Exhibit 10.1 -


    
      

      

    

    


    CALIM
      PRIVATE EQUITY, LLC

    P.O.
      Box 2720

    Aspen
      Colorado 81612

    


    March
      29,
      2007

    


    Chapeau,
      Inc.

    1190
      Suncast Lane, Suite 2

    El
      Dorado
      Hills, California 95762

    


    Re: Conversion
      Acknowledgement 

    


    Gentlemen:

    


    This
      letter of acknowledgement is provided in connection with the delivery of various
      Notices
      of Conversion
      by the
      undersigned holders listed
      on
Schedule
      A
      attached
      hereto (each of whom is referred to individually as, a “Holder” and collectively
      as, the “Holders”)
      to
      Chapeau, Inc., a Utah corporation, (the “Company”). 

     

    The
      Company hereby acknowledges receipt and acceptance from each of the Holders
      of a
      Notice of Conversion, each executed and delivered on March 8, 2007 (the
“Effective Date”) (each, respectively, a “Notice” and collectively, the
“Notices”), which Notices together with the receipt by the Company of each
      applicable original tendered bond or note (assigned to the Company) for
      cancellation by the Company or receipt by the Company of an Affidavit of Lost,
      Missing or Destroyed Certificate covering a bond together effect each Holder’s
      election to convert the original principal amount of the tendered bonds or
      notes, as applicable (exclusive of Interest, if any, as defined below), into
      shares of Company common stock, par value $0.001 per share (“Common Stock”) and
      an equal number of warrants to purchase Common Stock (the “Warrants” and
      together with the Common Stock hereinafter collectively referred to as, the
      “Shares”) pursuant to the terms and conditions of the applicable bonds and notes
      and associated bond purchase agreements or loan agreements (the “Debt
      Instruments”), all as detailed on Schedule A attached hereto. Unless otherwise
      defined herein or the context otherwise requires, capitalized terms used in
      this
      letter shall have the meanings assigned them in the applicable Debt
      Instrument.

    


    The
      Company and each Holder hereby agree that as of the Effective Date any and
      all
      of the original principal amount outstanding on each bond or note tendered
      for
      conversion (as set forth on Schedule
      A
      attached
      hereto), shall be converted into Shares. The Warrants shall be issued in
      substantially the same form as the Warrant attached hereto as Exhibit
      A.
      In
      addition, each Holder shall be entitled to an amount of cash which represents
      the unconverted amount of accrued and unpaid interest under the tendered bonds
      or notes, as applicable, through the Effective Date as provided for in the
      relevant Debt Instrument, as detailed on Schedule
      B
      attached
      hereto (the “Interest”).

    


    


    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    


    The
      Company hereby agrees to issue to and in the name of each Holder and cause
      such
      issuance to be recorded on the books and records of the Company, and each Holder
      hereby agrees to receive and accept from the Company, the number of Shares
      set
      forth adjacent to each Holder’s name on Schedule
      A
      attached
      hereto, in consideration for conversion and cancellation of the tendered bonds
      or notes, as applicable, representing the aggregate amount of principal on
      such
      bonds or notes as detailed on Schedule
      A
      attached
      hereto. The cash payable for any and all Interest with respect to a bond or
      note
      shall be payable from the Company’s net income and associated positive cash flow
      from the Company’s profitable operations and as soon as practicable in the sole
      discretion of the Company; but in no event later than March 31, 2009. Additional
      interest shall accrue on all unpaid Interest pursuant to the terms of the
      applicable Debt Instrument until full satisfaction of such obligation by the
      Company. No fractional shares of Common Stock shall be issued upon conversion
      of
      the bonds or notes tendered, as applicable. In lieu of the Company issuing
      any
      fractional shares of Common Stock to a Holder upon the conversion, the Company
      shall pay to such Holder(s) in cash an amount equal to the product obtained
      by
      multiplying the applicable conversion price set forth on Schedule
      A
      attached
      hereto, by the fractional interest of shares of Common Stock otherwise owing
      to
      such Holder(s) upon conversion.

    


    In
      conjunction with the conversion, Company and each Holder agree to take all
      such
      actions as shall be necessary to release any security interest in the Company’s
      assets created upon execution, including, but not limited to, all requisite
      filings under the Uniform Commercial Code.

    


    Upon
      conversion into Shares and the payment by the Company of Interest and any
      additional interest accruing thereon, the applicable Debt Instrument shall
      be of
      no further force and effect and the Company shall be forever released from
      any
      and all of its obligations and liabilities under said bonds and notes.


     

    This
      Agreement may be executed in counterparts, each of which when executed and
      delivered will be deemed to be an original but all of which taken together
      will
      constitute one and the same Agreement.

     

     

     

     

    [Remainder
      of Page Intentionally Left Blank]

     

     

     

     

     

     

     

    


    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first written above.

    


     

    
      	
               

            	
              CHAPEAU,
                INC.

            
	 	 	 
	
               

            	
              By:  
                

            	
              /s/
                Guy. A.
                Archbold                         

            
	 	
              Name:  


            	
              Guy
                A. Archbold

            	 
	 	
              Title:  


            	
              Chief
                Executive Officer

            	 
	
               

            	
               

            	
               

            	
               

            
	 	Address:	
              1190
                Suncast Lane, Suite 2

            	 
	 	 	
              El
                Dorado Hills, CA 95762

            	 


    

     

     

    
      	
               

            	
              CALIM
                BRIDGE PARTNERS I, LLC

            
	 	 
	
               

            	
              By:
                

            	
              Calim
                Private Equity, LLC 

            
	 	
              Its:

            	
              Manager

            
	 	
              By:

            	
              /s/
                Pat
                Imeson                                   

            
	
               

            	
              
                Name:

              

            	
              
                Pat
                  Imeson

              

            	
               

            
	
               

            	
              
                Its:

              

            	
              
                Managing
                  Director 

              

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
              
                Address:

              

            	
              
                320
                  W. Main St.

              

            	
               

            
	
               

            	
               

            	
              
                Aspen,
                  CO 81661

              

            	
               

            


    

    


    
      	
               

            	
              CALIM
                BRIDGE PARTNERS II, LLC

            
	 	 
	
               

            	
              By:
                

            	
              Calim
                Private Equity, LLC 

            
	 	
              Its:

            	
              Manager

            
	 	 	 
	 	
              By:

            	
              /s/
                Pat
                Imeson                                   

            
	
               

            	
              
                Name:

              

            	
              
                Pat
                  Imeson

              

            	
               

            
	
               

            	
              
                Its:

              

            	
              
                Managing
                  Director 

              

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
              
                Address:

              

            	
              
                320
                  W. Main St.

              

            	
               

            
	
               

            	
               

            	
              
                Aspen,
                  CO 81661

              

            	
               

            


    

    


    


    [Signature
      Page to Conversion Acknowledgement Letter, dated March 29,
      2007]

    


    


    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    
      	
               

            	
              CALIM
                VENTURE PARTNERS II, LLC

            
	 	 
	
               

            	
              By:
                

            	
              Calim
                Private Equity, LLC 

            
	 	
              Its:

            	
              Manager

            
	 	 	 
	 	
              By:

            	
              /s/
                Pat
                Imeson                                   

            
	
               

            	
              
                Name:

              

            	
              
                Pat
                  Imeson

              

            	
               

            
	
               

            	
              
                Its:

              

            	
              
                Managing
                  Director 

              

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
              
                Address:

              

            	
              
                320
                  W. Main St.

              

            	
               

            
	
               

            	
               

            	
              
                Aspen,
                  CO 81661

              

            	
               

            


    

    


    


    
      	
               

            	
              MFPI
                PARTNERS, LLC

            
	 	 
	
               

            	
              By:

            	
              /s/
                Pat
                Imeson                                   
                

            
	 	
              Name:

            	
              Pat
                Imeson

            
	 	
              Its:

            	
              Manager

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
              
                Address:

              

            	
              
                320
                  W. Main St.

              

            	
               

            
	
               

            	
               

            	
              
                Aspen,
                  CO 81661

              

            	
               

            
	
               

            	
               

            	 	 
	
               

            	 	 	 
	
               

            	 	 	 


    

    


    


    


    


    [Signature
      Page to Conversion Acknowledgement Letter, dated March 29,
      2007]

    


    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
      A

    


    
      	
              Holder

            	 	
              Bond/Note

            	 	
              Aggregate
                Principal Amount

            	 	
              Conversion
                Price

            	 	
              Shares
                of Common Stock Issued

            	 	
              Shares
                of Common Stock Underlying Warrant Issued 

            
	
              Calim
                Bridge Partners I, LLC

            	 	
              12%
                Series A Convertible Bonds1

            	 	
              $2.0
                Million

            	 	
              $0.30
                per share

            	 	
              6,666,666

            	 	
              6,666,6663

            
	
              Calim
                Bridge Partners II, LLC

            	 	
              12%
                Series B Convertible Bonds1

            	 	
              $2.5
                Million

            	 	
              $0.30
                per share

            	 	
              8,333,333

            	 	
              8,333,3333

            
	
              Calim
                Venture Partners II, LLC

            	 	
              Promissory
                Note2 

            	 	
              $517,000.00

            	 	
              $0.15
                per share

            	 	
              3,446,666

            	 	
              3,446,6664

            
	
              MFPI
                Partners, LLC

            	 	
              Promissory
                Note2

            	 	
              $304,000.00

            	 	
              $0.15
                per share

            	 	
              2,026,666

            	 	
              2,026,6664,5

            


    

    


    


    1. Issued
      pursuant to that certain Bond Purchase Agreement, dated as of April 16, 2004,
      as
      amended by First Amendment and Supplement to Bond Purchase Agreement, dated
      April 14, 2005.

    


    2. Promissory
      Note, dated August 14, 2002, as amended by that certain Allonge to Promissory
      Note, dated December 2, 2002.

    


    3. The
      exercise price of Common Stock underlying the Warrants is $0.50 per
      share.

    


    4. The
      exercise price of Common Stock underlying the Warrants is $0.25 per
      share.

    


    5. The
      warrants will be issued in increments of four warrant documents to purchase
      500,000 shares, one warrant document to purchase 20,000 shares and one warrant
      document to purchase 6,666 shares. Notice of exercise for these warrants may
      either be submitted by Patrick Imeson as Manager of MFPI Partners, LLC or by
      Gordon Snyder as Administrative Agent of the Loan, Pledge and Security Agreement
      between MFPI Partners, LLC and the Irrevocable Trust U/W John H
      Evans.

    


    


    


    


    


    


    
 

    


    


    


    


    


    


    


    [Schedule
      A to Conversion Acknowledgement Letter, dated March 29, 2007]

    


    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    


    SCHEDULE
      B

    

      
        	
                Holder

              	 	
                Bond/Note

              	 	
                Accrued
                  Interest as of March 8, 20073

              
	
                Calim
                  Bridge Partners I, LLC

              	 	
                12%
                  Series A Convertible Bonds1

              	 	
                $603,100

              
	
                Calim
                  Bridge Partners II, LLC

              	 	
                12%
                  Series B Convertible Bonds1

              	 	
                $562,207

              
	
                Calim
                  Venture Partners II, LLC

              	 	
                Promissory
                  Note2 

              	 	
                $257,811

              
	
                MFPI
                  Partners, LLC

              	 	
                Promissory
                  Note2

              	 	
                $151,595

              


      

    

     

    


    1.
      Issued
      pursuant to that certain Bond Purchase Agreement, dated as of April 16, 2004,
      as
      amended by First Amendment and Supplement to Bond Purchase Agreement, dated
      April 14, 2005.

    


    2.
      Promissory Note, dated August 14, 2002, as amended by that certain Allonge
      to
      Promissory Note, dated December 2, 2002. 

    


    3.
      The
      Company shall accrue and pay interest at a rate of 12% per annum on the amount
      of accrued interest as of March 8, 2007 as set forth in this Schedule B until
      such time as the amount of accrued interest as of March 8, 2007 and any interest
      thereon has been fully satisfied.

    


    


    


    


    


    


    


     

     

     

     

    


    


    


    


    


    


    


    


    


    


    [Schedule
      A to Conversion Acknowledgement Letter, dated March 29, 2007]

    


    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    


    EXHIBIT
      A

    


    FORM
      OF
      WARRANT TO PURCHASE COMMON STOCK

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). THEY
      MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
      TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      1933 ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
      IS NOT REQUIRED UNDER THE 1933 ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
      THE
      1933 ACT AND APPLICABLE STATE SECURITIES LAW.

     

    Warrant
      to Purchase Common Stock

     

    of

     

    Chapeau,
      Inc.

     

    Void
      after March 9, 2009 

     

    [TWO
      YEAR
      WARRANT]

     

    This
      Warrant
      is
      issued to____________________________________________,
      or its
      registered assigns (the “Holder”) by Chapeau, Inc., a Utah corporation (the
“Company”), on March 8, 2007 (the “Warrant Issue Date”). This Warrant is issued
      pursuant to that certain [Bond Purchase Agreement dated as of April 16, 2004
      (the “Purchase Agreement”), pursuant to a “Conversion,”] within the meaning of
      the Purchase Agreement, of the Series A Bonds issuable thereunder. Unless
      otherwise defined or the context otherwise requires, capitalized terms used
      herein shall have the meanings assigned them in the Purchase
      Agreement.

     

    1. Shares.
      Subject
      to the terms and conditions of this Warrant, the Holder is entitled, upon
      surrender of this Warrant at the principal office of the Company (or at such
      other place as the Company shall notify the Holder in writing), to purchase
      from
      the Company _______________ fully paid and nonassessable shares of Common Stock,
      as constituted on the Warrant Issue Date. The number of shares of Common Stock
      issuable pursuant to this Section 1 (the “Shares”) shall be subject to
      adjustment pursuant to Section 9 below.

     

    2. Exercise
      Price. The
      purchase price for the Shares shall be equal to $1.00 per share, as adjusted
      from time to time pursuant to Section 9 below (the “Exercise
      Price”).

     

    


    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    


    3. Exercise
      Period.
      This
      Warrant shall be exercisable, in whole or in part, during the term commencing
      on
      the date 30 days after the Warrant Issue Date and ending at 5:00 p.m. on the
      second anniversary of the Warrant Issue Date; provided
      that
      in the
      event (each a “Disposition Event”) of (i) the closing of the Company’s sale or
      transfer of all or substantially all of its assets or (ii) the closing of the
      acquisition of the Company by another entity by means of merger, consolidation
      or other transaction or series of related transactions, resulting in the
      exchange of the outstanding shares of the Common Stock (unless (A) the
      shareholders of the Company immediately prior to such transaction or series
      of
      related transactions are holders of a majority of the voting equity securities
      of the surviving or acquiring corporation immediately thereafter and (B) each
      of
      such shareholders immediately prior to such transaction or series of related
      transactions holds the same pro rata share of such majority of the voting equity
      securities of the surviving or acquiring corporation as each hold of the Company
      immediately prior to such transaction or series of related transactions), this
      Warrant shall, on the date of a Disposition Event, no longer be exercisable
      and
      become null and void. The Company shall notify the Holder at least 20 days
      prior
      to the consummation of any Disposition Event; provided that the Holder shall
      in
      any event have at least 40 days after the Warrant Issue Date to exercise this
      Warrant.

     

    4. Method
      of Exercise. While
      this Warrant remains outstanding and exercisable, the Holder may exercise this
      Warrant, in whole or in part, at one time or from time to time, by:

     

    (a) the
      surrender of this Warrant, together with a duly executed copy of the form of
      Notice of Election attached hereto, to the Secretary of the Company at its
      principal offices; and

     

    (b) the
      payment to the Company of an amount equal to the aggregate Exercise Price for
      the number of Shares being purchased. In the event of a partial exercise of
      this
      Warrant, the Company shall cause to be issued to the Holder a Warrant of like
      tenor to this Warrant for the number of Shares for which this Warrant has not
      yet been exercised.

     

    5. Net
      Exercise.
      In lieu
      of exercising this Warrant pursuant to Section 4 above, the Holder may elect
      to
      receive, without the payment by the Holder of any additional consideration,
      Shares in an amount equal to the then value of this Warrant (or the portion
      thereof being surrendered) by surrender of this Warrant at the principal office
      of the Company together with notice of such election, in which event the Company
      shall issue to the holder hereof a number of Shares computed using the following
      formula:

     

    Y
      (A -
      B)

     

    X
      =
 A

     

    
      	 	
              Where:

            	
              X
                =
                The number of Shares to be issued to the Holder pursuant to this
                Section
                5;

            


    

     

    Y
      = The
      number of Shares in respect of which the net issue election is
      made;

     

    A
      = The
      fair market value of one share of Common Stock at the time the net issue
      election is made; and

     

    B
      = The
      Exercise Price.

     

    


    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    


    For
      purposes of this Section 5, the fair market value of one share of Common Stock
      as of a particular date shall be (i) if traded on a national securities exchange
      or quoted through an established quotation system, the value shall be deemed
      to
      be the average of the closing prices of the securities on such exchange or
      through such system over the 30 day period ending three days prior to the net
      exercise election; (ii) if traded over-the-counter, the value shall be deemed
      to
      be the average of the closing bid or sale prices (whichever is applicable)
      over
      the 30 day period ending three days prior to the net exercise; and (iii) if
      there is no active public market, the value shall be the fair market value
      thereof, as determined in good faith by the Board of Directors of the
      Company.

     

    6. Representations
      and Warranties of Holder. The
      initial Holder referenced above, and each person who might hereafter become
      a
      Holder, hereby represents and warrants, either by its execution hereof or its
      receipt of this Warrant in a Permitted Transfer (as hereinafter defined)
      that:

     

    (a) Acquisition for
      Own Account.
      This
      Warrant is being issued to the Holder in reliance upon its representation to
      the
      Company that this Warrant, the Common Stock to be received by it upon exercise
      of this Warrant and the Common Stock issuable upon conversion thereof
      (collectively, the “Securities”) are being and will be acquired for investment
      for the Holder’s own account, not as a nominee or agent, and not with a view to
      the resale or distribution of any part thereof, and that the Holder has no
      present intention of selling, granting any participation in, or otherwise
      distributing the Securities, in whole or in part. The Holder further represents
      that it does not have any contract, undertaking, agreement or arrangement with
      any person to sell, transfer or grant participations to such person or to any
      third person, with respect to any of the Securities.

     

    (b) Investment
      Experience.
      The
      Holder is an investor in securities of companies in the development stage and
      acknowledges that it is able to fend for itself, can bear the economic risk
      of
      its investment, and has such knowledge and experience in financial or business
      matters that it is capable of evaluating the merits and risks of the investment
      in the Securities. If other than an individual, the Holder also represents
      it
      has not been organized for the purpose of acquiring the Securities. The Holder
      is an “accredited investor” as such term is defined under Regulation D
      promulgated pursuant to the 1933 Act.

     

    (c) Restricted
      Securities.
      The
      Holder understands that any of the Securities that it is purchasing or otherwise
      taking delivery of are or will be characterized as “restricted securities” under
      the 1933 Act inasmuch as they are being acquired from the Company in a
      transaction not involving a public offering and that under the 1933 Act and
      applicable regulations such securities may be resold without registration under
      the 1933 Act only in certain limited circumstances. The Holder represents that
      it is familiar with Rule 144 promulgated under the 1933 Act, as presently in
      effect, and understands the resale limitations imposed thereby and by the 1933
      Act.

     

    (d) Further
      Limitations on Disposition.
      The
      Holder agrees not to make any disposition of all or any portion of the
      Securities (each a “Permitted Transfer”) unless and until the transferee has
      agreed in writing for the benefit of the Company to be bound by this Section
      6,
      to the extent this Section is then applicable, and:

     

    (i) there
      is
      then in effect a registration statement under the 1933 Act covering the proposed
      disposition and such disposition is made in accordance with such registration
      statement; or

     

    


    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    


    (ii) (A)
      the
      Holder shall have notified the Company of the proposed disposition and shall
      have furnished the Company with a detailed statement of the circumstances
      surrounding the proposed disposition and (B) if reasonably requested by the
      Company, the Holder shall have furnished the Company with an opinion of counsel,
      reasonably satisfactory to the Company, that such disposition will not require
      registration of the applicable Securities under the 1933 Act; and

     

    (iii) notwithstanding
      (i) and (ii) above, no such registration statement or opinion of counsel shall
      be necessary for a transfer by a Holder (A) that is a partnership to a partner
      of such partnership or a retired partner of such partnership who retires after
      the date hereof, or to the estate of any such partner or retired partner or
      the
      transfer by gift, will or intestate succession of any partner to his or her
      spouse or to the siblings, lineal descendants or ancestors of such partner
      or
      his or her spouse, or (B) to any entity that is controlled by, controls or
      is
      under common control with the Holder, if the transferee agrees in writing to
      be
      subject to the terms hereof to the same extent as if it were an original Holder
      hereunder.

     

    (e) Legends.
      Certificates evidencing the Securities may bear one or all of the following
      legends:

     

    (i) “These
      securities have not been registered under the Securities Act of 1933, as
      amended. They may not be sold, offered for sale, pledged or hypothecated in
      the
      absence of a registration statement in effect with respect to the securities
      under such Act or an opinion of counsel satisfactory to the Company that such
      registration is not required or unless sold pursuant to Rule 144 of such Act;”
and

     

    (ii) Any
      legend required by the laws of the State and any other applicable state of
      the
      United States.

     

    7. Certificates
      for Shares.
      Upon the
      exercise of the purchase rights evidenced by this Warrant, one or more
      certificates for the number of Shares so purchased shall be issued as soon
      as
      practicable thereafter (with appropriate restrictive legends, if applicable),
      and in any event within 15 days following compliance by the Holder with the
      requirements of Section 4 above. The Company shall not be required to issue
      any
      fractional shares, and if any fraction of a Share would be issuable on the
      exercise of this Warrant in full, the Company shall pay an amount in cash equal
      to the then current fair market value of a Share, determined in accordance
      with
      Section 5 above, times the applicable fraction. 

     

    8. Reservation
      of Shares. The
      Company covenants that it will at all times keep available such number of
      authorized shares of Common Stock, free from all preemptive rights with respect
      thereto, which will be sufficient to permit the exercise of this Warrant for
      the
      full number of Shares specified herein. The Company covenants that the Shares,
      when issued pursuant to the exercise of this Warrant, will be duly and validly
      issued, fully paid and nonassessable and free from all taxes, liens, and charges
      with respect to the issuance thereof.

     

    9. Adjustment
      of Exercise Price and Number of Shares. The
      number of and kind of Securities purchasable or receivable upon exercise of
      this
      Warrant and the Exercise Price shall be subject to adjustment from time to
      time
      as follows:

     

    


    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    


    (a) Subdivisions,
      Combinations and Other Issuances.
      If the
      Company shall subdivide the Common Stock, by split-up or otherwise, combine
      the
      Common Stock or issue additional shares of Common Stock as a dividend or other
      distribution with respect to any of its securities, the number of Shares
      issuable on the exercise of this Warrant shall be proportionately increased
      in
      the case of a subdivision, dividend or distribution and shall be proportionately
      decreased in the case of a combination. Appropriate adjustments shall also
      be
      made to the Exercise Price, but the aggregate purchase price payable for the
      total number of Shares purchasable under this Warrant (as adjusted) shall remain
      the same. Any adjustment under this Section 9(a) shall become effective at
      the
      close of business on the date the subdivision or combination becomes effective,
      or as of the record date of a dividend or other distribution, or in the event
      that no record date is fixed, upon the making of such dividend or
      distribution.

     

    (b) Reclassification,
      Reorganization and Consolidation.
      In the
      event of any reclassification, capital reorganization or change in the Common
      Stock, other than as a result of an event provided for in (a) above, then,
      as a
      condition of such transaction, the Holder shall have the right at any time
      prior
      to the expiration of this Warrant to purchase, at a total price equal to that
      payable upon the exercise of this Warrant, the kind and amount of shares of
      stock and other securities and property receivable in connection with the
      applicable transaction by a holder of the same number of shares of Common Stock
      as were purchasable by the Holder immediately prior to the transaction. In
      any
      such case appropriate provisions shall be made with respect to the rights and
      interest of the Holder so that this provision shall thereafter be applicable
      with respect to any Securities deliverable upon exercise of this Warrant, and
      appropriate adjustments shall be made to the Exercise Price; provided
      that
      the
      aggregate purchase price shall remain the same.

     

    (c) Notice
      of Adjustment.
      When
      any adjustment is required to be made in the number or kind of Shares receivable
      upon exercise of this Warrant, or in the Warrant Price, the Company shall
      promptly notify the Holder thereof and of the number of Shares or other
      Securities thereafter receivable upon exercise of this Warrant.

     

    (d) No
      Impairment.
      The
      Company and the Holder will not, by any voluntary action, avoid or seek to
      avoid
      the observance or performance of any of the terms to be observed or performed
      hereunder by the Company or the Holder, respectively, but will at all times
      in
      good faith assist in the carrying out of all the provisions of this Section
      9
      and in the taking of all such action as may be necessary or appropriate in
      order
      to protect the rights of the Company and the Holder against
      impairment.

     

    10. No
      Shareholder Rights.
      Prior to
      exercise of this Warrant, the Holder shall not be entitled to any rights of
      a
      shareholder with respect to the Shares, including without limitation the right
      to vote Shares, receive dividends or other distributions thereon, exercise
      preemptive rights or, other than as may be provided in the Loan Agreement,
      be
      notified of shareholder meetings, and the Holder shall not be entitled to any
      notice or other communication concerning the business or affairs of the Company.
      However, nothing in this Section 10 shall limit the right of the Holder to
      be
      provided the notices required under this Warrant and, in addition, the Company
      will afford to the Holder the right, upon advance notice, to meet periodically
      with the Company’s chief executive and chief financial officers during mutually
      agreeable business hours to discuss the Company’s business and
      affairs.

     

    


    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    


    11. Transfers.
      Subject
      to compliance with the requirements of Section 6 above with respect to
      applicable federal and state securities laws, this Warrant and all rights (but
      only with all related obligations) hereunder are transferable in whole or in
      part by the Holder upon reasonable prior written notification to the Company.
      The transfer shall be recorded on the books of the Company upon (i) the
      surrender of this Warrant, properly endorsed, to the Company at its principal
      offices; (ii) the payment to the Company of all transfer taxes and other
      governmental charges imposed on such transfer; and (iii) the transferee’s
      agreement in writing to be bound by and subject to the terms and conditions
      of
      this Warrant. In the event of a partial transfer, the Company shall issue to
      the
      Holders one or more appropriate new Warrants of like tenor to this
      Warrant.

     

    12. Successors
      and Assigns. The
      terms
      and provisions of this Warrant shall inure to the benefit of, and be binding
      upon, the Company and the Holders and their respective successors and
      assigns.

     

    13. Registration
      Rights. The
      Shares issuable upon exercise of this Warrant shall be entitled to be included,
      pari
      passu,
      with
      any other shares of Common Stock and any securities issuable upon conversion
      of
      the Common Stock, pursuant to the Registration Rights Agreement, dated as of
      April 16, 2004, as well as under the terms of any other registration rights,
      if
      any, that the Company may have heretofore or may hereafter grant to any other
      persons whomsoever, and the Company agrees to do all such things in connection
      with any registration rights agreements or registration of the Common Stock
      under the 1933 Act to ensure that the rights of the Holder hereunder are
      recognized in connection therewith.

     

    14. Amendments
      and Waivers. Any
      term
      of this Warrant may be amended and the observance of any term of this Warrant
      may be waived (either generally or in a particular instance and either
      retroactively or prospectively), with the written consent of the Company and
      the
      Holder.

     

    15. Notices.
      All
      notices required or otherwise made under this Warrant shall be given as provided
      in Section 12.2 of the Purchase Agreement.

     

    16. Captions.
      The
      section and subsection headings of this Warrant are inserted for convenience
      only and shall not constitute a part of this Warrant in construing or
      interpreting any provision hereof.

     

    17. Governing
      Law.
      This
      Warrant shall be governed by the laws of the State of Delaware.

     

    


    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    


    IN
      WITNESS WHEREOF,
      this
      Warrant to be executed by the Company and acknowledged by the Holder as of
      March
      8, 2007
      .

     

    
      	 	
              CHAPEAU,
                INC.

            
	 	 
	 	
              By: 
                ____________________________

            
	 	
              Authorized
                Officer

            


    

     

    ACCEPTED
      AND ACKNOWLEDGED:

     

     

    ____________________________________

    [Name
      of
      Holder]

     

    By:
      _________________________________      

     

    Name:
      _______________________________     

     

    Title:
      ________________________________      

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    


    NOTICE
      OF EXERCISE

     

    To:
      Chapeau, Inc.

     

    The
      undersigned hereby elects to:

     

    
      	 	
              □

            	
              Purchase
                _________ shares of the Common Stock of Chapeau, Inc. (the “Company”)
                pursuant to the terms of the attached Warrant, and payment of the
                Exercise
                Price per share required under the Warrant accompanies this
                notice;

            


    

     

    OR

     

    
      	 	
              □

            	
              Exercise
                the attached Warrant for □
                all of the shares OR □
                __________ of the shares purchasable under the Warrant pursuant to
                the net
                exercise provisions of Section 5 of the
                Warrant.

            


    

     

    The
      undersigned hereby represents and warrants that it is acquiring the indicated
      shares for its own account for investment purposes only, and not for resale
      or
      with a view to distribution of such shares or any part thereof.

     

    
      	 	
              WARRANT
                HOLDER:

              ________________________________

            
	 	 
	 	
              By:
                _____________________________

            
	 	 
	 	
              Date:
                ____________________________

            


    

    


     

    Name
      in
      which shares should be registered:

     

    ____________________________________