Document:

ADDENDUM
      TO SUBSCRIPTION AGREEMENT

    

    DATED
      _______,
      2007

    

    This
      Addendum (the “Addendum”)
      relates to the TechoConcepts, Inc. (the “Company”
or
      the
“Corporation”)
      subscription agreement (the “Subscription
      Agreement”)
      for
      the offering of units (“Units”),
      with
      each $30,000 Unit consisting of: (i) $30,000 of 8% secured convertible
      debentures, convertible into shares of no par value common stock of the Company
      (“Common
      Stock”)
      at
      $1.50 per share, (ii) warrants to purchase 10,000 shares of Common Stock at
      a
      purchase price of $1.90 per share, and (iii) warrants to purchase 10,000 shares
      of Common Stock at a purchase price of $2.75 per share.
      This
      Addendum supplements certain information contained in the Subscription Agreement
      and the Offering Memorandum referenced therein and it exhibits. Capitalized
      terms not otherwise defined herein shall have the meaning ascribed to them
      in
      the Subscription Agreement.

     

    The
      opening paragraph of the Subscription Agreement states as follows:

     

    “Investors
      purchasing 67 Units ($2,010,000) or more shall be issued additional warrants
      (the “Additional
      Warrants”)
      at the
      rate of 40,000 Additional Warrants per Unit purchased, which Additional Warrants
      shall be identical in form to the Warrants, except that (a) 50% of such
      Additional Warrants shall have
      an
      exercise price of $2.00 per share, shall not have a cashless exercise feature,
      and shall expire eighteen (18) months from the Final Closing (defined below),
      (b) 25% of such Additional Warrants shall have an exercise price of $2.50 per
      share, and (c) 25% of such Additional Warrants shall have an exercise price
      of
      $3.50 per share.”

     

    This
      Addendum is to advise that the Additional Warrants shall have one additional
      feature which will differ from the Warrants issued as part of the Units. This
      feature will grant the holders of the Additional Warrants the right to receive
      a
      cash payment based upon the closing bid price of an acquirer’s stock or based
      upon a Black Scholes valuation of the Additional Warrants in the event the
      Company is acquired or sells all of its assets in a transaction in which the
      Common Stock is valued at less than $3.50 per share. As a result of this right,
      in place of Section 5(a) as set forth in the form of Warrant, the Additional
      Warrant shall contain the following provision:

    

    	(a)  	
            Merger
              or Consolidation.
              

          

    

    i.  For
      purposes of this Section 5(a), the term “Per Share Transaction Value” shall mean
      (A) the
      sum
      of the (i) cash, notes, securities and other property of value; (ii) liabilities
      (x) assumed by the purchaser (in the case of a sale of assets) and/or (y)
      existing on the Corporation’s balance sheet at the time the transaction is
      consummated (in the case of a merger or sale of stock); (iii) payments to be
      made in installments; (iv) amounts paid or payable under consulting, supply,
      service, distribution, licensing or lease agreements not to compete or similar
      arrangements (including such payments to management); and, (v) contingent
      payments (whether or not related to future earnings or operations), divided
      by
      (B) the number of shares of common stock of the Corporation outstanding
      immediately prior to the merger.

    

    ii.  If
      at any
      time there shall be a merger or a consolidation of the Corporation with or
      into
      another corporation when the Corporation is not the surviving corporation and
      where the Per Share Transaction Value equals or exceeds $3.50, then, as part
      of
      such merger or consolidation, lawful provision shall be made so that the holder
      hereof shall thereafter be entitled to receive upon exercise of this Warrant,
      during the period specified herein and upon payment of the aggregate Exercise
      Price then in effect, the number of shares of stock or other securities or
      property (including cash) of the successor corporation resulting from such
      merger or consolidation, to which the holder hereof as the holder of the stock
      deliverable upon exercise of this Warrant would have been entitled in such
      merger or consolidation if this Warrant had been exercised immediately before
      such merger or consolidation. In any such case, appropriate adjustment shall
      be
      made in the application of the provisions of this Warrant with respect to the
      rights and interests of the holder hereof as the holder of this Warrant after
      the merger or consolidation.

    

    iii.  In
      case
      the Corporation after the date hereof shall do any of the following (each,
      a
      "Triggering
      Event")
      in
      which the Per Share Transaction Value is below $3.50: (a) consolidate or merge
      with or into any other entity and the Corporation shall not be the continuing
      or
      surviving corporation of such consolidation or merger, or (b) transfer all
      or
      substantially all of its properties or assets to any other entity or person,
      then, and in the case of each such Triggering Event, proper provision shall
      be
      made to the Exercise Price and the number of Warrant Shares that may be
      purchased upon exercise of this Warrant so that, upon the basis and the terms
      and in the manner provided in this Warrant, the Holder of this Warrant shall
      be
      entitled upon the exercise hereof at any time after the consummation of such
      Triggering Event, to the extent this Warrant is not exercised prior to such
      Triggering Event, to receive at the Exercise Price as adjusted to take into
      account the consummation of such Triggering Event, in lieu of the Common Stock
      issuable upon such exercise of this Warrant prior to such Triggering Event,
      the
      securities, cash and property to which such Holder would have been entitled
      upon
      the consummation of such Triggering Event if such Holder had exercised the
      rights represented by this Warrant immediately prior thereto (including the
      right of a shareholder to elect the type of consideration it will receive upon
      a
      Triggering Event), subject to adjustments (subsequent to such corporate action)
      as nearly equivalent as possible to the adjustments provided for elsewhere
      in
      this Section 5, and the Exercise Price shall be adjusted to equal the product
      of
      (A) the closing bid price of the common stock of the continuing or surviving
      corporation as a result of such Triggering Event as of the date immediately
      preceding the date of the consummation of such Triggering Event multiplied
      by
      (B) the quotient of (i) the Exercise Price divided by (ii) the
      Closing Bid Price of the Common Stock as of the date immediately preceding
      the
      date hereof; provided,
      however,
      the
      Holder at its option may elect to receive an amount in cash equal to the value
      of this Warrant calculated in accordance with the Black-Scholes formula.
      Immediately upon the occurrence of a Triggering Event, the Corporation shall
      notify the Holder in writing of such Triggering Event and provide the
      calculations in determining the number of Warrant Shares issuable upon exercise
      of the new warrant and the adjusted Exercise Price. Upon the Holder’s request,
      the continuing or surviving corporation as a result of such Triggering Event
      shall issue to the Holder a new warrant of like tenor evidencing the right
      to
      purchase the adjusted number of Warrant Shares and the adjusted Exercise Price
      pursuant to the terms and provisions of this Section 5(a). Notwithstanding
      the
      foregoing to the contrary, this Section 5(a) shall only apply if the surviving
      entity pursuant to any such Triggering Event is a company that has a class
      of
      equity securities registered
      pursuant to the Securities Exchange Act of 1934, as amended, and its common
      stock is listed or quoted on a national securities exchange, national automated
      quotation system or the OTC Bulletin Board. In the event that the
      surviving entity pursuant to any such Triggering Event is not a public company
      that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national securities exchange, national
      automated quotation system or the OTC Bulletin Board, then the Holder shall
      have
      the right to demand that the Corporation pay to the Holder an amount in cash
      equal to the value of this Warrant calculated in accordance with the
      Black-Scholes formula

     

    
      
         

      

      
        Page
          1 of
          2

        
          

        

      

      
         

      

    

     

    The
      undersigned subscriber of Units hereby represents that he/she or it has
      received, read and understands this Addendum to the Subscription Agreement
      dated ____________,
      2007.

     

    
      	
              Dated:
                ______________, 2007

            	 	 	 
	 	 	 	 
	 	 	 	
              Very
                truly yours,

            
	 	 	 	 
	
            	 	 	
            
	
            	 	 	
              

              Name
                of Individual #1 or Entity

            
	
            	 	 	
            
	 	 	 	 
	 	 	 	
              
                

                Authorized
                  Signature

              

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              
                

              

              Name
                of Individual #2, if applicable

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              
                

              

              Authorized
                Signature

            

    

     

    
      
         

      

      
        Page 2
          of 2SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT, dated as of [___________ ___, 200__ (this “Agreement”), among
      TechnoConcepts, Inc., a Colorado corporation (the “Company”), and each of
      the subsidiaries of the Company signatory hereto (such subsidiaries, the
“Guarantors”) (the Company and Guarantors are collectively referred to as the
“Debtors”) and the holder or holders of the Company’s 8% Secured
      Debentures due [___________in the original aggregate principal amount of $[_____
      (the “Debentures”), signatory hereto, their endorsees, transferees and assigns
      (collectively referred to as, the “Secured Parties”). 

    

    WITNESSETH:
      

     

    WHEREAS,
      pursuant to the Debentures, the Secured Parties have severally agreed to extend
      the loans to the Company evidenced by the Debentures; 

     

    WHEREAS,
      pursuant to a certain Subsidiary Guarantee dated as of the date hereof (the
      “Guaranty”), the Guarantors have jointly and severally agreed to guaranty
      and act as surety for payment of such loans; and 

     

    WHEREAS,
      in order to induce the Secured Parties to extend the loans evidenced by the
      Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
      this Agreement and to grant the Secured Parties, pari
      passu
      with
      each other Secured Party, a perfected security interest in certain property
      of
      such Debtor to secure the prompt payment, performance and discharge in full
      of
      all of the Company’s obligations under the Debentures and the other Debtor’s
      obligations under the Guaranty. 

     

    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows: 

     

    1.
      Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1. Terms used but not otherwise defined in this Agreement that are
      defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial
      tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general
      intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have
      the respective meanings given such terms in Article 9 of the UCC. 

     

    (a)
      “Collateral”
means
      the collateral in which the Secured Parties are granted a security interest
      by
      this Agreement and which shall include the following personal property of the
      Debtors, whether presently owned or existing or hereafter acquired or coming
      into existence, wherever situated, and all additions and accessions thereto
      and
      all substitutions and replacements thereof, and all proceeds, products and
      accounts thereof, including, without limitation, all proceeds from the sale
      or
      transfer of the Collateral and of insurance covering the same and of any tort
      claims in connection therewith, and all dividends, interest, cash, notes,
      securities, equity interest or other property at any time and from time to
      time
      acquired, receivable or otherwise distributed in respect of, or in exchange
      for,
      any or all of the Pledged Securities (as defined below): 

     

    (i)
      All
      goods, including, without limitations, (A) all machinery, equipment, computers,
      motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
      and
      general tools, fixtures, test and quality control devices and other equipment
      of
      every kind and nature and wherever situated, together with all documents of
      title and documents representing the same, all additions and accessions thereto,
      replacements therefor, all parts therefor, and all substitutes for any of the
      foregoing and all other items used and useful in connection with any Debtor’s
      businesses and all improvements thereto; and (B) all inventory; 

     

    (ii)
      All
      contract rights and other general intangibles, including, without limitation,
      all partnership interests, membership interests, stock or other securities,
      rights under any of the Organizational Documents, agreements related to the
      Pledged Securities, licenses, distribution and other
      agreements, computer software (whether “off-the-shelf”, licensed from any third
      party or developed by any Debtor), computer software development rights, leases,
      franchises, customer lists, quality control procedures, grants and rights,
      goodwill, trademarks, service marks, trade styles, trade names, patents, patent
      applications, copyrights, and income tax refunds; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)
      All
      accounts, together with all instruments, all documents of title representing
      any
      of the foregoing, all rights in any merchandising, goods, equipment, motor
      vehicles and trucks which any of the same may represent, and all right, title,
      security and guaranties with respect to each account, including any right of
      stoppage in transit; 

     

    (iv)
      All
      documents, letter-of-credit rights, instruments and chattel paper;

     

    (v)
      All
      commercial tort claims; 

    

    (vi)
      All
      deposit accounts and all cash (whether or not deposited in such deposit
      accounts); 

     

    
      (vii)
        All
        investment property; 

      

      (viii)
        All supporting obligations; and 

      

      (ix)
        All
        files, records, books of account, business papers, and computer programs;
        and

      

      (x)
        the
        products and proceeds of all of the foregoing Collateral set forth in clauses
        (i)-(ix)
        above. 

    

     

    Without
      limiting the generality of the foregoing, the “Collateral” shall include
      all investment property and general intangibles respecting ownership and/or
      other equity interests in each Guarantor, including, without limitation, the
      shares of capital stock and the other equity interests listed on Schedule
      G hereto (as the same may be modified from time to time pursuant to the
      terms hereof), and any other shares of capital stock and/or other equity
      interests of any other direct or indirect subsidiary of any Debtor obtained
      in
      the future, other than subsidiaries incorporated in Hong Kong or in the People’s
      Republic of China, and, in each case, all certificates representing such shares
      and/or equity interests and, in each case, all rights, options, warrants, stock,
      other securities and/or equity interests that may hereafter be received,
      receivable or distributed in respect of, or exchanged for, any of the foregoing
      (all of the foregoing being referred to herein as the “Pledged
      Securities”) and all rights arising under or in connection with the Pledged
      Securities, including, but not limited to, all dividends, interest and cash.
      

     

    Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment of
      any
      asset which, in the event of an assignment, becomes void by operation of
      applicable law or the assignment of which is otherwise prohibited by applicable
      law (in each case to the extent that such applicable law is not overridden
      by
      Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
      provided, however, that to the extent permitted by applicable law, this
      Agreement shall create a valid security interest in such asset and, to the
      extent permitted by applicable law, this Agreement shall create a valid security
      interest in the proceeds of such asset. 

     

    (b)
      “Intellectual
      Property”
means
      the collective reference to all rights, priorities and privileges relating
      to
      intellectual property, whether arising under United States, multinational or
      foreign laws or otherwise, including, without limitation, (i) all copyrights
      arising under the laws of the United States, any other country or any political
      subdivision thereof, whether registered or unregistered and whether published
      or
      unpublished, all registrations and recordings thereof, and all applications
      in
      connection therewith, including, without limitation, all registrations,
      recordings and applications in the United States Copyright Office, (ii) all
      letters patent of the United States, any other country or any political
      subdivision thereof, all reissues and extensions thereof, and all applications
      for letters patent of the United States or any other country and all divisions,
      continuations and continuations-in-part thereof, (iii) all trademarks, trade
      names, corporate names, company names, business names, fictitious business
      names, trade dress, service marks, logos, domain names and other source or
      business identifiers, and all goodwill associated therewith, now existing or
      hereafter adopted or acquired, all registrations and recordings thereof, and
      all
      applications in connection therewith, whether in the United States Patent and
      Trademark Office or in any similar office or agency of the United States, any
      State thereof or any other country or any political subdivision thereof, or
      otherwise, and all common law rights related thereto, (iv) all trade secrets
      arising under the laws of the United States, any other country or any political
      subdivision thereof, (v) all rights to obtain any reissues, renewals or
      extensions of the foregoing, (vi) all licenses for any of the foregoing, and
      (vii)
      all
      causes of action for infringement of the foregoing. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)
      “Majority in Interest” shall mean, at any time of determination, the
      majority in interest (based on then-outstanding principal amounts of Debentures
      at the time of such determination) of the Secured Parties. 

     

    (d)
      “Necessary Endorsement” shall mean undated stock powers endorsed in blank
      or other proper instruments of assignment duly executed and such other
      instruments or documents as the Agent (as that term is defined below) may
      reasonably request. 

     

    (e)
      “Obligations”
means
      all of the liabilities and obligations (primary, secondary, direct, contingent,
      sole, joint or several) due or to become due, or that are now or may be
      hereafter contracted or acquired, or owing to, of any Debtor to the Secured
      Parties, including, without limitation, all obligations under this Agreement,
      the Debentures, the Guaranty and any other instruments, agreements or other
      documents executed and/or delivered in connection herewith or therewith, in
      each
      case, whether now or hereafter existing, voluntary or involuntary, direct or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from any of the
      Secured Parties as a preference, fraudulent transfer or otherwise as such
      obligations may be amended, supplemented, converted, extended or modified from
      time to time. Without limiting the generality of the foregoing, the term
“Obligations” shall include, without limitation: (i) principal of, and interest
      on the Debentures and the loans extended pursuant thereto; (ii) any and all
      other fees, indemnities, costs, obligations and liabilities of the Debtors
      from
      time to time under or in connection with this Agreement, the Debentures, the
      Guaranty and any other instruments, agreements or other documents executed
      and/or delivered in connection herewith or therewith; and (iii) all amounts
      (including but not limited to post-petition interest) in respect of the
      foregoing that would be payable but for the fact that the obligations to pay
      such amounts are unenforceable or not allowable due to the existence of a
      bankruptcy, reorganization or similar proceeding involving any Debtor.

     

    (f)
      “Organizational Documents” means with respect to any Debtor, the
      documents by which such Debtor was organized (such as a certificate of
      incorporation, certificate of limited partnership or articles of organization,
      and including, without limitation, any certificates of designation for preferred
      stock or other forms of preferred equity) and which relate to the internal
      governance of such Debtor (such as bylaws, a partnership agreement or an
      operating, limited liability or members agreement). 

     

    (g)
      “UCC” means the Uniform Commercial Code of the State of New York and or
      any other applicable law of any state or states which has jurisdiction with
      respect to all, or any portion of, the Collateral or this Agreement, from time
      to time. It is the intent of the parties that defined terms in the UCC should
      be
      construed in their broadest sense so that the term “Collateral” will be
      construed in its broadest sense. Accordingly if there are, from time to time,
      changes to defined terms in the UCC that broaden the definitions, they are
      incorporated herein and if existing definitions in the UCC are broader than
      the
      amended definitions, the existing ones shall be controlling. 

    

    2.
      Grant
      of Perfected First Priority Security Interest.
      As an
      inducement for the Secured Parties to extend the loans as evidenced by the
      Debentures and to secure the complete and timely payment, performance
      and discharge
      in full, as the case may be, of all of the Obligations, each Debtor hereby
      unconditionally and irrevocably pledges, grants and hypothecates to the Secured
      Parties a continuing and perfected security interest in and to, a lien upon
      and
      a right of set-off against all of their respective right, title and interest
      of
      whatsoever kind and nature in and to, the Collateral (the “Security
      Interest”). 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.
      Delivery
      of Certain Collateral.
      Contemporaneously or prior to the execution of this Agreement, each Debtor
      shall
      deliver or cause to be delivered to the Agent (a) any and all certificates
      and
      other instruments representing or evidencing the Pledged Securities, and (b)
      any
      and all certificates and other instruments or documents representing any of
      the
      other Collateral, in each case, together with all Necessary Endorsements. The
      Debtors are, contemporaneously with the execution hereof, delivering to Agent,
      or have previously delivered to Agent, a true and correct copy of each
      Organizational Document governing any of the Pledged Securities. 

     

    4.
      Representations,
      Warranties, Covenants and Agreements of the Debtors.
      Each
      Debtor represents and warrants to, and covenants and agrees with, the Secured
      Parties as follows: 

     

    (a)
      Each
      Debtor has the requisite corporate, partnership, limited liability company
      or
      other power and authority to enter into this Agreement and otherwise to carry
      out its obligations hereunder. The execution, delivery and performance by each
      Debtor of this Agreement and the filings contemplated therein have been duly
      authorized by all necessary action on the part of such Debtor and no further
      action is required by such Debtor. This Agreement has been duly executed by
      each
      Debtor. This Agreement constitutes the legal, valid and binding obligation
      of
      each Debtor, enforceable against each Debtor in accordance with its terms except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization and similar laws of general application relating to or affecting
      the rights and remedies of creditors and by general principles of equity.

     

    (b)
      The
      Debtors have no place of business or offices where their respective books of
      account and records are kept (other than temporarily at the offices of its
      attorneys or accountants) or places where Collateral is stored or located,
      except as set forth on Schedule A attached hereto. Except as specifically
      set forth on Schedule A, each Debtor is the record owner of the real
      property where such Collateral is located, and there exist no mortgages or
      other
      liens on any such real property except for Permitted Liens (as defined in the
      Debentures). Except as disclosed on Schedule A, none of such Collateral
      is in the possession of any consignee, bailee, warehouseman, agent or processor.
      

     

    (c)
      Except for Permitted Liens (as defined in the Debentures) and except as set
      forth on Schedule B attached hereto, the Debtors are the sole owner of
      the Collateral (except for non-exclusive licenses granted by any Debtor in
      the
      ordinary course of business), free and clear of any liens, security interests,
      encumbrances, rights or claims, and are fully authorized to grant the Security
      Interest. There is not on file in any governmental or regulatory authority,
      agency or recording office an effective financing statement, security agreement,
      license or transfer or any notice of any of the foregoing (other than those
      that
      will be filed in favor of the Secured Parties pursuant to this Agreement)
      covering or affecting any of the Collateral. So long as this Agreement shall
      be
      in effect, the Debtors shall not execute and shall not knowingly permit to
      be on
      file in any such office or agency any such financing statement or other document
      or instrument (except to the extent filed or recorded in favor of the Secured
      Parties pursuant to the terms of this Agreement). With respect to Permitted
      Liens in connection with the Debtors’ Series A Secured Subordinated Promissory
      Notes (“Series A Notes”), the rights of the Secured Parties are subject
      to an Inter-Creditor Agreement between the Secured Parties and certain holders
      of the Series A Notes (“Inter-Creditor Agreement”), the form of which is
      attached hereto as Annex C. The
      Agent is hereby explicitly granted authority to execute the Inter-Creditor
      Agreement on behalf of the Secured Parties. 

     

    (d)
      No
      written claim has been received that any Collateral or Debtor's use of any
      Collateral violates the rights of any third party. There has been no adverse
      decision to any Debtor's claim of ownership rights in or exclusive rights to
      use
      the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding involving
      said rights pending or, to the best knowledge of any Debtor, overtly threatened
      before any court, judicial body, administrative or regulatory agency, arbitrator
      or other governmental authority. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e)
      Each
      Debtor shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule A attached hereto and may not relocate
      such books of account and records or tangible Collateral unless it delivers
      to
      the Secured Parties at least 30 days prior to such relocation (i) written notice
      of such relocation and the new location thereof (which must be within the United
      States) and (ii) evidence that appropriate financing statements under the UCC
      and other necessary documents have been filed and recorded and other steps
      have
      been taken to perfect the Security Interest to create in favor of the Secured
      Parties a valid, perfected and continuing perfected first priority lien in
      the
      Collateral. 

     

    (f)
      This
      Agreement creates in favor of the Secured Parties a valid, security interest
      in
      the Collateral, subject only to Permitted Liens (as defined in the Debentures)
      securing the payment and performance of the Obligations. Upon making the filings
      described in the immediately following paragraph, all security interests created
      hereunder in any Collateral which may be perfected by filing Uniform Commercial
      Code financing statements shall have been duly perfected. Except for the filing
      of the Uniform Commercial Code financing statements referred to in the
      immediately following paragraph, the recordation of the Intellectual Property
      Security Agreement (as defined below) with respect to copyrights and copyright
      applications in the United States Copyright Office referred to in paragraph
      (m),
      the execution and delivery of deposit account control agreements satisfying
      the
      requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
      account of the Debtors, and the delivery of the certificates and other
      instruments provided in Section 3, no action is necessary to create, perfect
      or
      protect the security interests created hereunder. Without limiting the
      generality of the foregoing, except for the filing of said financing statements,
      the recordation of said Intellectual Property Security Agreement, and the
      execution and delivery of said deposit account control agreements, no consent
      of
      any third parties and no authorization, approval or other action by, and no
      notice to or filing with, any governmental authority or regulatory body is
      required for (i) the execution, delivery and performance of this Agreement,
      (ii)
      the creation or perfection of the Security Interests created hereunder in the
      Collateral or (iii) the enforcement of the rights of the Secured Parties
      hereunder. 

     

    (g)
      Each
      Debtor hereby authorizes the Agent to file one or more financing statements
      under the UCC, with respect to the Security Interest with the proper filing
      and
      recording agencies in any jurisdiction deemed proper by it. Notwithstanding
      the
      foregoing, such authorization shall not impact the Debtor’s obligation to file
      such UCC-1 or other financing statements that may be required to perfect or
      maintain the Security Interest. 

     

    (h)
      The
      execution, delivery and performance of this Agreement by the Debtors does not
      (i) violate any of the provisions of any Organizational Documents of any Debtor
      or any judgment, decree, order or award of any court, governmental body or
      arbitrator or any applicable law, rule or regulation applicable to any Debtor
      or
      (ii) conflict with, or constitute a default (or an event that 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 (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing any Debtor's debt or otherwise) or other understanding
      to
      which any Debtor is a party or by which any property or asset of any Debtor
      is
      bound or affected except as would not reasonably be expected to have a material
      adverse effect. No consent (including, without limitation, from stockholders
      or
      creditors of any Debtor) is required for any Debtor to enter into and perform
      its obligations hereunder. 

     

    (i)
      The
      capital stock and other equity interests listed on Schedule G hereto
      represent all of the capital stock and other equity interests of the Guarantors,
      and represent all capital stock and other equity interests owned, directly
      or
      indirectly, by the Company. All of the Pledged Securities are validly issued,
      fully paid and nonassessable, and the Company is the legal and beneficial owner
      of the Pledged Securities, free and clear of any lien, security interest or
      other encumbrance except for the security interests created by this Agreement
      and other Permitted Liens (as defined in the Debentures). 

     

    (j)
      The
      ownership and other equity interests in partnerships and limited liability
      companies (if any) included in the Collateral (the “Pledged Interests”)
      by their express terms do not provide that they are
      securities governed by Article 8 of the UCC and are not held in a securities
      account or by any financial intermediary. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (k)
      Except for Permitted Liens (as defined in the Debentures), each Debtor shall
      at
      all times maintain the liens and Security Interest provided for hereunder as
      valid and perfected first priority liens and security interests in the
      Collateral in favor of the Secured Parties until this Agreement and the Security
      Interest hereunder shall be terminated pursuant to Section 11 hereof. Each
      Debtor hereby agrees to defend the same against the claims of any and all
      persons and entities. Each Debtor shall safeguard and protect all Collateral
      for
      the account of the Secured Parties. At the request of the Secured Parties,
      each
      Debtor will sign and deliver to the Secured Parties at any time or from time
      to
      time one or more financing statements pursuant to the UCC in form reasonably
      satisfactory to the Secured Parties and will pay the cost of filing the same
      in
      all public offices wherever filing is, or is deemed by the Secured Parties
      to
      be, necessary or desirable to effect the rights and obligations provided for
      herein. Without limiting the generality of the foregoing, each Debtor shall
      pay
      all fees, taxes and other amounts necessary to maintain the Collateral and
      the
      Security Interest hereunder, and each Debtor shall obtain and furnish to the
      Secured Parties from time to time, upon demand, such releases and/or
      subordinations of claims and liens which may be required to maintain the
      priority of the Security Interest hereunder. 

     

    (l)
      No
      Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
      dispose of any of the Collateral (except for non-exclusive licenses granted
      by a
      Debtor in its ordinary course of business and sales of inventory by a Debtor
      in
      its ordinary course of business) without the prior written consent of a Majority
      in Interest. 

     

    (m)
      Each
      Debtor shall keep and preserve its equipment, inventory and other tangible
      Collateral in good condition, repair and order, ordinary wear and tear excepted,
      and shall not operate or locate any such Collateral (or cause to be operated
      or
      located) in any area excluded from insurance coverage. 

     

    (n)
      Each
      Debtor shall maintain with financially sound and reputable insurers, insurance
      with respect to the Collateral against loss or damage of the kinds and in the
      amounts customarily insured against by entities of established reputation having
      similar properties similarly situated and in such amounts as are customarily
      carried under similar circumstances by other such entities and otherwise as
      is
      prudent for entities engaged in similar businesses but in any event sufficient
      to cover the full replacement cost thereof. Each Debtor shall cause each
      insurance policy issued in connection herewith to provide, and the insurer
      issuing such policy to certify to the Agent that (a) the Agent will be named
      as
      lender loss payee and additional insured under each such insurance policy;
      (b)
      if such insurance be proposed to be cancelled or materially changed for any
      reason whatsoever, such insurer will promptly notify the Agent and such
      cancellation or change shall not be effective as to the Agent for at least
      thirty (30) days after receipt by the Agent of such notice, unless the effect
      of
      such change is to extend or increase coverage under the policy; and (c) the
      Agent will have the right (but no obligation) at its election to remedy any
      default in the payment of premiums within thirty (30) days of notice from the
      insurer of such default. If no Event of Default (as defined in the Debentures)
      exists and if the proceeds arising out of any claim or series of related claims
      do not exceed $100,000, loss payments in each instance will be applied by the
      applicable Debtor to the repair and/or replacement of property with respect
      to
      which the loss was incurred to the extent reasonably feasible, and any loss
      payments or the balance thereof remaining, to the extent not so applied, shall
      be payable to the applicable Debtor, provided, however, that payments received
      by any Debtor after an Event of Default occurs and is continuing or in excess
      of
      $100,000 for any occurrence or series of related occurrences shall be paid
      to
      the Agent and, if received by such Debtor, shall be held in trust for and
      immediately paid over to the Agent unless otherwise directed in writing by
      the
      Agent. Copies of such policies or the related certificates, in each case, naming
      the Agent as lender loss payee and additional insured shall be delivered to
      the
      Agent at least annually and at the time any new policy of insurance is issued.
      

     

    (o)
      Each
      Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
      Secured Parties promptly, in sufficient detail, of any substantial change in
      the
      Collateral, and of the occurrence
      of any event which would have a material adverse effect on the value of the
      Collateral or on the Secured Parties’ security interest therein. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (p)
      Each
      Debtor shall promptly execute and deliver to the Secured Parties such further
      deeds, mortgages, assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Agent may from time to time request and may in its sole discretion
      deem necessary to perfect, protect or enforce its security interest in the
      Collateral including, without limitation, if applicable, the execution and
      delivery of a separate security agreement with respect to each Debtor’s
      Intellectual Property (“Intellectual Property Security Agreement”) in
      which the Secured Parties have been granted a security interest hereunder,
      substantially in a form acceptable to the Secured Parties, which Intellectual
      Property Security Agreement, other than as stated therein, shall be subject
      to
      all of the terms and conditions hereof. 

     

    (q)
      Each
      Debtor shall permit the Secured Parties and their representatives and agents
      to
      inspect the Collateral during normal business hours upon reasonable advance
      notice at any time, and to make copies of records pertaining to the Collateral
      as may be reasonably requested by a Secured Party from time to time.

     

    (r)
      Each
      Debtor shall take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Collateral. 

     

    (s)
      Each
      Debtor shall promptly notify the Secured Parties in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by such
      Debtor that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Parties hereunder.

     

    (t)
      All
      information heretofore, herein or hereafter supplied to the Secured Parties
      by
      or on behalf of any Debtor with respect to the Collateral is accurate and
      complete in all material respects as of the date furnished. 

     

    (u)
      The
      Debtors shall at all times preserve and keep in full force and effect their
      respective valid existence and good standing and any rights and franchises
      material to its business. 

     

    (v)
      No
      Debtor will change its name, type of organization, jurisdiction of organization,
      organizational identification number (if it has one), legal or corporate
      structure, or identity, or add any new fictitious name unless it provides at
      least 30 days prior written notice to the Secured Parties of such change and,
      at
      the time of such written notification, such Debtor provides any financing
      statements or fixture filings necessary to perfect and continue perfected the
      perfected security Interest granted and evidenced by this Agreement.

     

    (w)
      No
      Debtor may consign any of its Inventory or sell any of its Inventory on bill
      and
      hold, sale or return, sale on approval, or other conditional terms of sale
      without the consent of a Majority in Interest which shall not be unreasonably
      withheld, except to the extent such consignment or sale does not exceed 15%
      of
      the total value of all of the Company’s finished goods in Inventory.

     

    (x)
      No
      Debtor may relocate its chief executive office to a new location without
      providing 30 days prior written notification thereof to the Secured Parties
      and
      so long as, at the time of such written notification, such Debtor provides
      any
      financing statements or fixture filings necessary to perfect and continue
      perfected the perfected security Interest granted and evidenced by this
      Agreement. 

     

    (y)
      Each
      Debtor was organized and remains organized solely under the laws of the state
      set forth next to such Debtor’s name in the first paragraph of this Agreement.
Schedule D attached hereto sets forth each Debtor’s organizational
      identification number or, if any Debtor does not have one, states that one
      does
      not exist. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (z)
      (i)
      The actual name of each Debtor is the name set forth in the preamble above;
      (ii)
      no Debtor has any trade names except as set forth on Schedule E attached
      hereto; (iii) no Debtor has used any name other than that stated in the preamble
      hereto or as set forth on Schedule E for the preceding five years; and
      (iv) no entity has merged into any Debtor or been acquired by any Debtor within
      the past five years except as set forth on Schedule E. 

    

    (aa)
      At
      any time and from time to time that any Collateral consists of instruments,
      certificated securities or other items that require or permit possession by
      the
      secured party to perfect the security interest created hereby, the applicable
      Debtor shall deliver such Collateral to the Agent. 

     

    (bb)
      Each
      Debtor, in its capacity as issuer, hereby agrees to comply with any and all
      orders and instructions of Agent regarding the Pledged Interests consistent
      with
      the terms of this Agreement without the further consent of any Debtor as
      contemplated by Section 8-106 (or any successor section) of the UCC. Further,
      each Debtor agrees that it shall not enter into a similar agreement (or one
      that
      would confer “control” within the meaning of Article 8 of the UCC) with any
      other person or entity. 

     

    (cc)
      Each
      Debtor shall cause all tangible chattel paper constituting Collateral to be
      delivered to the Agent, or, if such delivery is not possible, then to cause
      such
      tangible chattel paper to contain a legend noting that it is subject to the
      security interest created by this Agreement. To the extent that any Collateral
      consists of electronic chattel paper, the applicable Debtor shall cause the
      underlying chattel paper to be “marked” within the meaning of Section 9-105 of
      the UCC (or successor section thereto). 

     

    (dd)
      If
      there is any investment property or deposit account included as Collateral
      that
      can be perfected by “control” through an account control agreement, the
      applicable Debtor shall cause such an account control agreement, in form and
      substance in each case satisfactory to the Secured Parties, to be entered into
      and delivered to the Secured Parties. 

     

    (ee)
      To
      the extent that any Collateral consists of letter-of-credit rights, the
      applicable Debtor shall cause the issuer of each underlying letter of credit
      to
      consent to an assignment of the proceeds thereof to the Secured Parties.

     

    (ff)
      To
      the extent that any Collateral is in the possession of any third party, the
      applicable Debtor shall join with the Secured Parties in notifying such third
      party of the Secured Parties’ security interest in such Collateral and shall use
      its best efforts to obtain an acknowledgement and agreement from such third
      party with respect to the Collateral, in form and substance satisfactory to
      the
      Secured Parties. 

     

    (gg)
      If
      any Debtor shall at any time hold or acquire a commercial tort claim, such
      Debtor shall promptly notify the Secured Parties in a writing signed by such
      Debtor of the particulars thereof and grant to the Secured Parties in such
      writing a security interest therein and in the proceeds thereof, all upon the
      terms of this Agreement, with such writing to be in form and substance
      satisfactory to the Secured Parties. 

     

    (hh)
      Each
      Debtor shall immediately provide written notice to the Secured Parties of any
      and all accounts which arise out of contracts with any governmental authority
      and, to the extent necessary to perfect or continue the perfected status of
      the
      Security Interest in such accounts and proceeds thereof, shall execute and
      deliver to the Secured Parties an assignment of claims for such accounts and
      cooperate with the Secured Parties in taking any other steps required, in their
      judgment, under the Federal Assignment of Claims Act or any similar federal,
      state or local statute or rule to perfect or continue the perfected status
      of
      the Security Interest in such accounts and proceeds thereof. 

     

    (ii)
      Each
      Debtor shall cause each subsidiary of such Debtor, other than subsidiaries
      incorporation in Hong Kong or in the People’s Republic of China, immediately and
      in any event within 30 days that it becomes a subsidiary of such Debtor, to
      become a party hereto (an “Additional Debtor”), by executing and
      delivering an Additional Debtor Joinder in substantially the form of Annex
      A
      attached hereto and comply with the provisions hereof applicable to the Debtors.
      Concurrent therewith, the Additional Debtor shall deliver replacement schedules
      for, or supplements to all other Schedules to (or referred to in) this
      Agreement, as applicable, which replacement schedules shall supersede, or
      supplements shall modify, the Schedules then in effect. The Additional Debtor
      shall also deliver such opinions of counsel, authorizing resolutions, good
      standing certificates, incumbency certificates, organizational documents,
      financing statements and other information and documentation as the Secured
      Parties may reasonably request. Upon delivery of the foregoing to the Secured
      Parties, the Additional Debtor shall be and become a party to this Agreement
      with the same rights and obligations as the Debtors, for all purposes hereof
      as
      fully and to the same extent as if it were an original signatory hereto and
      shall be deemed to have made the representations, warranties and covenants
      set
      forth herein as of the date of execution and delivery of such Additional Debtor
      Joinder, and all references herein to the “Debtors” shall be deemed to include
      each Additional Debtor. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (jj)
      Each
      Debtor shall vote the Pledged Securities to comply with the covenants and
      agreements set forth herein and in the Debentures. 

     

    (kk)
      Each
      Debtor shall register the pledge of the applicable Pledged Securities on the
      books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
      to register the pledge of the applicable Pledged Securities in the name of
      the
      Secured Parties on the books of such issuer. Further, except with respect to
      certificated securities delivered to the Agent, the applicable Debtor shall
      deliver to Agent an acknowledgement of pledge (which, where appropriate, shall
      comply with the requirements of the relevant UCC with respect to perfection
      by
      registration) signed by the issuer of the applicable Pledged Securities, which
      acknowledgement shall confirm that: (a) it has registered the pledge on its
      books and records; and (b) at any time directed by Agent during the continuation
      of an Event of Default, such issuer will transfer the record ownership of such
      Pledged Securities into the name of any designee of Agent, will take such steps
      as may be necessary to effect the transfer, and will comply with all other
      instructions of Agent regarding such Pledged Securities without the further
      consent of the applicable Debtor. 

     

    (ll)
      In
      the event that, upon an occurrence of an Event of Default, Agent shall sell
      all
      or any of the Pledged Securities to another party or parties (herein called
      the
“Transferee”) or shall purchase or retain all or any of the Pledged Securities,
      each Debtor shall, to the extent applicable: (i) deliver to Agent or the
      Transferee, as the case may be, the articles of incorporation, bylaws, minute
      books, stock certificate books, corporate seals, deeds, leases, indentures,
      agreements, evidences of indebtedness, books of account, financial records
      and
      all other Organizational Documents and records of the Debtors and their direct
      and indirect subsidiaries (other than subsidiaries incorporated in Hong Kong
      or
      in the People’s Republic of China); (ii) use its best efforts to obtain
      resignations of the persons then serving as officers and directors of the
      Debtors and their direct and indirect subsidiaries (other than subsidiaries
      incorporated in Hong Kong or in the People’s Republic of China), if so
      requested; and (iii) use its best efforts to obtain any approvals that are
      required by any governmental or regulatory body in order to permit the sale
      of
      the Pledged Securities to the Transferee or the purchase or retention of the
      Pledged Securities by Agent and allow the Transferee or Agent to continue the
      business of the Debtors and their direct and indirect subsidiaries (other than
      subsidiaries incorporated in Hong Kong or in the People’s Republic of China).

     

    (mm)
      Without limiting the generality of the other obligations of the Debtors
      hereunder, each Debtor shall promptly (i) cause to be registered at the United
      States Copyright Office all of its material copyrights, (ii) cause the security
      interest contemplated hereby with respect to all Intellectual Property
      registered at the United States Copyright Office or United States Patent and
      Trademark Office to be duly recorded at the applicable office, and (iii) give
      the Agent notice whenever it acquires (whether absolutely or by license) or
      creates any additional material Intellectual Property. 

     

    (nn)
      Each
      Debtor will from time to time, at the joint and several expense of the Debtors,
      promptly execute and deliver all such further instruments and documents, and
      take all such further action as may be necessary or desirable, or as the Secured
      Parties may reasonably request, in order to perfect and protect any security
      interest granted or purported to be granted hereby or to enable the Secured
      Parties to exercise and enforce their rights and remedies hereunder and with
      respect to any Collateral or to otherwise carry out the purposes of this
      Agreement. 

     

    (oo)
      Schedule F attached hereto lists, to the best knowledge of the Debtors,
      all of the patents, patent applications, trademarks, trademark applications,
      registered copyrights, and domain names owned by any of the Debtors as of the
      date hereof. Schedule F lists all material licenses in favor of any
      Debtor for the use of any patents, trademarks, copyrights and domain names
      as of
      the date hereof. All material patents and trademarks of the Debtors have been
      duly recorded at the United States Patent and Trademark Office and all material
      copyrights of the Debtors have been duly recorded at the United States Copyright
      Office. Schedule F shall be updated to the extent necessary to reflect new
      or
      additional patents, trademarks, copyrights, domain names, and applications
      or
      licenses therefor, in favor of the Debtors, 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (pp)
      None
      of the account debtors or other persons or entities obligated on any of the
      Collateral is a governmental authority covered by the Federal Assignment of
      Claims Act or any similar federal, state or local statute or rule in respect
      of
      such Collateral. 

     

    5.
      Effect
      of Pledge on Certain Rights.
      If any
      of the Collateral subject to this Agreement consists of nonvoting equity or
      ownership interests (regardless of class, designation, preference or rights)
      that may be converted into voting equity or ownership interests upon the
      occurrence of certain events (including, without limitation, upon the transfer
      of all or any of the other stock or assets of the issuer), it is agreed that
      the
      pledge of such equity or ownership interests pursuant to this Agreement or
      the
      enforcement of any of Agent’s rights hereunder shall not be deemed to be the
      type of event which would trigger such conversion rights notwithstanding any
      provisions in the Organizational Documents or agreements to which any Debtor
      is
      subject or to which any Debtor is party.

     

    6.
      Defaults.
      The
      following events shall be “Events of Default”: 

     

    (a)
      The
      occurrence of an Event of Default (as defined in the Debentures) under the
      Debentures that continues beyond applicable cure periods; 

     

    (b)
      Any
      representation or warranty of any Debtor in this Agreement shall prove to have
      been incorrect in any material respect when made; 

     

    (c)
      The
      failure by any Debtor to observe or perform any of its obligations hereunder
      for
      ten (10) days after delivery to such Debtor of notice of such failure by or
      on
      behalf of a Secured Party unless such default is capable of cure but cannot
      be
      cured within such time frame and such Debtor is using best efforts to cure
      same
      in a timely fashion; or 

     

    (d)
      If
      any provision of this Agreement shall at any time for any reason be declared
      to
      be null and void, or the validity or enforceability thereof shall be contested
      by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
      governmental authority having jurisdiction over any Debtor, seeking to establish
      the invalidity or unenforceability thereof, or any Debtor shall deny that any
      Debtor has any liability or obligation purported to be created under this
      Agreement. 

    

    7.
      Duty
      To Hold In Trust.
      

     

    (a)
      Upon
      the occurrence of any Event of Default and at any time thereafter, each Debtor
      shall, upon receipt of any revenue, income, dividend, interest or other sums
      subject to the Security Interest, whether payable pursuant to the Debentures
      or
      otherwise, or of any check, draft, note, trade acceptance or other instrument
      evidencing an obligation to pay any such sum, hold the same in trust for the
      Secured Parties and shall forthwith endorse and transfer any such sums or
      instruments, or both, to the Secured Parties, pro-rata in proportion to their
      initial purchases of Debentures for application to the satisfaction of the
      Obligations (and if any Debenture is not outstanding, pro-rata in proportion
      to
      the initial purchases of the remaining Debentures). 

     

    (b)
      If
      any Debtor shall become entitled to receive or shall receive any securities
      or
      other property (including, without limitation, shares of Pledged Securities
      or
      instruments representing Pledged Securities acquired after the date hereof,
      or
      any options, warrants, rights or other similar property or certificates
      representing a dividend, or any distribution in connection with any
      recapitalization, reclassification or increase or reduction of capital, or
      issued in connection with any reorganization of such Debtor or any of its direct
      or indirect subsidiaries, other than subsidiaries incorporated in Hong Kong
      or
      in the People’s Republic of China) in respect of the Pledged Securities (whether
      as an addition to, in substitution of, or in exchange for, such Pledged
      Securities or otherwise), such Debtor agrees to (i) accept the
      same
      as the agent of the Secured Parties; (ii) hold the same in trust on behalf
      of
      and for the benefit of the Secured Parties; and (iii) to deliver any and all
      certificates or instruments evidencing the same to Agent on or before the close
      of business on the fifth business day following the receipt thereof by such
      Debtor, in the exact form received together with the Necessary Endorsements,
      to
      be held by Agent subject to the terms of this Agreement as Collateral.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    8.
      Rights
      and Remedies Upon Default.
      

     

    (a)
      Upon
      the occurrence of any Event of Default and at any time thereafter, the Secured
      Parties, acting through any agent appointed by them for such purpose, shall
      have
      the right to exercise all of the remedies conferred hereunder and under the
      Debentures, and the Secured Parties shall have all the rights and remedies
      of a
      secured party under the UCC. Without limitation, the Secured Parties shall
      have
      the following rights and powers: 

     

    (i)
      The
      Secured Parties shall have the right to take possession of the Collateral and,
      for that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove the
      same, and each Debtor shall assemble the Collateral and make it available to
      the
      Secured Parties at places which the Secured Parties shall reasonably select,
      whether at such Debtor's premises or elsewhere, and make available to the
      Secured Parties, without rent, all of such Debtor’s respective premises and
      facilities for the purpose of the Secured Parties taking possession of, removing
      or putting the Collateral in saleable or disposable form. 

     

    (ii)
      Upon
      notice to the Debtors by Agent, all rights of each Debtor to exercise the voting
      and other consensual rights which it would otherwise be entitled to exercise
      and
      all rights of each Debtor to receive the dividends and interest which it would
      otherwise be authorized to receive and retain, shall cease. Upon such notice,
      Agent shall have the right to receive any interest, cash dividends or other
      payments on the Collateral and, at the option of Agent, to exercise in such
      Agent’s discretion all voting rights pertaining thereto. Without limiting the
      generality of the foregoing, Agent shall have the right (but not the obligation)
      to exercise all rights with respect to the Collateral as it were the sole and
      absolute owners thereof, including, without limitation, to vote and/or to
      exchange, at its sole discretion, any or all of the Collateral in connection
      with a merger, reorganization, consolidation, recapitalization or other
      readjustment concerning or involving the Collateral or any Debtor or any of
      its
      direct or indirect subsidiaries (other than subsidiaries incorporated in Hong
      Kong or in the People’s Republic of China). 

     

    (iii)
      The
      Secured Parties shall have the right to operate the business of each Debtor
      using the Collateral and shall have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the Collateral, at public
      or
      private sale or otherwise, either with or without special conditions or
      stipulations, for cash or on credit or for future delivery, in such parcel
      or
      parcels and at such time or times and at such place or places, and upon such
      terms and conditions as the Secured Parties may deem commercially reasonable,
      all without (except as shall be required by applicable statute and cannot be
      waived) advertisement or demand upon or notice to any Debtor or right of
      redemption of a Debtor, which are hereby expressly waived. Upon each such sale,
      lease, assignment or other transfer of Collateral, the Secured Parties may,
      unless prohibited by applicable law which cannot be waived, purchase all or
      any
      part of the Collateral being sold, free from and discharged of all trusts,
      claims, right of redemption and equities of any Debtor, which are hereby waived
      and released. 

     

    (iv)
      The
      Secured Parties shall have the right (but not the obligation) to notify any
      account debtors and any obligors under instruments or accounts to make payments
      directly to the Secured Parties and to enforce the Debtors’ rights against such
      account debtors and obligors. 

     

    (v)
      The
      Secured Parties may (but are not obligated to) direct any financial intermediary
      or any other person or entity holding any investment property to transfer the
      same to the Secured Parties or their designee. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (vi)
      The
      Secured Parties may (but are not obligated to) transfer any or all Intellectual
      Property registered in the name of any Debtor at the United States Patent and
      Trademark Office and/or Copyright Office into the name of the Secured Parties
      or
      any designee or any purchaser of any Collateral. 

     

    (b)
      The
      Agent may comply with any applicable law in connection with a disposition of
      Collateral and such compliance will not be considered adversely to affect the
      commercial reasonableness of any sale of the Collateral. The Agent may sell
      the
      Collateral without giving any warranties and may specifically disclaim such
      warranties. If the Agent sells any of the Collateral on credit, the Debtors
      will
      only be credited with payments actually made by the purchaser. In addition,
      each
      Debtor waives any and all rights that it may have to a judicial hearing in
      advance of the enforcement of any of the Agent’s rights and remedies hereunder,
      including, without limitation, its right following an Event of Default to take
      immediate possession of the Collateral and to exercise its rights and remedies
      with respect thereto. 

     

    (c)
      For
      the purpose of enabling the Agent to further exercise rights and remedies under
      this Section 8 or elsewhere provided by agreement or applicable law, each Debtor
      hereby grants to the Agent, for the benefit of the Agent and the Secured
      Parties, an irrevocable, nonexclusive license (exercisable without payment
      of
      royalty or other compensation to such Debtor) to use, license or sublicense
      following an Event of Default, any Intellectual Property now owned or hereafter
      acquired by such Debtor, and wherever the same may be located, and including
      in
      such license access to all media in which any of the licensed items may be
      recorded or stored and to all computer software and programs used for the
      compilation or printout thereof. 

     

    9.
      Applications
      of Proceeds.
      The
      proceeds of any such sale, lease or other disposition of the Collateral
      hereunder shall be applied first, to the expenses of retaking, holding, storing,
      processing and preparing for sale, selling, and the like (including, without
      limitation, any taxes, fees and other costs incurred in connection therewith)
      of
      the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
      Secured Parties in enforcing their rights hereunder and in connection with
      collecting, storing and disposing of the Collateral, and then to satisfaction
      of
      the Obligations pro rata among the Secured Parties (based on then-outstanding
      principal amounts of Debentures at the time of any such determination), and
      to
      the payment of any other amounts required by applicable law, after which the
      Secured Parties shall pay to the applicable Debtor any surplus proceeds. If,
      upon the sale, license or other disposition of the Collateral, the proceeds
      thereof are insufficient to pay all amounts to which the Secured Parties are
      legally entitled, the Debtors will be liable for the deficiency, together with
      interest thereon, at the rate of 10% per annum or the lesser amount permitted
      by
      applicable law (the “Default Rate”), and the reasonable fees of any attorneys
      employed by the Secured Parties to collect such deficiency. To the extent
      permitted by applicable law, each Debtor waives all claims, damages and demands
      against the Secured Parties arising out of the repossession, removal, retention
      or sale of the Collateral, unless due solely to the gross negligence or willful
      misconduct of the Secured Parties as determined by a final judgment (not subject
      to further appeal) of a court of competent jurisdiction. 

     

    10.
      Securities
      Law Provision.
      Each
      Debtor recognizes that Agent may be limited in its ability to effect a sale
      to
      the public of all or part of the Pledged Securities by reason of certain
      prohibitions in the Securities Act of 1933, as amended, or other federal or
      state securities laws (collectively, the “Securities Laws”), and may be
      compelled to resort to one or more sales to a restricted group of purchasers
      who
      may be required to agree to acquire the Pledged Securities for their own
      account, for investment and not with a view to the distribution or resale
      thereof. Each Debtor agrees that sales so made may be at prices and on terms
      less favorable than if the Pledged Securities were sold to the public, and
      that
      Agent has no obligation to delay the sale of any Pledged Securities for the
      period of time necessary to register the Pledged Securities for sale to the
      public under the Securities Laws. Each Debtor shall cooperate with Agent in
      its
      attempt to satisfy any requirements under the Securities Laws (including,
      without limitation, registration thereunder if requested by Agent) applicable
      to
      the sale of the Pledged Securities by Agent. 

     

    11.
      Costs
      and Expenses.
      Each
      Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
      incurred in connection with any filing required hereunder, including without
      limitation, any financing statements pursuant to the UCC, continuation
      statements, partial releases and/or termination statements related thereto
      or
      any expenses of any searches reasonably required by the Secured Parties. The
      Debtors shall also pay all other
      claims and charges which in the reasonable opinion of the Secured Parties might
      prejudice, imperil or otherwise affect the Collateral or the Security Interest
      therein. The Debtors will also, upon demand, pay to the Secured Parties the
      amount of any and all reasonable expenses, including the reasonable fees and
      expenses of its counsel, the Agent and of any experts and agents, which the
      Secured Parties may incur in connection with (i) the enforcement of this
      Agreement, (ii) the custody or preservation of, or the sale of, collection
      from,
      or other realization upon, any of the Collateral, or (iii) the exercise or
      enforcement of any of the rights of the Secured Parties under the Debentures.
      Until so paid, any fees payable hereunder shall be added to the principal amount
      of the Debentures and shall bear interest at the Default Rate. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    12.
      Responsibility
      for Collateral.
      The
      Debtors assume all liabilities and responsibility in connection with all
      Collateral, and the Obligations shall in no way be affected or diminished by
      reason of the loss, destruction, damage or theft of any of the Collateral or
      its
      unavailability for any reason. Without limiting the generality of the foregoing,
      (a) neither the Agent nor any Secured Party (i) has any duty (either before
      or
      after an Event of Default) to collect any amounts in respect of the Collateral
      or to preserve any rights relating to the Collateral, or (ii) has any obligation
      to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor
      shall remain obligated and liable under each contract or agreement included
      in
      the Collateral to be observed or performed by such Debtor thereunder. Neither
      the Agent nor any Secured Party shall have any obligation or liability under
      any
      such contract or agreement by reason of or arising out of this Agreement or
      the
      receipt by the Agent or any Secured Party of any payment relating to any of
      the
      Collateral, nor shall the Agent or any Secured Party be obligated in any manner
      to perform any of the obligations of any Debtor under or pursuant to any such
      contract or agreement, to make inquiry as to the nature or sufficiency of any
      payment received by the Agent or any Secured Party in respect of the Collateral
      or as to the sufficiency of any performance by any party under any such contract
      or agreement, to present or file any claim, to take any action to enforce any
      performance or to collect the payment of any amounts which may have been
      assigned to the Agent or to which the Agent or any Secured Party may be entitled
      at any time or times. 

     

    13.
      Security
      Interest Absolute.
      All
      rights of the Secured Parties and all obligations of the Debtors hereunder,
      shall be absolute and unconditional, irrespective of: (a) any lack of validity
      or enforceability of this Agreement, the Debentures or any agreement entered
      into in connection with the foregoing, or any portion hereof or thereof; (b)
      any
      change in the time, manner or place of payment or performance of, or in any
      other term of, all or any of the Obligations, or any other amendment or waiver
      of or any consent to any departure from the Debentures or any other agreement
      entered into in connection with the foregoing; (c) any exchange, release or
      nonperfection of any of the Collateral, or any release or amendment or waiver
      of
      or consent to departure from any other collateral for, or any guaranty, or
      any
      other security, for all or any of the Obligations; (d) any action by the Secured
      Parties to obtain, adjust, settle and cancel in its sole discretion any
      insurance claims or matters made or arising in connection with the Collateral;
      or (e) any other circumstance which might otherwise constitute any legal or
      equitable defense available to a Debtor, or a discharge of all or any part
      of
      the Security Interest granted hereby. Until the Obligations shall have been
      paid
      and performed in full, the rights of the Secured Parties shall continue even
      if
      the Obligations are barred for any reason, including, without limitation, the
      running of the statute of limitations or bankruptcy. Each Debtor expressly
      waives presentment, protest, notice of protest, demand, notice of nonpayment
      and
      demand for performance. In the event that at any time any transfer of any
      Collateral or any payment received by the Secured Parties hereunder shall be
      deemed by final order of a court of competent jurisdiction to have been a
      voidable preference or fraudulent conveyance under the bankruptcy or insolvency
      laws of the United States, or shall be deemed to be otherwise due to any party
      other than the Secured Parties, then, in any such event, each Debtor’s
      obligations hereunder shall survive cancellation of this Agreement, and shall
      not be discharged or satisfied by any prior payment thereof and/or cancellation
      of this Agreement, but shall remain a valid and binding obligation enforceable
      in accordance with the terms and provisions hereof. Each Debtor waives all
      right
      to require the Secured Parties to proceed against any other person or entity
      or
      to apply any Collateral which the Secured Parties may hold at any time, or
      to
      marshal assets, or to pursue any other remedy. Each Debtor waives any defense
      arising by reason of the application of the statute of limitations to any
      obligation secured hereby. 

     

    14.
      Term
      of Agreement.
      This
      Agreement and the Security Interest shall terminate on the date on which all
      payments under the Debentures have been indefeasibly paid in full and all other
      Obligations have been paid or discharged; provided, however, that all
      indemnities of the Debtors contained in this Agreement (including, without
      limitation, Annex B hereto) shall survive and remain operative and in full
      force
      and effect regardless of the termination of this Agreement. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    15.
      Power
      of Attorney; Further Assurances.
      

     

    (a)
      Each
      Debtor authorizes the Agent, and does hereby make, constitute and appoint the
      Agent and its respective officers, agents, successors or assigns with full
      power
      of substitution, as such Debtor’s true and lawful attorney-in-fact, with power,
      in the name of the various Secured Parties or such Debtor, to, after the
      occurrence and during the continuance of an Event of Default, (i) endorse any
      note, checks, drafts, money orders or other instruments of payment (including
      payments payable under or in respect of any policy of insurance) in respect
      of
      the Collateral that may come into possession of the Agent; (ii)
      to
      sign and endorse any financing statement pursuant to the UCC or any invoice,
      freight or express bill, bill of lading, storage or warehouse receipts, drafts
      against debtors, assignments, verifications and notices in connection with
      accounts, and other documents relating to the Collateral; (iii) to pay or
      discharge taxes, liens, security interests or other encumbrances at any time
      levied or placed on or threatened against the Collateral; (iv) to demand,
      collect, receipt for, compromise, settle and sue for monies due in respect
      of
      the Collateral; (v) to transfer any Intellectual Property or provide licenses
      respecting any Intellectual Property; and (vi) generally, at the option of
      the
      Agent, and at the expense of the Debtors, at any time, or from time to time,
      to
      execute and deliver any and all documents and instruments and to do all acts
      and
      things which the Secured Parties deem necessary to protect, preserve and realize
      upon the Collateral and the Security Interest granted therein in order to effect
      the intent of this Agreement and the Debentures all as fully and effectually
      as
      the Debtors might or could do; and each Debtor hereby ratifies all that said
      attorney shall lawfully do or cause to be done by virtue hereof. This power
      of
      attorney is coupled with an interest and shall be irrevocable for the term
      of
      this Agreement and thereafter as long as any of the Obligations shall be
      outstanding. The designation set forth herein shall be deemed to amend and
      supersede any inconsistent provision in the Organizational Documents or other
      documents or agreements to which any Debtor is subject or to which any Debtor
      is
      a party. Without limiting the generality of the foregoing, after the occurrence
      and during the continuance of an Event of Default, each Secured Party is
      specifically authorized to execute and file any applications for or instruments
      of transfer and assignment of any patents, trademarks, copyrights or other
      Intellectual Property with the United States Patent and Trademark Office and
      the
      United States Copyright Office. 

     

    (b)
      On a
      continuing basis, each Debtor will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, with the proper filing and recording agencies in
      any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule C attached hereto, all such instruments, and take all such action
      as
      may reasonably be deemed necessary or advisable, or as reasonably requested
      by
      the Secured Parties, to perfect the Security Interest granted hereunder and
      otherwise to carry out the intent and purposes of this Agreement, or for
      assuring and confirming to the Secured Parties the grant or perfection of a
      perfected security interest in all the Collateral under the UCC. 

     

    (c)
      Each
      Debtor hereby irrevocably appoints the Secured Parties as such Debtor’s
      attorney-in-fact, with full authority in the place and instead of such Debtor
      and in the name of such Debtor, from time to time in the Secured Parties’
discretion, to take any action and to execute any instrument which the Secured
      Parties may deem necessary or advisable to accomplish the purposes of this
      Agreement, including the filing, in its sole discretion, of one or more
      financing or continuation statements and amendments thereto, relative to any
      of
      the Collateral without the signature of such Debtor where permitted by law,
      which financing statements may (but need not) describe the Collateral as “all
      assets” or “all personal property” or words of like import, and ratifies all
      such actions taken by the Secured Parties. This power of attorney is coupled
      with an interest and shall be irrevocable for the term of this Agreement and
      thereafter as long as any of the Obligations shall be outstanding. 

     

    16.
      Notices.
      All
      notices, requests, demands and other communications hereunder shall be subject
      to the notice provision of the Purchase Agreement (as such term is defined
      in
      the Debentures). 

     

    17.
      Other
      Security.
      To the
      extent that the Obligations are now or hereafter secured by property other
      than
      the Collateral or by the guarantee, endorsement or property of any other person,
      firm, corporation or other entity,
      then the Secured Parties shall have the right, in its sole discretion, to
      pursue, relinquish, subordinate, modify or take any other action with respect
      thereto, without in any way modifying or affecting any of the Secured Parties’
rights and remedies hereunder. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    18.
      Appointment
      of Agent.
      The
      Secured Parties hereby appoint the firm of Gallagher, Briody & Butler to act
      as their agent (“Agent”) for purposes of exercising any and all rights and
      remedies of the Secured Parties hereunder. Such appointment shall continue
      until
      revoked in writing by a Majority in Interest, at which time a Majority in
      Interest shall appoint a new Agent. The Agent shall have the rights,
      responsibilities and immunities set forth in Annex B hereto. 

    

    19.
      Miscellaneous.
      

     

    (a)
      No
      course of dealing between the Debtors and the Secured Parties, nor any failure
      to exercise, nor any delay in exercising, on the part of the Secured Parties,
      any right, power or privilege hereunder or under the Debentures shall operate
      as
      a waiver thereof; nor shall any single or partial exercise of any right, power
      or privilege hereunder or thereunder preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege. 

     

    (b)
      All
      of the rights and remedies of the Secured Parties with respect to the
      Collateral, whether established hereby or by the Debentures or by any other
      agreements, instruments or documents or by law shall be cumulative and may
      be
      exercised singly or concurrently. 

     

    (c)
      This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto. Except as specifically
      set
      forth in this Agreement, no provision of this Agreement may be modified or
      amended except by a written agreement specifically referring to this Agreement
      and signed by the parties hereto. 

     

    (d)
      In
      the event any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other jurisdiction.
      

     

    (e)
      No
      waiver of any breach or default or any right under this Agreement shall be
      considered valid unless in writing and signed by the party giving such waiver,
      and no such waiver shall be deemed a waiver of any subsequent breach or default
      or right, whether of the same or similar nature or otherwise. 

     

    (f)
      This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns. 

     

    (g)
      Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement. 

     

    (h)
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each Debtor agrees that all proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and the Debentures (whether brought against
      a
      party hereto or its respective affiliates, directors, officers, shareholders,
      partners, members, employees or agents) shall be commenced exclusively in the
      state and federal courts sitting in the City of New York, Borough of Manhattan.
      Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the
      state and federal courts sitting in the City of New York,
      Borough of Manhattan for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or discussed
      herein, and hereby irrevocably waives, and agrees not to assert in any
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such proceeding is improper. Each party hereto hereby
      irrevocably waives personal service of process and consents to process being
      served in any such proceeding by mailing a copy thereof via registered or
      certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. Each party hereto hereby
      irrevocably waives, to the fullest extent permitted by applicable law, any
      and
      all right to trial by jury in any legal proceeding arising out of or relating
      to
      this Agreement or the transactions contemplated hereby. If any party shall
      commence a proceeding to enforce any provisions of this Agreement, then the
      prevailing party in such proceeding shall be reimbursed by the other party
      for
      its reasonable attorney’s fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such proceeding. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (i)
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof. 

     

    (j)
      All
      Debtors shall jointly and severally be liable for the obligations of each Debtor
      to the Secured Parties hereunder. 

     

    (k)
      Each
      Debtor shall indemnify, reimburse and hold harmless the Secured Parties and
      their respective partners, members, shareholders, officers, directors, employees
      and agents (collectively, “Indemnitees”) from and against any and all
      losses, claims, liabilities, damages, penalties, suits, costs and expenses,
      of
      any kind or nature, (including fees relating to the cost of investigating and
      defending any of the foregoing) imposed on, incurred by or asserted against
      such
      Indemnitee in any way related to or arising from or alleged to arise from this
      Agreement or the Collateral, except any such losses, claims, liabilities,
      damages, penalties, suits, costs and expenses which result from the gross
      negligence or willful misconduct of the Indemnitee as determined by a court
      of
      competent jurisdiction. This indemnification provision is in addition to, and
      not in limitation of, any other indemnification provision in the Debentures,
      the
      Purchase Agreement (as such term is defined in the Debentures) or any other
      agreement, instrument or other document executed or delivered in connection
      herewith or therewith. 

     

    (l)
      Nothing in this Agreement shall be construed to subject Agent or any Secured
      Party to liability as a partner in any Debtor or any if its direct or indirect
      subsidiaries that is a partnership or as a member in any Debtor or any of its
      direct or indirect subsidiaries that is a limited liability company, nor shall
      Agent or any Secured Party be deemed to have assumed any obligations under
      any
      partnership agreement or limited liability company agreement, as applicable,
      of
      any such Debtor or any if its direct or indirect subsidiaries or otherwise,
      unless and until any such Secured Party exercises its right to be substituted
      for such Debtor as a partner or member, as applicable, pursuant hereto.

     

    (m)
      To
      the extent that the grant of the security interest in the Collateral and the
      enforcement of the terms hereof require the consent, approval or action of
      any
      partner or member, as applicable, of any Debtor or any direct or indirect
      subsidiary of any Debtor or compliance with any provisions of any of the
      Organizational Documents, the Debtors hereby grant such consent and approval
      and
      waive any such noncompliance with the terms of said documents. 

     

    
      [SIGNATURE
        PAGES FOLLOW] 

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be
      duly executed on the day and year first above written. 

     

    
      	
              TECHNOCONCEPTS,
                INC. 

               

            	 	 	 
	By:	 	 	 
	
              
                

              

              Name:

              Title:

            	 	 	
            
	 	 	 	 

    

     

    
      	
              ASANTE NETWORKS, INC. 

               

            	 	 	 
	By:	 	 	 
	
              
                

              

              Name:

              Title:

            	 	 	
            
	 	 	 	 

    

    

      	
              TECHNOCONCEPTS,
                INC. (NEVADA) 

               

            	 	 	 
	By:	 	 	 
	
              
                

              

              Name:

              Title:

            	 	 	
            
	 	 	 	 

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS] 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    [SIGNATURE
      PAGE OF HOLDERS TO TECHNOCONCEPTS, INC. SECURITY AGREEMENT] 

    

      
        	
                Name
                  of Investor:

              	
                 

              	 
	 	 	 
	
                Signature
                  of Investor or Authorized Signatory:

              	 	 
	 	 	 
	
                Name
                  and Title of Authorized Signatory

                (if
                  investor is an Entity)

              	 	 
	 	 	 
	
                Name
                  of Joint Investor (if any): 

              	 	 
	 	 	 
	
                Signature
                  of Joint Investor (if any):
                  

              	 	 
	 	 	 

      

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    SCHEDULES
      A - D 

     

    Schedule
      A 

     

    Principal
      Place of Business of Debtors: 

     

    6060
      Sepulveda Blvd 

    Suite
      202

    Van
      Nuys,
      CA 91411 

     

    Locations
      Where Collateral is Located or Stored: 

     

    TechnoConcepts,
      Inc. Corporate Office

    60606
      Sepulveda Blvd. #202 

    Van
      Nuys,
      CA 91411 Phone 818-988-7916 Phone 818-988-1813 

     

    TechnoConcepts,
      Inc. Administrative Office

    14945
      Ventura Blvd. # 300 

    Sherman
      Oaks, Ca 91403 

     

    TechnoConcepts,
      Inc.Engineering office

    2182
      DuPont Dr Suite 13-15 

    Irvine,
      CA 92612 

     

    TechnoConcepts,
      Inc. Engineering office

     673
      South Milpitas Blvd. 

    Milpitas,
      CA 95035 

     

    Asante
      Networks Corporate Office

    673
      South
      Milpitas Blvd. 

    Milpitas,
      CA 95035 

     

    Asante
      Networks Warehouse

    1021
      Yosemite Drive 

    Milpitas,
      CA 95035 

     

    Schedule
      B 

     

    Permitted
      Liens: None,
      except “Permitted Liens” as set forth in the Debenture 

     

    Schedule
      C 

     

    Jurisdictions
      to Perfect Security Interest: Colorado
      and California 

    

    Schedule
      D 

     

    
      	Organizational
              Identification Numbers: 	
              TechnoConcepts, Inc.

              Asante Networks, Inc.

              TechnoConcepts, Inc. (Nevada) 

            	
              Tax ID 84-1605055

              Tax ID 30-0389115 

              Tax ID 02-0688210

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULES
      E - F

     

    Schedule
      E 

     

    Names
      / Mergers & Acquisitions: 

     

    TechnoConcepts,
      Inc. (the “Company”, “we”) was organized as a Colorado corporation under the
      name Technology Consulting Partners, Inc. (“TCP”) in September 2001. On December
      15, 2003, TCP entered into an agreement and plan of merger with TechnoConcepts
      Inc., a Nevada corporation, (“TCI Nevada”), under which TCP acquired all of the
      issued and outstanding shares of capital stock of TCI Nevada in exchange for
      shares of TCP representing a controlling interest in TCP. This transaction
      was
      completed on February 17, 2004. 

     

    In
      May
      2005, we formed Techno (Hong Kong) Limited, a wholly-owned subsidiary organized
      to perform production design and application-specific engineering and to provide
      product support in Asia for our microchip products. 

     

    In
      June
      2005, we acquired the assets and significant liabilities of Asanté Technologies
      Inc. in exchange for 1,161,170 shares of our common stock, valued at $4.306
      per
      share, such that the aggregate value of the transaction was $5 million. In
      October 2005, we restructured Asanté, merging it into RegalTech Inc., a publicly
      traded Delaware corporation. RegalTech's name was changed to Asanté Networks
      Inc. (PNK:ASTN). We own shares of Asanté Networks’ preferred stock, which are
      convertible into eighty five (85%) percent of Asanté Networks common stock on a
      non-dilutable basis. 

     

    In
      December 2005, we formed Jinshilin Techno as a wholly owned subsidiary, based
      in
      Shanghai, to provide marketing, sales and technical support for our True
      Software RadioTM technology in China. 

     

    Schedule
      F 

     

    Intellectual
      Property: 

     

    Domain
      Names 

     

    www.technoconcepts.com
      

     

    Trademarks
      

     

    
      	
              Item
                

            	 	
               

            	 	
               

            	 	
              Application
                

            	 	
              Filing
                

            	 	
              Registration
                

            	 	
              Reg.
                Date 

            	 	
              Renewal
                

            
	
              No.
                

            	 	
              Mark

            	 	
              Country
                

            	 	
              Serial
                No. 

            	 	
              Date
                

            	 	
              No.
                

            	 	
              or
                Status 

            	 	
              Due
                

            
	
              21
                106-005 

            	 	
              TECHNOCONCEPTS
                Logo 

            	 	
              US
                

            	 	
              75/244,343
                

            	 	
              02/19/97
                

            	 	
              2,197,178
                

            	 	
              10/20/98
                

            	 	
              10/20/2008
                

            
	
              22
                

            	 	
              TECHNOCONCEPTS
                

            	 	
              US
                

            	 	
              75/532,045
                

            	 	
              08/06/98
                

            	 	
              2,292,497
                

            	 	
              11/16/99
                

            	 	
              11/16/2009
                

            
	
              106-010
                

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              23
                

            	 	
              RF/D

            	 	
              US
                

            	 	
              78/522,970
                

            	 	
              11/24/04
                

            	 	
              -

            	 	
              Pending
                - 

            	 	 
	
              106-011
                

            	 	 	 	 	 	 	 	 	 	 	 	
              under
                final 

            	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	
              rejection
                

            	 	 
	
              24
                106-012 

            	 	
              TRUE
                SOFTWARE RADIO 

            	 	
              US
                

            	 	
              78/522,968
                

            	 	
              11/24/04
                

            	 	
              -

            	 	
              Pending
                - published for 

            	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	
              opposition
                

            	 	 

    

    

    Patents
      

     

    See
      following page. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      F (cont’d)
      

     

    Patents
      

     

    
      	
              Item
                No. 

            	 	
              Title
                

            	 	
              Country
                

            	 	
              Filed
                

            	 	
              Serial
                No. 

            	 	
              Patent
                No. 

            	 	
              Issue
                Date or Status 

            
	
              1
                

            	 	
              Differential
                Comparator Circuit 

            	 	
              US
                

            	 	
              10/14/94
                

            	 	
              08/322,986
                

            	 	
              5,563,59
                

            	 	
              Issued
                

            
	
              106-007
                

            	 	 	 	 	 	 	 	 	 	
              8
                

            	 	 
	
              2
                106-006 

            	 	
              Direct
                Conversion Delta-Sigma Receiver 

            	 	
              US
                

            	 	
              02/02/99
                

            	 	
              09/241,994
                

            	 	
              6,748,02
                5 

            	 	
              Issued
                

            
	
              3
                106-008 

            	 	
              Direct
                Conversion Delta-Sigma Receiver (Continuation) 

            	 	
              US
                

            	 	
              06/02/04
                

            	 	
              10/858,611
                

            	 	
              -

            	 	
              Pending
                

            
	
              4
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              CN

            	 	
              06/07/04
                

            	 	
              200410007143
                

            	 	
              -

            	 	
              Pending
                - Request for Exam 

            
	
              106-006.CN
                

            	 	
              Receiver
                

            	 	 	 	 	 	
              9.X
                

            	 	 	 	
              due
                6/7/2007 

            
	
              5
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              KR

            	 	
              06/07/04
                

            	 	
              10-2004-

            	 	
              -

            	 	
              Pending
                - Request for Exam 

            
	
              106-006.KR
                

            	 	
              Receiver
                

            	 	 	 	 	 	
              0041465
                

            	 	 	 	
              due
                6/5/2009 

            
	
              6
                106-002 

            	 	
              Direct
                Conversion Delta-Sigma Transmitter 

            	 	
              US
                

            	 	
              11/26/04
                

            	 	
              10/998,212
                

            	 	
              -

            	 	
              Pending
                

            
	
              7
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              CN
                

            	 	
              -

            	 	
              -

            	 	
              -

            	 	
              Not
                Authorized 

            
	
              106-002.CN
                

            	 	
              Transmitter
                

            	 	 	 	 	 	 	 	 	 	 
	
              8
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              EP
                

            	 	
              8/26/05
                

            	 	
              05255261.9
                

            	 	
              -

            	 	
              Pending
                

            
	
              106-

            	 	
              Transmitter
                

            	 	 	 	 	 	 	 	 	 	 
	
              002.EPO
                

            	 	 	 	 	 	 	 	 	 	 	 	 
	
              9
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              HK
                

            	 	
              -

            	 	
              -

            	 	
              -

            	 	
              (Will
                be through China) 

            
	
              106-020.HK
                

            	 	
              Transmitter
                

            	 	 	 	 	 	 	 	 	 	 
	
              10
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              JP
                

            	 	
              -

            	 	
              -

            	 	
              -

            	 	
              Not
                Authorized 

            
	
              106-002.JP
                

            	 	
              Transmitter
                

            	 	 	 	 	 	 	 	 	 	 
	
              11
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              KR

            	 	
              03/22/05
                

            	 	
              10-2005-

            	 	
              -

            	 	
              Pending
                

            
	
              106-002.KR
                

            	 	
              Transmitter
                

            	 	 	 	 	 	
              0023490
                

            	 	 	 	 
	
              12
                

            	 	
              Direct
                Conversion Delta-Sigma 

            	 	
              PCT
                

            	 	
              01/10/05
                

            	 	
              PCT/US05/00
                

            	 	
              -

            	 	
              Pending
                

            
	
              106-

            	 	
              Transmitter
                

            	 	 	 	 	 	
              751
                

            	 	 	 	 
	
              002.PCT
                

            	 	 	 	 	 	 	 	 	 	 	 	 
	
              13
                106-002.TW 

            	 	
              Direct
                Conversion Delta-Sigma Transmitter 

            	 	
              TW

            	 	
              09/06/05
                

            	 	
              94130461
                

            	 	
              -

            	 	
              Pending
                

            
	
              14
                

              106-003
                

            	 	
              Linearizing
                Commutating Amplifier (Provisional) 

            	 	
              US
                

            	 	
              01/21/05
                

            	 	
              60/646,082
                

            	 	
              -

            	 	
              Expired
                Provisional 

            
	
              15
                

              106-013
                

            	 	
              Linearizing
                Commutating Amplifier 

            	 	
              US
                

            	 	
              09/02/05
                

            	 	
              11/219,238
                

            	 	
              -

            	 	
              Pending
                

            
	
              16

              106-009
                

            	 	
              Bandpass
                Filter for Delta-Sigma Transmitter (Provisional) 

            	 	
              US
                

            	 	
              01/21/05
                

            	 	
              60/646,059
                

            	 	
              -

            	 	
              Expired
                Provisional 

            
	
              17

              106-014
                

            	 	
              Bandpass
                Filter for Delta-Sigma Transmitter 

            	 	
              US
                

            	 	
              01/20/06
                

            	 	
              11/337,189
                

            	 	
              -

            	 	
              Pending
                

            
	
              18
                

            	 	
              Adaptive
                Narrow Band Interference 

            	 	
              US
                

            	 	
              09/30/06
                

            	 	
              60/713,921
                

            	 	
              -

            	 	
              Pending
                Provisional 

            
	
              106-017
                

            	 	
              Canceller
                for Broadband Signals 

            	 	 	 	 	 	 	 	 	 	 
	 	 	
              (Provisional)
                

            	 	 	 	 	 	 	 	 	 	 
	
              19
                

            	 	
              Single
                Input, Single Output, Multi-Band RF Front End (Provisional)
                

            	 	
              US
                

            	 	 	 	 	 	
              -

            	 	
              Pending
                Provisional 

            
	
              20
                

            	 	
              Low
                Power, Low Voltage, Digitally 

            	 	
              US
                

            	 	 	 	 	 	
              -

            	 	
              Pending
                Provisional 

            
	 	 	
              Trim-able
                Active Back-termination 

            	 	 	 	 	 	 	 	 	 	 
	 	 	
              LVDS
                driver (Provisional) 

            	 	 	 	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      G 

    Pledged
      Securities 

     

    All
      of
      the shares of preferred stock of Asanté Networks, Inc., which are convertible
      into eighty five (85%) percent of Asanté Network, Inc’s common stock on a
      non-dilutable basis. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A 

    to
      

    SECURITY
      

    AGREEMENT
      

    

    FORM
      OF ADDITIONAL DEBTOR JOINDER 

     

    Security
      Agreement dated as of [_____ ___, 200__ made by

     [_____________
      

    and
      its
      subsidiaries party thereto from time to time, as Debtors 

    to
      and in
      favor of 

    the
      Secured Parties identified therein (the “Security Agreement”)

     

    Reference
      is made to the Security Agreement as defined above; capitalized terms used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Security Agreement. 

     

    The
      undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
      to the Secured Parties referred to above, the undersigned shall (a) be an
      Additional Debtor under the Security Agreement, (b) have all the rights and
      obligations of the Debtors under the Security Agreement as fully and to the
      same
      extent as if the undersigned was an original signatory thereto and (c) be deemed
      to have made the representations and warranties set forth in Section ___ therein
      as of the date of execution and delivery of this Additional Debtor Joinder.
      WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
      GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
      FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
      WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN. 

     

    Attached
      hereto are supplemental and/or replacement Schedules to the Security Agreement,
      as applicable. 

     

    An
      executed copy of this Joinder shall be delivered to the Secured Parties, and
      the
      Secured Parties may rely on the matters set forth herein on or after the date
      hereof. This Joinder shall not be modified, amended or terminated without the
      prior written consent of the Secured Parties. 

     

    IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned. 

     

    [Name
      of
      Additional Debtor] 

     

    By:

    Name:
      

    Title:
      

     

    Address:
      

     

    Dated:
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      B 

    to
      

    SECURITY
      

    AGREEMENT
      

     

    

    THE
      AGENT 

     

    1.
      Appointment.
      The
      Secured Parties (all capitalized terms used herein and not otherwise defined
      shall have the respective meanings provided in the Security Agreement to which
      this Annex B is attached (the "Agreement")), by their acceptance of the
      benefits of the Agreement, hereby designate Gallagher, Briody & Butler (
“Agent”) as the Agent to act as specified herein and in the Agreement.
      Each Secured Party shall be deemed irrevocably to authorize the Agent to take
      such action on its behalf under the provisions of the Agreement and any other
      Transaction Document (as such term is defined in the Debentures) and to exercise
      such powers and to perform such duties hereunder and thereunder as are
      specifically delegated to or required of the Agent by the terms hereof and
      thereof and such other powers as are reasonably incidental thereto. The Agent
      may perform any of its duties hereunder by or through its agents or employees.
      

     

    2.
      Nature
      of Duties.
      The
      Agent shall have no duties or responsibilities except those expressly set forth
      in the Agreement. Neither the Agent nor any of its partners, members,
      shareholders, officers, directors, employees or agents shall be liable for
      any
      action taken or omitted by it as such under the Agreement or hereunder or in
      connection herewith or therewith, be responsible for the consequence of any
      oversight or error of judgment or answerable for any loss, unless caused solely
      by its or their gross negligence or willful misconduct as determined by a final
      judgment (not subject to further appeal) of a court of competent jurisdiction.
      The duties of the Agent shall be mechanical and administrative in nature; the
      Agent shall not have by reason of the Agreement or any other Transaction
      Document a fiduciary relationship in respect of any Debtor or any Secured Party;
      and nothing in the Agreement or any other Transaction Document, expressed or
      implied, is intended to or shall be so construed as to impose upon the Agent
      any
      obligations in respect of the Agreement or any other Transaction Document except
      as expressly set forth herein and therein. 

     

    3.
      Lack
      of Reliance on the Agent.
      Independently and without reliance upon the Agent, each Secured Party, to the
      extent it deems appropriate, has made and shall continue to make (i) its own
      independent investigation of the financial condition and affairs of the Company
      and its subsidiaries in connection with such Secured Party’s investment in the
      Debtors, the creation and continuance of the Obligations, the transactions
      contemplated by the Transaction Documents, and the taking or not taking of
      any
      action in connection therewith, and (ii)
      its
      own appraisal of the creditworthiness of the Company and its subsidiaries,
      and
      of the value of the Collateral from time to time, and the Agent shall have
      no
      duty or responsibility, either initially or on a continuing basis, to provide
      any Secured Party with any credit, market or other information with respect
      thereto, whether coming into its possession before any Obligations are incurred
      or at any time or times thereafter. The Agent shall not be responsible to the
      Debtors or any Secured Party for any recitals, statements, information,
      representations or warranties herein or in any document, certificate or other
      writing delivered in connection herewith, or for the execution, effectiveness,
      genuineness, validity, enforceability, perfection, collectibility, priority
      or
      sufficiency of the Agreement or any other Transaction Document, or for the
      financial condition of the Debtors or the value of any of the Collateral, or
      be
      required to make any inquiry concerning either the performance or observance
      of
      any of the terms, provisions or conditions of the Agreement or any other
      Transaction Document, or the financial condition of the Debtors, or the value
      of
      any of the Collateral, or the existence or possible existence of any default
      or
      Event of Default under the Agreement, the Debentures or any of the other
      Transaction Documents. Anything to the contrary notwithstanding, the Agent
      shall
      have no obligation whatsoever to any Secured Party to assure that the Collateral
      exists or is owned by the Debtors or is cared for, protected or insured or
      that
      the liens granted pursuant to the Agreement have been properly or sufficiently
      or lawfully created, perfected, or enforced or are entitled to any particular
      priority. 

     

    4.
      Certain
      Rights of the Agent.
      The
      Agent shall have the right to take any action with respect to the Collateral,
      on
      behalf of all of the Secured Parties. The Agent shall have the right to request
      instructions from the Secured Parties with respect to any material act or action
      (including failure to act) in connection with the Agreement or any other
      Transaction Document, and shall be entitled to act or refrain from acting in
      accordance with the instructions of Secured Parties holding a majority in
      principal amount of Debentures (based on then-outstanding principal amounts
      of
      Debentures at the time of any such determination); if such instructions are
      not
      provided despite the
      Agent’s request therefor, the Agent shall be entitled to refrain from such act
      or taking such action, and if such action is taken, shall be entitled to
      appropriate indemnification from the Secured Parties in respect of actions
      to be
      taken by the Agent; and the Agent shall not incur liability to any person or
      entity by reason of so refraining. Without limiting the foregoing, (a) no
      Secured Party shall have any right of action whatsoever against the Agent as
      a
      result of the Agent acting or refraining from acting hereunder in accordance
      with the terms of the Agreement or any other Transaction Document, and the
      Debtors shall have no right to question or challenge the authority of, or the
      instructions given to, the Agent pursuant to the foregoing and (b) the Agent
      shall not be required to take any action which the Agent believes (i) could
      reasonably be expected to expose it to personal liability or (ii) is contrary
      to
      this Agreement, the Transaction Documents or applicable law. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.
      Reliance.
      The
      Agent shall be entitled to rely, and shall be fully protected in relying, upon
      any writing, resolution, notice, statement, certificate, telex, teletype or
      telecopier message, cablegram, radiogram, order or other document or telephone
      message signed, believed by it to be sent or made by the proper person or
      entity, and, with respect to all legal matters pertaining to the Agreement
      and
      the other Transaction Documents and its duties thereunder, upon advice of
      counsel selected by it and upon all other matters pertaining to this Agreement
      and the other Transaction Documents and its duties thereunder, upon advice
      of
      other experts selected by it. 

     

    6.
      Indemnification.
      To the
      extent that the Agent is not reimbursed and indemnified by the Debtors, the
      Secured Parties will jointly and severally reimburse and indemnify the Agent,
      in
      proportion to their initially purchased respective principal amounts of
      Debentures, from and against any and all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever which may be imposed on, incurred by or
      asserted against the Agent in performing its duties hereunder or under the
      Agreement or any other Transaction Document, or in any way relating to or
      arising out of the Agreement or any other Transaction Document except for those
      determined by a final judgment (not subject to further appeal) of a court of
      competent jurisdiction to have resulted solely from the Agent's own gross
      negligence or willful misconduct. Prior to taking any action hereunder as Agent,
      the Agent may require each Secured Party to deposit with it sufficient sums
      as
      it determines in good faith is necessary to protect the Agent for costs and
      expenses associated with taking such action. 

     

    7.
      Resignation
      by the Agent.

     

    (a)
      The
      Agent may resign from the performance of all its functions and duties under
      the
      Agreement and the other Transaction Documents at any time by giving 30 days'
      prior written notice (as provided in the Agreement) to the Debtors and the
      Secured Parties. Such resignation shall take effect upon the appointment of
      a
      successor Agent pursuant to clauses (b) and (c) below. 

     

    (b)
      Upon
      any such notice of resignation, the Secured Parties, acting by a Majority in
      Interest, shall appoint a successor Agent hereunder. 

     

    (c)
      If a
      successor Agent shall not have been so appointed within said 30-day period,
      the
      Agent shall then appoint a successor Agent who shall serve as Agent until such
      time, if any, as the Secured Parties appoint a successor Agent as provided
      above. If a successor Agent has not been appointed within such 30-day period,
      the Agent may petition any court of competent jurisdiction or may interplead
      the
      Debtors and the Secured Parties in a proceeding for the appointment of a
      successor Agent, and all fees, including, but not limited to, extraordinary
      fees
      associated with the filing of interpleader and expenses associated therewith,
      shall be payable by the Debtors on demand. 

     

    (d)
      Upon
      the acceptance of any appointment as Agent hereunder by a successor Agent,
      such
      successor Agent shall thereupon succeed to and become vested with all the
      rights, powers, privileges and duties of the retiring Agent and the retiring
      Agent shall be discharged from its duties and obligations under the Agreement.
      After any retiring Agent’s resignation or removal hereunder as Agent, the
      provisions of the Agreement including this Annex B shall inure to its benefit
      as
      to any actions taken or omitted to be taken by it while it was Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.
      Rights
      with respect to Collateral.
      Each
      Secured Party agrees with all other Secured Parties and the Agent (i) that
      it
      shall not, and shall not attempt to, exercise any rights with respect to its
      security interest in the Collateral, whether pursuant to any other agreement
      or
      otherwise (other than pursuant to this Agreement), or take or institute any
      action against the Agent or any of the other Secured Parties in respect of
      the
      Collateral or its rights hereunder (other than any such action arising from
      the
      breach of this Agreement) and (ii) that such Secured Party has no other rights
      with respect to the Collateral other than as set forth in this Agreement and
      the
      other Transaction Documents. 

    

    The
      undersigned hereby accepts appointment as Agent pursuant to the terms of the
      Agreement as of this ____ day of _______________, 2007. 

     

    
      	 	 	 
	 
 	 
 	GALLAGHER,
              BRIODY
              & BUTLER 
 
	 	 	 
	 	
              
By: 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      C 

    to
      

    SECURITY
      

    AGREEMENT
      

     

    INTER-CREDITOR
      AGREEMENT 

     

    This
      INTER-CREDITOR
      AGREEMENT
      (the
“Agreement”) is made by and between the holders of the TechnoConcepts,
      Inc. Series A Secured Subordinated Promissory Notes (“Existing
      Creditors”) and the New Creditors (as defined below), (the Existing
      Creditors and the New Creditors are collectively referred to as the
“Creditors”).
      The
      Agreement shall be effective as of the date of the first issuance of debentures
      to the New Creditors (the “Effective Date”). 

     

    RECITALS

     

    WHEREAS,
      the Existing Creditors are the parties to that certain Note Purchase Agreement
      dated various dates between May 2006 and January 2007 (the “Purchase
      Agreement”) by and between each Existing Creditor and TechnoConcepts, Inc.
      (the “Company”) and are the holders of those TechnoConcepts, Inc. Series
      A Secured Promissory Notes each maturing one year from issuance for an aggregate
      initial issuance amount of $12,408,906.89 executed by the Company in favor
      of
      Purchasers (the “Existing Indebtedness”), and the Existing Creditors are
      the beneficiaries of certain security interests as set forth in Section 1.7
      of
      such Purchase Agreement; 

     

    WHEREAS,
      pursuant to those certain Subscription Agreements entered into pursuant to
      a
      private placement offering which commenced on January 19, 2007 (the
“Subscription Agreements”), the investors signatory thereto (the “New
      Creditors”) will be purchasing at least $2,000,000 and up to $6,000,000 of
      8% Secured Convertible Debentures Due eighteen months from their date of
      issuance from the Company (the “New Indebtedness” and together with the
      Existing Indebtedness, the “Indebtedness”); 

     

    WHEREAS,
      the New Indebtedness will also be secured by all assets of the Company pursuant
      to a Security Agreement dated as of each issuance date of the New Indebtedness
      (the “Security Agreement”), to which this Annex C is attached;

     

    WHEREAS,
      the Creditors wish to memorialize their agreements concerning their respective
      rights, duties and obligations to one another with respect to the security
      interests granted under the Indebtedness. 

     

    NOW,
      THEREFORE, in consideration of the mutual covenants herein, their respective
      performances and benefits pertaining to the Indebtedness, and other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties agree as follows: 

     

    
      	1.	
              Ranking.
                

            

    

     

    
      	
            	1.1	
              The
                Indebtedness shall rank in the following order of priority:
                

            

    

     

    
      	
            	1.1.1	
              First,
                to any sums secured or owed to the holder of the Company’s 7% Secured
                Convertible Debenture (the “2004 Holder”). For clarity, as of
                January 19, 2007 the principal balance on such debenture (not including
                interest, fees or liquidated damages) is $250,000.
                

            

    

     

    
      	
            	1.1.2	
              Second,
                to any Existing Creditor who is not a party to this Agreement, each
                pari
                passu to each other. For clarity, as of January 19, 2007, the aggregate
                principal balance of the Series A Secured Subordinated Promissory
                Notes
                (not including interest, fees or liquidated damages) is $10,158,907.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	1.1.3	
              Third,
                to any sums secured or owed to the Existing Creditors party to this
                Agreement or the New Creditors, paripassu and pro-rata in
                proportion to such Creditor’s outstanding principal amounts of
                Indebtedness at any given time that a determination needs to be made
                of
                pro-rata holdings. For clarity, as of the Effective Date: (i) the
                holdings
                of the 2004 Holder and the Existing Holders who are not a party to
                this
                Agreement (collectively) shall be no greater than $1,000,000; (ii)
                the
                pro-rata holdings of the Existing Creditors (collectively) shall
                be
                no greater than $10,000,000; and (iii) the pro-rata holdings of the
                New Creditors (collectively) shall be no greater than $6,000,000.
                

            

    

     

    
      	
            	1.2	
              If
                an Event of Default (as defined under any Indebtedness) occurs and
                any
                party hereto receives payment from the Company not in compliance
                with this
                Agreement, the other parties hereto shall be immediately notified
                and such
                payment shall be delivered to the Collateral Agent (hereinafter defined)
                to be held in escrow until such time as the Collateral Agent can
                make
                distribution to all of the Creditors in proportion to their respective
                pro-rata holdings of Indebtedness as set forth above.
                

            

    

     

    
      	
            	1.3	
              If
                an Event of Default occurs and any party hereto collects proceeds
                pursuant
                to its rights under any Indebtedness, the other parties hereto shall
                be
                immediately notified and such payment shall be delivered to the Collateral
                Agent to be held in escrow until such time as the Collateral Agent
                can
                make distribution to all of the Creditors in proportion to their
                respective pro-rata holdings of Indebtedness as set forth above.
                

            

    

     

    
      	
            	1.4	
              Notwithstanding
                any other provision in this Agreement, adjustments shall be made
                between
                the Creditors from time to time to reflect the fact that any contingent
                obligation taken into account as an obligation under the Indebtedness
                becomes satisfied or incapable of maturing into an actual obligation.
                Additionally, the Creditors hereby acknowledge that varying maturity
                dates
                apply to the Existing Indebtedness and varying maturity dates may
                apply to
                the New Indebtedness. A payment of principal or interest to a Creditor
                pursuant to the terms of his or her Indebtedness not subject to an
                Event
                of Default shall not trigger any requirement for payment to any other
                Creditor hereunder unless pursuant to the terms of such Creditor’s
                Indebtedness. 

            

    

     

    
      	
            	1.5	
              Gallagher,
                Briody & Butler as Collateral Agent for the New Creditors (the
                “Collateral Agent”), is hereby authorized to file a UCC-1 with the
                Secretary of States of Colorado and California each naming Gallagher,
                Briody & Butler as Collateral Agent as secured party and the Company
                as the debtor. Notwithstanding the foregoing, such authorization
                shall not
                impact the Company’s obligation to file such UCC-1 or other statements
                that may be required to perfect or maintain the security interest
                relating
                to the Collateral. 

            

    

     

    
      	
            	1.6	
              Notwithstanding
                anything to the contrary contained in the Purchase Agreement, the
                Subscription Agreements, the Security Agreement or any document executed
                in connection with the New Indebtedness or the Existing Indebtedness
                and
                irrespective of: (i) the time, order or method of attachment or perfection
                of the security interests created in favor of Existing Creditors
                and the
                New Creditors, (ii) the time or order of filing or recording of financing
                statements or other documents filed or recorded to perfect security
                interests in any collateral; (iii) anything contained in any filing
                or
                agreement to which any Creditor now or hereafter may be a party;
                and (iv)
                the rules for determining perfection or priority under the Uniform
                Commercial Code or any other law governing the relative priorities
                of
                secured creditors, each Creditor acknowledges that (x) all other
                Creditors
                have a valid security interest in the Collateral and (y) the security
                interests of the Creditors in any Collateral pursuant to any outstanding
                Indebtedness shall be pari-passu with each other.
                

            

    

     

    
      	
            	1.7	
              Each
                Creditor agrees not to commence any action or proceeding concerning
                the
                Indebtedness or the Collateral without providing at least one business
                day’s notice to all Creditors. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	2.	
              Indemnification
                by Existing Creditors.
                Existing Creditors shall indemnify, defend, and hold harmless New
                Creditors and the Collateral Agent against and in respect of any
                and all
                claims, demands, losses, costs, expenses, obligations, liabilities,
                damages, recoveries, and deficiencies, including interest, penalties,
                and
                reasonable professional and attorneys’ fees, including those arising from
                settlement negotiations, that New Creditors and the Collateral Agent,
                respectively, shall incur or suffer, which arise, result from, or
                relate
                to a breach of, or failure by Existing Creditors to perform under
                this
                Agreement. 

            

    

     

    
      	3.	
              Indemnification
                by New Creditors.
                New Creditors shall indemnify, defend, and hold harmless Existing
                Creditors and the Collateral Agent against and in respect of any
                and all
                claims, demands, losses, costs, expenses, obligations, liabilities,
                damages, recoveries, and deficiencies, including interest, penalties,
                and
                reasonable professional and attorneys’ fees, including those arising from
                settlement negotiations, that Existing Creditors and the Collateral
                Agent,
                respectively, shall incur or suffer, which arise, result from, or
                relate
                to a breach of, or failure by New Creditors to perform under this
                Agreement. 

            

    

     

    
      	4.	
              Indemnification
                of Collateral Agent.
                To the extent that the Collateral Agent is not reimbursed and indemnified
                by the Company, the Existing Creditors and the New Creditors will
                jointly
                and severally reimburse and indemnify the Collateral Agent, in proportion
                to their then outstanding respective principal amounts of Indebtedness,
                from and against any and all liabilities, obligations, losses, damages,
                penalties, actions, judgments, suits, costs, expenses or disbursements
                of
                any kind or nature whatsoever which may be imposed on, incurred by
                or
                asserted against the Collateral Agent in performing its duties hereunder,
                or in any way relating to or arising out of the Agreement except
                for those
                determined by a final judgment (not subject to further appeal) of
                a court
                of competent jurisdiction to have resulted solely from the Collateral
                Agent's own gross negligence or willful misconduct.
                

            

    

     

    
      	5.	
              Miscellaneous.
                

            

    

     

    
      	
            	5.1	
              Assignment.
                The rights and obligations of the Creditors under this Agreement
                may be
                assigned to or assumed to a transferee of the Debentures (as defined
                in
                the Existing Creditors Securities Purchase Agreement and as defined
                in the
                New Creditors Securities Purchase Agreement), as applicable.
                

            

    

     

    
      	
            	5.2	
              Binding
                Effect.
                This Agreement shall be binding on, and shall inure to the benefit
                of, the
                parties to it and their respective heirs, legal representatives,
                and
                successors. 

            

    

     

    
      	
            	5.3	
              Parties
                in Interest.
                Except as expressly provided in this Agreement, nothing in this Agreement,
                whether express or implied, is intended to confer any rights or remedies
                under or by reason of this Agreement on any persons other than the
                parties
                to it and their respective successors and assigns, nor is anything
                in this
                Agreement intended to relieve or discharge the obligation or liability
                of
                any third persons to any party to this Agreement, nor shall any provision
                give any third persons any right to subrogation or action over against
                any
                party to this Agreement. 

            

    

     

    
      	
            	5.4	
              Entire
                Agreement.
                This Agreement constitutes the entire agreement between the parties
                pertaining to the subject matter contained in it and supersedes all
                prior
                and contemporaneous agreements, representations and understandings
                of the
                parties. 

            

    

     

    
      	
            	5.5	
              Amendment.
                No supplement, modification, or amendment of this Agreement shall
                be
                binding unless executed in writing by all the parties.
                

            

    

     

    
      	
            	5.6	
              Waiver.
                No waiver of any of the provisions of this Agreement shall be deemed,
                or
                shall constitute, a waiver of any other provision, whether or not
                similar,
                nor shall any waiver constitute a continuing waiver. No waiver shall
                be
                binding unless executed in writing by the party making the waiver.
                

            

    

     

    
      	
            	5.7	
              Notices.
                Notices given under this Agreement shall be delivered as set forth
                in the
                Purchase Agreement. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	
              	5.8	
                Governing
                  Law and Venue.
                  This Agreement shall be construed in accordance with, and governed
                  by, the
                  laws of the State of New York, and any action or proceeding, including
                  arbitration, brought by any party in which this Agreement is a
                  subject,
                  shall be brought in New York County, New York.

              

      

      

      
        	
              	5.9	
                Effect
                  of Headings.
                  The headings of the Sections of this Agreement are included for
                  purposes
                  of convenience only, and shall not affect the construction or
                  interpretation of any of its provisions.

              

      

      

      
        	
              	5.10	
                Invalidity.
                  Any provision of this Agreement which is invalid, void, or illegal,
                  shall
                  not affect, impair, or invalidate any other provision of this Agreement,
                  and such other provisions of this Agreement shall remain in full
                  force and
                  effect. 

              

      

      

      
        	
              	5.11	
                Counterparts.
                  This Agreement may be executed in multiple counterparts, each of
                  which may
                  be executed by less than all of the parties and shall be deemed
                  to be an
                  original instrument which shall be enforceable against the parties
                  actually executing such counterparts and all of which together
                  shall
                  constitute one and the same instrument. In lieu of the original
                  documents,
                  a facsimile transmission or copy of the original documents shall
                  be as
                  effective and enforceable as the original.

              

      

      

      
        	
              	5.12	
                Number
                  and Gender.
                  When required by the context of this Agreement, each number (singular
                  and
                  plural) shall include all numbers, and each gender shall include
                  all
                  genders. 

              

      

      

      
        	
              	5.13	
                Further
                  Assurances.
                  Each party to this Agreement agrees to execute further instruments
                  as may
                  be necessary or desirable to carry out this Agreement, provided
                  the party
                  requesting such further action shall bear all related costs and
                  expenses.
                  

              

      

      

      
        	
              	5.14	
                Professional
                  Fees and Costs.
                  If any legal or equitable action, arbitration, or other proceeding,
                  whether on the merits or on motion, are brought or undertaken,
                  or an
                  attorney retained, to enforce this Agreement, or because of an
                  alleged
                  dispute, breach, default, or misrepresentation in connection with
                  any of
                  the provisions of this Agreement, then the successful or prevailing
                  party
                  or parties in such undertaking (or the party that would prevail
                  if an
                  action were brought) shall be entitled to recover reasonable attorney's
                  fees and other professional fees and other costs incurred in such
                  action,
                  proceeding, or discussions, in addition to any other relief to
                  which such
                  party may be entitled. The parties intend this provision to be
                  given the
                  most liberal construction possible and to apply to any circumstances
                  in
                  which such party reasonably incurs expenses.

              

      

      

      
        	6.	
                Additional
                  Parties to this Agreement. Any Existing Creditor or New Creditor that
                  wishes to become a party to this Agreement subsequent to the Effective
                  Date can become a party hereto (an “Additional Creditor”), by
                  executing and delivering an Additional Creditor Joinder in substantially
                  the form of Schedule I attached hereto and shall comply with the
                  provisions hereof applicable to the Creditors.

              

      

      

      
        	7.	
                Termination.
                  

              

      

      

      
        	
              	7.1	
                This
                  Agreement shall terminate with respect to each Existing Creditor
                  on the
                  date on which all payments under the Series A Secured Subordinated
                  Promissory Notes held by such Existing Creditor have been indefeasibly
                  paid in full and all other obligations thereunder have been paid
                  or
                  discharged. 

              

      

      

      
        	
              	7.2	
                This
                  Agreement shall terminate with respect to each New Creditor on
                  the date on
                  which all payments under the 8% Secured Convertible Debentures
                  held by
                  such New Creditor have been indefeasibly paid in full and all other
                  obligations thereunder have been paid or discharged.
                  

              

      

      

      
        	
              	7.3	
                Notwithstanding
                  the foregoing Section 7.1 and 7.2, all indemnities of the Existing
                  Creditors and the New Creditors contained in this Agreement shall
                  survive
                  and remain operative and in full force and effect regardless of
                  the
                  termination of this Agreement..

              

      

    

     

    
      	
               *************************
                

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE TO INTERCREDITOR AGREEMENT]

     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed by the Creditors as
      of
      the day and year first written above. 

     

    EXISTING
      CREDITORS: 

     

    Print
      Name: __________________________________________

     

    By:
      ________________________________________________

    Name:

    Title:
      

     

    Address
      for Notices:

     

    ___________________________________________________

     

    ___________________________________________________

     

     

    NEW
      CREDITORS:

     

    
      Print
        Name: __________________________________________

       

      By:
        ________________________________________________

      Name:

      Title:
        

    

     

    Address
      for Notices:

    
       

      ___________________________________________________

       

      ___________________________________________________

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      I to Inter-Creditor Agreement 

     

    FORM
      OF ADDITIONAL CREDITOR JOINDER 

     

    Inter-Creditor
      Agreement dated as of [_____ ___, 200__ made by 

    the
      Existing Creditors and the New Creditors identified therein 

    (the
      “Inter-Creditor Agreement”) 

    with
      respect to certain Indebtedness issued by 

    TechnoConcepts,
      Inc. (the “Company”) 

     

    Reference
      is made to the Inter-Creditor Agreement as defined above; capitalized terms
      used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Inter-Creditor Agreement. 

     

    The
      undersigned hereby agrees that upon delivery of this Additional Creditor Joinder
      to the Collateral Agent referred to in the Inter-Creditor Agreement, the
      undersigned shall (a) be an Additional Creditor under the Security Agreement,
      (b) have all the rights and obligations of the Existing Creditors or the New
      Creditors, as applicable, under the Inter-Creditor Agreement as fully and to
      the
      same extent as if the undersigned was an original signatory thereto and (c)
      be
      deemed to have made the representations and warranties set forth therein as
      of
      the date of execution and delivery of this Additional Creditor Joinder. WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
      ACKNOWLEDGES THE RESPECTIVE RIGHTS, DUTIES AND OBLIGATIONS OF THE CREDITORS
      TO
      ONE ANOTHER WITH RESPECT TO THE SECURITY INTERESTS GRANTED UNDER THE
      INDEBTEDNESS AS MORE FULLY SET FORTH IN THE INTER-CREDITOR AGREEMENT.

     

    An
      executed copy of this Joinder shall be delivered to the Collateral Agent, and
      the Collateral Agent may rely on the matters set forth herein on or after the
      date hereof. This Joinder shall not be modified, amended or terminated without
      the prior written consent of the Creditors. 

     

    IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned. 

     

    
      	
              EXISTING
                CREDITORS: 

               

            	 	 	NEW
              CREDITORS: 
	Print
              Name:	 	 	Print
              Name:
	
              
                

              

            	 	 	
              
                

              

            
	
              By:

              
                

              

              Name:

              Title:

            	 	 	
              By:

              
                

              

              Name:

              Title:

            
	 	 	 	 
	Address for Notices: 	 	 	Address for Notices:
	 	 	 	 
	
              
 	 	 	
              
 
	
              
 	 	 	
              
 

    

    Dated:

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