Document:

EX-4.1

CONVERTIBLE LINE OF CREDIT NOTE AGREEMENT

	 	 	Up to $250,000, subject to conditions

	 	 	Crossville, Tennessee

Date: April 23, 2007

FOR VALUE RECEIVED, the undersigned Digital Lifestyles Group Inc., a Delaware corporation
(“Company”), hereby promises to pay to the order of      , with an address of
     (“Holder”), at such place as Holder may specify, in lawful money of the
United States of America, the sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000), or
the principal amount then outstanding of the advances that Holder makes hereunder to Company,
whichever amount is less (the “Principal Amount”) on April 23, 2008 (the “Maturity Date”), plus
interest on the Principal Amount outstanding from time to time hereunder at a rate equal to seven
and one half percent (7.5%) per annum. Interest shall be calculated in arrears on the Principal
Amount outstanding through the last day of each month and shall be due and payable in arrears in
monthly installments on the first business day of each month commencing on June 1, 2007 for the
Principal Amount outstanding and ending on the Maturity Date, as may adjusted according to this
Agreement. All interest due hereunder shall be computed on the basis of a 365 day year.

The Company shall pay interest only on the Principal Amount outstanding hereunder from the
date of this Agreement until the day immediately prior to the Maturity Date. On the Maturity Date,
the Company shall repay the Principal Amount outstanding plus any otherwise unpaid interest in the
full amount, unless either (i) Holder elects to convert this Agreement into shares of common stock
of the Company in accordance with Section 4; or (ii) the Company elects to prepay all of this
Agreement in accordance with Section 3 and Holder declines or does not exercise his right to
convert this Agreement into shares of common stock of the Company in accordance with Section 4. In
the event that Company elects to prepay part of this Agreement in accordance with Section 3 and
Holder declines or does not exercise his right to convert this Agreement into shares of common
stock of the Company in accordance with Section 4 (as may be adjusted pursuant to Section 7(m)),
then, on the Maturity Date, the Company shall repay the remaining Principal Amount then outstanding
plus any otherwise unpaid interest in the full amount.

1. Advances; Payments. On, before or after the date of this Convertible Line of Credit
Note Agreement (the “Agreement”), Holder will deliver to Company in immediately available funds
such amounts as Company may request for the primary purpose of satisfying outstanding debts of the
Company and obtaining complete releases from the creditors owed such debts; provided, however, the
total amount of funds advanced to Company pursuant to this Agreement shall in no event exceed Two
Hundred Fifty Thousand and No/100 Dollars ($250,000.00). Holder shall only advance funds requested
by Company upon the written request of Company, signed by L. E. Smith, its Chief Executive Officer.

All payments under this Agreement shall be applied first to interest and then to principal.
Any principal or interest payments on this Agreement outstanding after the occurrence and during
the continuance of a default under this Agreement shall bear interest at a rate equal to the lesser
of (i) the lawful legal rate or (ii) three percent (3%) above the interest rate otherwise
applicable under this Agreement.

2. Representations, Warranties and Covenants of Company.

(a) Corporate Existence and Authority. Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware. Company has all requisite power to execute
and deliver this Agreement, and to perform the provisions of this Agreement and to consummate the
transactions contemplated by this Agreement. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this Agreement, have been duly
authorized and approved by Company.

(b) Compliance with Law. Company has complied, and will comply, in all material respects,
with all provisions of all applicable laws and regulations, including, but not limited to, those
relating to Company’s ownership of real or personal property, the conduct and licensing of
Company’s business, and all environmental matters.

(c) Disclosure. No representation, other statement or information made or provided by
Company to Holder contains any untrue statement of a material fact or omits to state a material
fact necessary to make any statements made to Holder not misleading.

(d) Information. Company will provide Holder with access to or copies of Company’s books,
records, financial statements and such additional financial and other information as Holder may
reasonably request from time to time; provided, however, to the extent such information is not
otherwise publicly available, such information shall be kept confidential by Holder.

3. Prepayments. For the first six (6) months from the date of funding of the Principal
Amount, Company may not, at any time, prepay the loan evidenced hereby, without the written consent
of Holder, which shall not be unreasonably withheld. Upon the expiration of the respective time
periods, upon written notice by Company to the Holder, Company may, at its option, elect to prepay
all or part of the Principal Amount plus any unpaid and accrued interest due hereunder without
penalty. Thereafter, interest will continue to accrue as set forth herein on the remaining
principal amount not prepaid by the Company. Notwithstanding any of the forgoing provisions, upon
receipt of the Company’s notice to prepay all or part of the Principal Amount plus any unpaid and
accrued interest due hereunder, Holder shall have the right to prevent Company from prepaying by
electing to convert the principal amount due into shares of the common stock of the Company in
accordance with Section 4 herein.

4. Optional Conversion.

(a) At Holder’s sole and exclusive option, at any time after the effective date of this
Agreement or within three (3) business days following receipt of notice by the Company that it
wishes to exercise its prepayment rights set forth in Section 3, the Principal Amount outstanding
under the loan as of the Conversion Date1 evidenced by this Agreement shall be
convertible, without the payment of any additional consideration by the Holder and at the option of
the Holder, into shares of common stock of the Company. In the event the Holder elects to convert,
Company shall issue the number of shares of common stock equivalent to the amount calculated by
converting the Principal Amount outstanding and all unpaid and accrued interest due under the loan
evidenced by this Agreement, as of the Conversion Date, into such shares of common stock at a price
per share of $0.35. The Principal Amount outstanding shall continue to accrue interest, and
Company shall be obligated to pay such interest, according to the terms and conditions of this
Agreement until the Conversion Date. All unpaid and accrued interest due under the loan as of the
Conversion Date evidenced by this Agreement shall be paid in cash within three (3) business days
from the Conversion Date.

(b) In order for Holder to convert the Principal Amount outstanding under this Agreement into
shares of common stock of the Company, Holder shall deliver a written notice to Company that Holder
elects to make such conversion. Any conversion made at the election of the Holder shall be deemed
to have been made immediately prior to the close of business on the date Company is deemed to have
received such notice, and Holder or its nominee or nominees entitled to receive the shares of
common stock of Company shall be treated for all such purposes as the record holder or holders of
such shares of common stock on such date (the “Conversion Date”). Company shall have no obligation
to issue any fractional shares upon conversion. Any fractional shares shall be rounded up to the
nearest whole share.

(c) Company agrees (a) that the shares issuable upon conversion of this Agreement shall be
“Registrable Securities” under the Registration Rights Agreement (the “Registration Rights
Agreement”) between Company and Holder, a copy of which is attached hereto and incorporated herein
by reference as Exhibit A and (b) that Holder shall have the rights and obligations of a
“Holder” set forth on the Registration Rights Agreement.

5. Conditions. The following conditions shall govern this Agreement:

(a) Holder shall pay, or shall have paid,      Thousand and No/100
($     ,000) Dollars as of the execution of this Agreement by wire transfer;

(b) Upon request by Company at any time during the term of this Agreement, according to the
manner set forth in paragraph 1 of this Agreement, Holder shall advance funds by wire transfer or
certified check (collectively, “Additional Advances”).

In the event that the Company, at any time during the term of this Agreement, is in default of
its obligations hereunder, then Holder shall, without waiving any rights or remedies granted Holder
in the event of a default by Company under this Agreement, not be obligated to make any Additional
Advances. All other provisions of this Agreement shall remain in full force and effect with
respect to the Principal Amount.

6. Fees and Expenses. Each party to this Agreement shall be responsible for all of their
respective costs and expenses, including reasonable attorneys’ fees, incurred in the preparation of
this Agreement and the other documents executed in connection herewith. Company shall also deliver
a warrant (or warrants, as the case may be) to Holder to purchase common stock (i) in an amount
equal to twenty (20%) percent of the total share amount which shall be issued to Holder upon
conversion of this Agreement pursuant to Section 4 hereinabove; and (ii) with an exercise price of
$0.35 per share. The warrant will expire four years from the date of issuance, which shall be
deemed to be on the earlier of (i) the maturity date of the Note; (ii) the date on which the funds
are advanced in full and owing to the Company; or (iii) the date on which the Company elects to pay
off the Note in full during the term. An unexecuted draft form of warrant is attached hereto as
Exhibit B (together with this Agreement and any other documents delivered in connection
with this Agreement, the “Loan Documents”), provided, however, that such warrant h. Company shall
pay all reasonable and actual costs that Holder incurs in successfully enforcing this Agreement,
including, without limitation, reasonable attorneys’ fees and expenses.

7. Events of Default; Remedies.

(a) Events of Default. If any of the following events (“Events of Default”) shall occur and
be continuing (for any reason whatsoever and whether it shall be voluntary or involuntary or by
operation of law or otherwise):

(i) default shall be made in the payment of the principal of, or interest on,
the Principal Amount when and as the same shall become due and payable, whether at
stated maturity, by acceleration, upon a mandatory prepayment due date or
otherwise; or

(ii) default shall be made in the performance or observance of any covenant,
agreement or condition contained in this Agreement and such default shall have
continued for a period of five (5) business days; or

(iii) Company’s dissolution, termination of existence or insolvency, the
appointment of a receiver of all or any part of the property of Company; an
assignment for the benefit of creditors by Company; or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Company which
results in the entry of an order for relief or which remains undismissed,
undischarged or unbonded for a period of 60 days or more; or

(iv) any representation, warranty, financial statement or other information
statement by Company to Holder, or any other documents or agreements contemplated
hereby and thereby or in any certificate or other instrument delivered hereunder or
pursuant hereto or in connection with any provision hereof shall be false or
incorrect in any material respect on the date as of which made;

then, upon the occurrence of any Event of Default described in (iii), the unpaid Principal Amount,
together with the interest accrued thereon, and all other amounts payable by Company under this
Agreement, shall automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly waived by Company or,
upon the occurrence of any other Event of Default, Holder may, by written notice to Company,
declare the unpaid principal amount of the loan to be, and the same shall forthwith become, due and
payable, together with the interest accrued thereon and all other amounts payable by Company
hereunder.

(b) Suits for Enforcement. If any Event of Default shall have occurred and be continuing,
Holder may proceed to protect and enforce its rights against Company, either by suit in equity or
by action at law, or both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in aid of the exercise of any power granted in this Agreement, or
Holder may proceed to enforce the payment by Company of all sums due under this Agreement or to
enforce any other legal or equitable right of Holder. Company covenants that, if it shall default
in the making of any payment due hereunder or in the performance or observance of any agreement
contained in this Agreement, it will pay to Holder such further amounts, to the extent lawful, to
cover any reasonable costs and expenses of collection or of otherwise enforcing Holder’s rights,
including without limitation the reasonable counsel fees and costs and expenses incurred in
connection with any restructuring, negotiation, refinancing, workout, bankruptcy or other similar
transaction or proceeding.

(c) Remedies Cumulative. No remedy herein conferred upon Holder is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

(d) Remedies Not Waived. No course of dealing between Company and any other person and no
delay or failure in exercising any rights hereunder or under the loan in respect thereof shall
operate as a waiver of Holder’s rights.

8. Miscellaneous.

(a) Successors and Assigns. This Agreement shall bind and inure to the benefit of and be
enforceable by Company, Holder and each of their respective successors and assigns, and, in
addition, shall inure to the benefit of and be enforceable by each person who shall from time to
time be a holder of the loan.

(b) Notices. All notices and other communications provided for in this Agreement shall be in
writing and delivered by registered or certified mail, postage prepaid, or delivered by overnight
courier (for next business day delivery) or telecopied, addressed as follows, or at such other
address as any of the parties hereto may hereafter designate by notice to the other parties given
at the addresses set forth on the signature page:

	 	 	 	 	 
	If to Company:
	 	Digital Lifestyles Group Inc..

	 
	 	ATTN:  L. E. Smith, CEO

	 
	 	1872 West Avenue, Suite 102
	 
	 	Crossville, TN  38555

	If to Holder:
	 	 	 	 

Any such notice or communication shall be deemed to have been duly given on the fifth (5th) day
after being so mailed, the next business day after delivery by overnight courier, when received
when sent by telecopy or upon receipt when delivered personally.

(c) Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.
Signatures may be exchanged by telecopy, with original signatures to follow.

(d) Amendments. This Agreement may only be amended by a writing duly executed by the parties
hereto.

(e) Severability. If any term or provision of this Agreement or any other document executed
in connection herewith shall be determined to be illegal or unenforceable, all other terms and
provisions hereof and thereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law.

(f) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Tennessee and the United States of America, both substantive and remedial. Any
judicial proceeding brought against either of the parties to this agreement or any dispute arising
out of this Agreement or any matter related hereto may be brought in the courts of the State of
Tennessee or in the United States District Court for the Middle District of the State of Tennessee
and, by its execution and delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer
rights on any person other than the parties to this Agreement.

(g) Entire Agreement. This Agreement contains the entire Agreement of the parties hereto
with respect to the transactions contemplated hereby and supersedes all previous oral and written,
and all previous contemporaneous oral negotiations, commitments and understandings.

(h) Further Assurances. The parties agree to promptly to execute and deliver such documents
and to take such other acts as are reasonably necessary to effectuate the purposes of this
Agreement.

(i) Headings. The headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

(j) Assignments and Participations. Company may not assign its rights or obligations
hereunder or under the loan without the prior written consent of Holder. Holder may assign all or
any portion of the loan or warrant without the prior consent of Company. Holder may sell or agree
to sell to one or more other persons a participation in all or any part of any of the loan or
warrant without the prior consent of Company. Upon surrender of the loan or warrant, Company shall
execute and deliver one or more substitute notes, warrants or other securities in such
denominations required by Holder’s designated transferee or transferees. Holder may furnish any
information in the possession of Holder concerning Company, or any of its respective subsidiaries,
from time to time to assignees and participants (including prospective assignees and participants).

(k) Waivers; Indemnity. Company waives presentment and demand for payment, notice of
dishonor, protest of this Agreement, and shall pay all costs of collection when incurred, including
reasonable attorneys’ fees, costs and expenses. Company shall indemnify and hold harmless from any
claim, obligation or liability (including without limitation reasonable attorneys fees and
expenses) arising out of this Agreement.

(l) JURY WAIVER. HOLDER AND COMPANY EACH WAIVES ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

(m) In the event of any dividend or other distribution (whether in the form of cash, common
stock, other securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of common stock or other securities of
the Company, issuance of warrants or other rights to purchase common stock or other securities of
the Company, or other similar corporate transaction or event (an “Event”), and in the opinion of
the Board of Directors of Company (the “Board”), such Event affects the common stock such that an
adjustment is determined by the Board to be appropriate in order to prevent dilution or enlargement
of the right or potential rights intended to be made available under this Agreement, then the Board
shall, in such manner as it may deem equitable, including, without limitation, adjust any or all of
the following: (i) the number and kind of shares of common stock (or other securities or property)
which may be issued pursuant to this Agreement; (ii) the exercise price which may be issued
pursuant to this Agreement. The Board’s determination under this section shall be final, binding
and conclusive.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year set forth above.

	 	 	 	 	 
	COMPANY:

	 	 	 	HOLDER:
	 
	 	 	 	 
	By:

	 	     
	 	By:

L. E. Smith

Chief Executive Officer

1 “Conversion Date” is defined in
paragraph 4(b) of this Agreement.EX-4.2

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS (I) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE
WITH AN EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY DIGITAL LIFESTYLES GROUP, INC., WITH
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH AN EXEMPTION THEREFROM.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS

EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON

TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT

	 	 	 
	Warrant No.      

	 	Number of Shares:      
	 
	 	 
	Date of Issuance:      , 200     

	 	

DIGITAL LIFESTYLES GROUP, INC.

Common Stock Purchase Warrant

THIS IS TO CERTIFY THAT, for value received of $     , effective immediately upon
     , 200     ,      (the “Registered Holder”), or his permitted assigns, is
entitled to purchase from DIGITAL LIFESTYLES GROUP INC., a Delaware corporation (the
“Company”), at the place where the Warrant Office designated pursuant to Section 2.1 is
located, at a purchase price per share of $0.     (as may be adjusted pursuant to the terms of this
Warrant, the “Exercise Price”),      shares of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock, $0.03 par value per share, of the Company, and
is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter set
forth. The number of shares of the Common Stock purchasable hereunder and the Exercise Price are
subject to adjustment in accordance with Article III hereof. This Warrant shall expire at 5:00
p.m., P.S.T., on      , 20     ,      years from the date of issuance.

Certain Terms used in this Warrant are defined in Article IV.

1

ARTICLE I

Exercise of Warrant

1.1 Method of Exercise. This Warrant may be exercised by the Registered Holder in
whole or in part immediately at any time on or before      , 200     , at which time this Warrant
shall expire and be of no further force or effect. To exercise this Warrant, the Registered Holder
or permitted assignees of all rights of the Registered Holder shall deliver to the Company, at the
Warrant Office designated in Section 2.1(a), a written notice in the form of the Purchase Form
attached as Exhibit A hereto, stating therein the election of the Registered Holder or such
permitted assignees of the Registered Holder to exercise this Warrant in the manner provided in the
Purchase Form, (b) payment in full of the Exercise Price (in the manner described below) for all
Warrant Shares purchased hereunder, and (c) this Warrant. Subject to compliance with Section
3.1(a)(vi), this Warrant shall be deemed to be exercised on the date of receipt by the Company of
the Purchase Form, accompanied by payment for the Warrant Shares to be purchased and surrender of
this Warrant, as aforesaid, and such date is referred to herein as the “Exercise Date.”
Upon such exercise (subject as aforesaid), the Company shall issue and deliver to the Registered
Holder a certificate for the full number of the Warrant Shares purchasable by the Registered Holder
hereunder, against the receipt by the Company of the total Exercise Price payable hereunder for all
such Warrant Shares, (a) in cash or by certified or cashier’s check or (b) if the Common Stock is
registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by
surrendering Warrant Shares having a Current Market Price equal to the Exercise Price for all the
Warrant Shares so purchased. The Person in whose name the certificate(s) for Common Stock is to be
issued shall be deemed to have become a holder of record of such Common Stock on the Exercise Date.

1.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon
exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be
issuable upon exercise of this Warrant, the Company shall round up, or down, such fractional
interest and shall issue the appropriate number of shares based on such calculation whereby a 5/10
or greater shall be rounded up and any other fractional interest shall be rounded down.

1.3 Termination. Notwithstanding any other provision of this Warrant, the right to
exercise this Warrant shall terminate upon the earlier of (a) the close of business on      ,
20     or (b) the closing date of an Asset Transfer or Acquisition.

1.4 Convertible Note. This Warrant is issued in connection with the execution by and
between the Company and the Registered Holder of that certain convertible line of credit note
agreement (the “Convertible Note”) as of the date hereof. Pursuant to the terms of the Convertible
Note, the Registered Holder has agreed to convert an aggregate principal loan amount of
$     , convertible into Common Stock of the Company in accordance with the terms of the
Convertible Note.

ARTICLE II

Warrant Office; Transfer

2.1 Warrant Office. The Company shall maintain an office for certain purposes
specified herein (the “Warrant Office”), which office shall initially be the Company’s
office at 1872 West Avenue, Suite 102, Crossville, Tennessee 38555, and may subsequently be such
other office of the Company or of any transfer agent of the Common Stock in the continental United
States of which written notice has previously been given to the Registered Holder. The Company
shall maintain, at the Warrant Office, a register for the Warrant in which the Company shall record
the name and address of the Registered Holder, as well as the name and address of each permitted
assignee of the rights of the Registered Holder.

2.2 Ownership of Warrant. The Company may deem and treat the Registered Holder as the
holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as provided in this
Article II.

2.3 Transfer of Warrants. The Company agrees to maintain at the Warrant Office books
for the registration and transfer of this Warrant. This Warrant may be transferred in whole or in
part only in compliance with the applicable law. The Company, from time to time, shall register
the transfer of this Warrant in such books upon surrender of this Warrant at the Warrant Office,
properly endorsed, together with a written assignment of this Warrant, substantially in the form of
the Assignment attached as Exhibit B hereto. Upon any such transfer, a new Warrant shall be issued
to the transferee, and the Company shall cancel the surrendered Warrant. The Registered Holder
shall pay all taxes and all other expenses and charges payable in connection with the transfer of
Warrants pursuant to this Section 2.3.

2.4 Registration Rights. The Company agrees (a) that the Warrant Shares shall be
“Registrable Securities” under the Registration Rights Agreement (the “Registration Rights
Agreement”) between the Company and Registered Holder, a copy of which is attached hereto and
incorporated herein by reference as Exhibit C and (b) that the Registered Holder shall have
the rights and obligations of a Holder set forth on the Registration Rights Agreement.

2.5 No Rights as Shareholder Until Exercise. This Warrant does not entitle the
Registered Holder to any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise
Price, the Warrant Shares so purchased shall be and be deemed to be issued to the Registered Holder
as the record owner of such shares as of the close of business on the later of the date of such
surrender or payment.

2.6 Expenses of Delivery of Warrants. Except as provided in Section 2.3 above, the
Company shall pay all reasonable expenses, taxes (other than transfer taxes) and other charges
payable in connection with the preparation, issuance and delivery of Warrants and related Warrant
Shares hereunder.

2.7 Compliance with Securities Laws. The Registered Holder (and its transferees and
assigns), by acceptance of this Warrant, covenants and agrees that such Registered Holder is
acquiring the Warrants evidenced hereby, and, upon exercise hereof, the Warrant Shares, for its own
account as an investment and not with a view to distribution thereof. Neither this Warrant nor the
Warrant Shares issuable hereunder have been registered under the Securities Act or any state
securities laws and no transfer of this Warrant or any Warrant Shares shall be permitted unless the
Company has received notice of such transfer in the form of the assignment attached hereto as
Exhibit B, accompanied by an opinion of counsel reasonably satisfactory to the Company that
an exemption from registration of such Warrant or Warrant Shares under the Securities Act is
available for such transfer, except that no such opinion shall be required after the registration
for resale of the Warrant Shares has become effective. Upon any exercise of the Warrants prior to
effective registration for resale or except as in accordance with Rule 144 under the Securities
Act, certificates representing the Warrant Shares shall bear a restrictive legend substantially
identical to that set forth as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

(c) Any purported transfer of the Warrant or Warrant Shares not in compliance with the
provisions of this section shall be null and void. Stop transfer instructions have been or will be
imposed with respect to the Warrant Shares so as to restrict resale or other transfer thereof,
subject to this Section 2.7.

ARTICLE III

Adjustments to Warrant

3.1 Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price
shall be subject to adjustment from time to time as hereinafter provided in this Article III. Upon
each adjustment of the Exercise Price, except pursuant to Sections 3.1(a)(iii), (iv), and (v), the
Registered Holder shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of shares of the Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of the Common Stock
purchasable pursuant hereto immediately prior to such adjustment and dividing the product thereof
by the Exercise Price resulting from such adjustment.

(a) Exercise Price Adjustments. The Exercise Price shall be subject to adjustment
from time to time as follows:

(i) Adjustment for Stock Splits and Combinations. If the Company shall, at any
time or from time to time after the date hereof (the “Original Issue Date”) while
this Warrant remains outstanding, effect a subdivision of the outstanding Common Stock, the
Exercise Price in effect immediately before such subdivision shall be proportionately
decreased. Conversely, if the Company shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock into a smaller number of
 shares, the Exercise Price in effect immediately before such combination shall be
proportionately increased. Any adjustment under this Section 3.1(a)(i) shall become
effective at the close of business on the date the subdivision or combination becomes
effective.

(ii) Adjustment for Common Stock Dividends and Distributions. If the Company,
at any time or from time to time after the Original Issue Date while this Warrant remains
outstanding makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional shares of
Common Stock, in each such event the Exercise Price that is then in effect shall be
decreased as of the time of such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by multiplying the Exercise Price then in effect
by a fraction (i) the numerator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total number of
 shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not fully paid or
if such distribution is not fully made on the date fixed therefor, the Exercise Price shall
be recomputed accordingly as of the close of business on such record date, and thereafter
the Exercise Price shall be adjusted pursuant to this Section 3.1(a)(ii) to reflect the
actual payment of such dividend or distribution.

(iii) Adjustment for Reclassification, Exchange and Substitution. If at any
time or from time to time after the Original Issue Date while this Warrant remains
outstanding, the Common Stock is changed into the same or a different number of shares of
any class or classes of stock, whether by recapitalization, reclassification or otherwise
(other than an Acquisition, Asset Transfer, subdivision or combination of shares, stock
dividend, reorganization, merger, consolidation, or sale of assets provided for elsewhere
in this Section 3.1(a)), in any such event the Registered Holder shall have the right
thereafter to convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other change by holders
of the maximum number of shares of Common Stock into which such shares of Common Stock
could have been converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to such other
securities or property by the terms thereof.

(iv) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time after the Original Issue Date while this Warrant remains
outstanding, there is a capital reorganization of the Common Stock (other than an
Acquisition, Asset Transfer, recapitalization, or subdivision, combination,
reclassification, exchange, or substitution of shares provided for elsewhere in this
Section 3.1(a)), as a part of such capital reorganization, provision shall be made so that
the Registered Holder shall thereafter be entitled to receive upon exercise hereof the
number of shares of stock or other securities or property of the Company to which a holder
of the number of shares of Common Stock deliverable upon exercise immediately prior to such
event would have been entitled as a result of such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the provisions of this Section
3.1(a) with respect to the rights of the Registered Holder after the capital reorganization
to the end that the provisions of this Section 3.1(a) (including adjustment of the Exercise
Price then in effect and the number of shares issuable upon exercise) shall be applicable
after that event and be as nearly equivalent as practicable.

(v) Rounding of Calculations; Minimum Adjustment. All calculations under this
Section 3.1(a) and under Section 3.1(b) shall be made to the nearest cent. Any provision
of this Section 3.1 to the contrary notwithstanding, no adjustment in the Exercise Price
shall be made if the amount of such adjustment would be less than one percent, but any such
amount shall be carried forward and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which, together with such amount and
any other amount or amounts so carried forward, shall aggregate one percent or more.

(vi) Timing of Issuance of Additional Common Stock Upon Certain Adjustments.
In any case in which the provisions of this Section 3.1(a) shall require that an adjustment
shall become effective immediately after a record date for an event, the Company may defer
until the occurrence of such event issuing to the Registered Holder after such record date
and before the occurrence of such event the additional shares of Common Stock or other
property issuable or deliverable upon exercise by reason of the adjustment required by such
event over and above the shares of Common Stock or other property issuable or deliverable
upon such exercise before giving effect to such adjustment; provided,
however, that the Company upon request shall deliver to such Registered Holder a
due bill or other appropriate instrument evidencing such Registered Holder’s right to
receive such additional shares or other property, and such cash, upon the occurrence of the
event requiring such adjustment.

(vii) Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant, reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors, in its sole discretion, of the
Company.

(b) Current Market Price. The “Current Market Price” shall mean, as of any
date, 5% of the sum of the average, for each of the 20 consecutive Trading Days immediately prior
to such date, of either: (i) the high and low sales prices of the Common Stock on such Trading Day
as reported on the composite tape for the principal national securities exchange on which the
Common Stock may then be listed, or (ii) if the Common Stock shall not be so listed on any such
Trading Day, the high and low sales prices of Common Stock in the over-the-counter market as
reported by the Nasdaq Stock Market for National Market Securities, or (iii) if the Common Shares
shall not be included in the Nasdaq Stock Market as a National Market Security on any such Trading
Day, the representative bid and asked prices at the end of such Trading Day in such market as
reported by the Nasdaq Stock Market or (iv) if there be no such representative prices reported by
the Nasdaq Stock Market, the lowest bid and highest asked prices at the end of such Trading Day in
the over-the-counter market as reported by the OTC Electronic Bulletin Board, Pink Sheets or
National Quotation Bureau, Inc., or any successor organization. For purposes of determining
Current Market Price, the term “Trading Day” shall mean a day on which an amount greater
than zero can be calculated with respect to the Common Stock under any one or more of the foregoing
categories (i), (ii), (iii) and (iv), and the “end” thereof, for the purposes of categories (iii)
and (iv), shall mean the exact time at which trading shall end on the Pink Sheets Market, or
applicable market on which the Common Stock of the Company is trading. If the Current Market Price
cannot be determined under any of the foregoing methods, Current Market Price shall mean the fair
value per share of Common Stock on such date as determined by the Board of Directors in good faith,
irrespective of any accounting treatment.

(c) Statement Regarding Adjustments. Whenever the Exercise Price shall be adjusted as
provided in Section 3.1(a), and upon each change in the number of shares of the Common Stock
issuable upon exercise of this Warrant, the Company shall forthwith file, at the office of any
transfer agent for this Warrant and at the principal office of the Company, a statement showing in
detail the facts requiring such adjustment and the Exercise Price and new number of shares issuable
that shall be in effect after such adjustment, and the Company shall also cause a copy of such
statement to be given to the Registered Holder. Each such statement shall be signed by the
Company’s chief financial or accounting officer. Where appropriate, such copy may be given in
advance and may be included as part of a notice required to be mailed under the provisions of
Section 3.1(d).

(d) Notice to Holders. In the event the Company shall propose to take any action of
the type described in clause (iii) or (iv) of Section 3.1(a), the Company shall give notice to the
Registered Holder, in the manner set forth in Section 6.6, which notice shall specify the record
date, if any, with respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such effect may be known
at the date of such notice) on the Exercise Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon exercise of this Warrant. In the case of
any action which would require the fixing of a record date, such notice shall be given at least 10
days prior to the date so fixed, and in case of all other action, such notice shall be given at
least 15 days prior to the taking of such proposed action. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of any such action.

(e) Treasury Stock. For the purposes of this Section 3.1, the sale or other
disposition of any Common Stock of the Company theretofore held in its treasury shall be deemed to
be an issuance thereof.

3.2 Costs. The Registered Holder shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of the Warrant Shares upon exercise of
this Warrant. Additionally, the Company shall not be required to pay any taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificate for such
Warrant Shares. The Registered Holder shall reimburse the Company for any such taxes assessed
against the Company.

3.3 Reservations of Shares. The Company shall reserve at all times so long as this
Warrant remains outstanding, free from preemptive rights, out of its treasury Common Stock or its
authorized but unissued shares of Common Stock, or both, solely for the purpose of effecting the
exercise of this Warrant, sufficient shares of Common Stock to provide for the exercise hereof.

3.4 Valid Issuance. All shares of Common Stock which may be issued upon exercise of
this Warrant will upon issuance by the Company be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the issuance thereof
attributable to any act or omission by the Company, and the Company shall take no action which will
cause a contrary result (including without limitation, any action which would cause the Exercise
Price to be less than the par value, if any, of the Common Stock).

ARTICLE IV

Terms Defined

As used in this Warrant, unless the context otherwise requires, the following terms have the
respective meanings set forth below or in the Section indicated:

Acquisition means (a) any consolidation or merger of the Company with or into any
other corporation or other entity or Person, or any other corporate reorganization, in which the
individuals and entities who were beneficial owners of the Common Stock immediately prior to such
transaction beneficially own, directly or indirectly, less than 50% of the outstanding securities
entitled to vote generally in the election of directors of the resulting, surviving, or acquiring
corporation in such transaction or (b) any transaction or series of related transactions to which
the Company is a party in which in excess of 50% of the outstanding securities entitled to vote
generally in the election of director of the Company are transferred, excluding any consolidation
or merger effected exclusively to change the domicile of the Company.

Asset Transfer means a sale, lease, or other disposition of all or substantially all
of the assets of the Company to another Person.

Board of Directors means the Board of Directors of the Company.

Common Stock means the Company’s authorized Common Stock, $0.03 par value per share.

Company means Digital Lifestyles Group Inc., a Delaware corporation, and any other
corporation assuming or required to assume the obligations undertaken in connection with this
Warrant.

Current Market Price is defined in Section 3.1(b).

Exchange Act is defined in Section 1.1.

Exercise Date is defined in Section 1.1.

Exercise Price is defined in the Preamble.

Original Issue Date is defined in Section 3.1(a)(i).

Outstanding means when used with reference to Common Stock at any date, all issued
shares of Common Stock (including, but without duplication, shares deemed issued pursuant to
Article III) at such date, except shares then held in the treasury of the Company.

Person means any individual, corporation, partnership, trust, organization,
association or other entity.

Registered Holder is defined in the Preamble.

Securities Act means the Securities Act of 1933 and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.

Trading Day is defined in Section 3.1(b).

Warrant means this Warrant and any successor or replacement Warrant delivered in
accordance with Section 2.3 or 6.8.

Warrant Office is defined in Section 2.1.

Warrant Shares means the shares of Common Stock purchased or purchasable by the
Registered Holder, or the permitted assignees of such Registered Holder, upon exercise of this
Warrant pursuant to Article I hereof.

ARTICLE V

Covenant of the Company

The Company covenants and agrees that this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of
the Company’s assets.

ARTICLE VI

Miscellaneous

6.1 Entire Agreement. This Warrant and the Registration Rights Agreement contain the
entire agreement between the Registered Holder and the Company with respect to the Warrant Shares
that it can purchase upon exercise hereof and the related transactions and supersedes all prior
arrangements or understanding with respect thereto.

6.2 Governing Law. This Warrant shall be governed by and construed in accordance with
the internal laws of the State of Tennessee, without regard to its conflict of law provisions.

6.3 Waiver and Amendment. Any term or provision of this Warrant may be waived at any
time by the party which is entitled to the benefits thereof, and any term or provision of this
Warrant may be amended or supplemented at any time by the written consent of the parties (it
being agreed that an amendment to or waiver under any of the provisions of Article III of this
Warrant shall not be considered an amendment of the number of Warrant Shares or the Exercise
Price). No waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising because of any prior or subsequent such occurrence.

6.4 Illegality. In the event that any one or more of the provisions contained in this
Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in any other respect and the
remaining provisions of this Warrant shall not, at the election of the party for whom the benefit
of the provision exists, be in any way impaired.

6.5 Copy of Warrant. A copy of this Warrant shall be filed among the records of the
Company.

6.6 Notice. Any notice or other document required or permitted to be given or
delivered to the Registered Holder shall be delivered at, or sent by certified or registered mail
to such Registered Holder at, the last address shown on the books of the Company maintained at the
Warrant Office for the registration of this Warrant or at any more recent address of which the
Registered Holder shall have notified the Company in writing. Any notice or other document
required or permitted to be given or delivered to the Company, other than such notice or documents
required to be delivered to the Warrant Office, shall be delivered at, or sent by certified or
registered mail to, the office of the Company at 1872 West Avenue, Suite 102, Crossville, Tennessee
38555 or any other address within the continental United States of America as shall have been
designated in writing by the Company delivered to the Registered Holder.

6.7 Limitation of Liability; Not Stockholders. Subject to the provisions of Article
III, until the exercise of this Warrant, the Registered Holder shall not have or exercise any
rights by virtue hereof as a stockholder of the Company, including, without limitation, the right
to vote, to receive dividends and other distributions, or to receive notice of, or attend meetings
of stockholders or any other proceedings of the Company. Until the exercise of this Warrant, no
provision hereof, and no mere enumeration herein of the rights or privileges of the Registered
Holder, shall give rise to any liability of such Registered Holder for the purchase price of any
shares of Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.

6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory evidence)
of the loss, theft, mutilation or destruction of this Warrant, and, in the case of any such loss,
theft or destruction, upon delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or, in the event of such mutilation upon surrender and
cancellation of this Warrant, the Company will make and deliver a new Warrant of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Warrant; provided, however, that
the original Registered Holder of this Warrant shall not be required to provide any such bond of
indemnity and may in lieu thereof provide his agreement of indemnity. Any Warrant issued under the
provisions of this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or
in lieu of any mutilated Warrant, shall constitute an original contractual obligation on the part
of the Company. This Warrant shall be promptly canceled by the Company upon the surrender hereof
in connection with any exchange or replacement. The Registered Holder of this Warrant shall pay
all taxes (including securities transfer taxes) and all other expenses and charges payable in
connection with the preparation, execution and delivery of replacement Warrant(s) pursuant to this
Section 6.8.

6.9 Headings. The Article and Section and other headings herein are for convenience
only and are not a part of this Warrant and shall not affect the interpretation thereof.

6.10 Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Registered Holder. The
provisions of this Warrant are intended to be for the benefit of all Registered Holders from time
to time of this Warrant and shall be enforceable by any such Registered Holder or holder of Warrant
Shares.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name.

Dated:      , 200     

DIGITAL LIFESTYLES GROUP INC.

By:      

Name:

Title: Chief Executive Officer

Exhibit A

PURCHASE FORM

To: Digital Lifestyles Group, Inc. Dated:

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.      ),
hereby irrevocably elects to purchase      shares of the Common Stock covered by such Warrant.

The undersigned herewith makes payment of the full exercise price for such shares at the price
per share provided for in such Warrant, which is $    per share in lawful money of the United
States.

[     ]

     

Name:      

Title:      

2

Exhibit B

ASSIGNMENT

For value received,      , hereby sells, assigns and transfers unto
     the within Warrant, together with all right, title and interest
therein and does hereby irrevocably constitute and appoint 
 attorney, to transfer said Warrant on the books of the
Company, with full power of substitution.

     

Dated:      , 200_

3

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