Articles of Incorporation or the
      Bylaws.

     

    3. The
      Notes
      and the Warrants have been duly authorized and, when delivered against payment
      in full as provided in the Purchase Agreement, will be validly issued, fully
      paid and nonassessable. The shares of Common Stock issuable upon conversion
      of
      the Notes and exercise of the Warrants have been duly authorized and reserved
      for issuance, and when delivered upon conversion or against payment in full
      as
      provided in the Notes and the Warrants, as applicable, will be validly issued,
      fully paid and nonassessable.

     

    4. The
      execution, delivery and performance of and compliance with the terms of the
      Transaction Documents and the issuance of the Notes, the Warrants and the Common
      Stock issuable upon conversion of the Notes and exercise of the Warrants do
      not
      (a) violate any provision of the Articles of Incorporation or Bylaws, (b)
      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 material agreement,
      mortgage, deed of trust, indenture, note, bond, license, lease agreement,
      instrument or obligation to which the Company is a party and which is set forth
      on Schedule I, (c) create or impose a lien, charge or encumbrance on any
      property of the Company under any agreement or any commitment which is set
      forth
      on Schedule I to which the Company is a party or by which the Company is bound
      or by which any of its respective properties or assets are bound, or (d) result
      in a violation of any Federal, state, local or foreign statute, rule,
      regulation, order, judgment, injunction or decree (including Federal and state
      securities laws and regulations) applicable to the Company or by which any
      property or asset of the Company is bound or affected, except, in all cases
      other than violations pursuant to clauses (a) and (d) above, for such conflicts,
      default, terminations, amendments, acceleration, cancellations and violations
      as
      would not, individually or in the aggregate, have a Material Adverse
      Effect.

     

    
      
         

      

      
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    5. No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required under Federal,
      state or local law, rule or regulation in connection with the valid execution,
      delivery and performance of the Transaction Documents, or the offer, sale or
      issuance of the Notes, the Warrants and the Common Stock issuable upon exercise
      of the Warrants other than filings as may be required by applicable Federal
      and
      state securities laws and regulations and any applicable stock exchange rules
      and regulations.

     

    6. To
      our
      knowledge, there is no action, suit, claim, investigation or proceeding pending
      or threatened against the Company which questions the validity of the Purchase
      Agreement, the other Transaction Documents or the transactions contemplated
      thereby or any action taken or to be taken pursuant thereto. There is no action,
      suit, claim, investigation or proceeding pending, or to our knowledge,
      threatened, against or involving the Company or any of its properties or assets
      and which, if adversely determined, is reasonably likely to result in a Material
      Adverse Effect. To our knowledge, there are no outstanding orders, judgments,
      injunctions, awards or decrees of any court, arbitrator or governmental or
      regulatory body against the Company or any officers or directors of the Company
      in their capacities as such.

     

    7. Assuming
      that all of the Purchasers’ representations and warranties in the Purchase
      Agreement are complete and accurate, the offer, issuance and sale of the Notes
      and the Warrants and the offer, issuance and sale of the Common Stock issuable
      upon exercise of the Warrants are exempt from the registration requirements
      of
      the Securities Act of 1933, as amended. 

     

    8. The
      Security Agreement will create a valid security interest in favor of the
      Purchasers in such assets of the Company that are subject to such Security
      Agreement. 

     

    9. The
      financing statement on form UCC-1, a copy of which is attached hereto as
Schedule
      [X]
      (the
“Financing
      Statement”)
      is in
      appropriate form for filing with the Secretary of State of the State of Colorado
      under the Uniform Commercial Code in effect in that State (the “Colorado
      UCC”).
      The
      security interest created in favor of the Purchasers by the Security Agreement
      in those items and types of Collateral described in the Security Agreement
      in
      which a security interest may be perfected by the filing of a financing
      statement under the Colorado UCC will be perfected upon the filing of the
      Financing Statement with the Secretary of State of the State of Colorado,
      together with the payment of requisite filing or recording fees.

     

    10. The
      Company is not, and as a result of and immediately upon Closing will not be,
      an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    
      
         

      

      
        41