Document:

NOTE
      PURCHASE AGREEMENT

     

    This
      Subordinated Convertible Note Purchase Agreement (the "Agreement") is made
      effective as of    between
      TECHNOCONCEPTS INC. (the "Company"), and
      the
      investors listed on the Schedule of Investors attached as Exhibit A hereto
      (the
      "Investors").

     

    1.
      The Notes

     

    1.1
      Authorization 

     

    The
      Company has authorized the sale and issuance of Subordinated Convertible
      Promissory Notes, substantially in the form attached hereto as Exhibit B (each
      a
      "Note" and, collectively, the "Notes"), in the principal amount of up to
      $1,000,000.00.

     

    1.2
      Purchase and Sale of Notes 

     

    Subject
      to the terms and conditions hereof, the Company will issue and sell to the
      Investors, and the Investors will purchase from the Company, the
      Notes.

     

    1.3
      Convertibility of the Notes 

     

    The
      Notes
      will be convertible into equity securities of the Company upon the terms and
      conditions contained in the Notes. Shares of equity securities of the Company
      issued upon conversion of the Notes are referred to herein as the "Note
      Shares."

     

    1.4
      Closing 

     

    The
      closing of the sale and issuance of the Notes (the "Closing") will be held
      at
      the offices of the Company at 12:00 Noon, local time, on    ,
      or at
      such other time and place as shall be mutually agreed upon by the Company and
      the Investors who propose to purchase a majority in interest of the Notes.
      The
      date of such Closing is hereinafter referred to as the "Closing
      Date."

     

    1.5
      Delivery 

     

    At
      the
      Closing, the Company will deliver to the Investors the Notes against payment
      of the principal amount thereof by a check or wire transfer payable to the
      order
      of the Company.

     

    2.
      Representations and Warranties of the Company 

     

    Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Investors concurrently herewith (the “Disclosure Schedules”) which
      Disclosure Schedules shall be deemed a part hereof, the Company represents
      and
      warrants to the Investors as follows:

     

    2.1
      Organization and Standing 

     

    The
      Company is a corporation duly organized and existing under, and by virtue of,
      the laws of the State of Colorado and is in good standing under such laws.
      The
      Company has all requisite corporate power and authority to own its properties
      and assets and to carry on its business as presently conducted and as proposed
      to be conducted.

    

      
        
          
          

        

        
          Note
            Purchase Agreement
            - Page 1 of 29

          
            

          

        

        
          
          

        

      

       

    

    2.2
      Capitalization 

     

    The
      capitalization of the Company is as described in the Company’s most recent
      periodic report filed with the SEC. The Company has not issued any capital
      stock
      since such filing other than pursuant to the exercise of employee stock options
      under the Company’s stock option plans, the issuance of shares of Common Stock
      to employees pursuant to the Company’s employee stock purchase plan and pursuant
      to the conversion or exercise of outstanding Common Stock Equivalents. Except
      as
      may be set forth in that certain Securities Purchase Agreement dated November,
      17, 2004, no person has any right of first refusal, preemptive right, right
      of
      participation, or any similar right to participate in the transactions
      contemplated herein. Except as a result of the purchase and sale of the Notes,
      there are no outstanding options, warrants, scrip rights to subscribe to, calls
      or commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock,
      or
      securities or rights convertible or exchangeable into shares of Common Stock.
      The issuance and sale of the Notes will not obligate the Company to issue shares
      of Common Stock or other securities to any Person (other than the Investors)
      and
      will not result in a right of any holder of Company securities to adjust the
      exercise, conversion, exchange or reset price under such securities. All of
      the
      outstanding shares of capital stock of the Company are validly issued, fully
      paid and nonassessable, have been issued in compliance with all federal and
      state securities laws, and none of such outstanding shares was issued in
      violation of any preemptive rights or similar rights to subscribe for or
      purchase securities. No further approval or authorization of any stockholder,
      the Board of Directors of the Company or others is required for the issuance
      and
      sale of the Securities. There are no stockholders agreements, voting agreements
      or other similar agreements with respect to the Company’s capital stock to which
      the Company is a party or, to the knowledge of the Company, between or among
      any
      of the Company’s stockholders.

     

    2.3
      Authorization

     

    All
      corporate action on the part of the Company and its directors necessary for
      the
      sale and issuance of the Notes and the performance of the Company's obligations
      under this Agreement and the Notes will be taken prior to the Closing. This
      Agreement and the Notes are valid, binding and enforceable obligations of the
      Company, subject to the laws of general application relating to bankruptcy,
      insolvency, and the relief of debtors and rules of law governing specific
      performance, injunctive relief or other equitable remedies. The Notes, when
      issued in compliance with the provisions of this Agreement, will be validly
      issued, and will be free of any liens or encumbrances, assuming the Investors
      take the Notes with no notice thereof, other
      than any liens or encumbrances created by or imposed on the Holder; provided,
      however, that the Notes may be subject to restrictions on transfer under state
      and/or federal securities laws as set forth herein. The Note Shares, when issued
      in compliance with the provisions of the Notes, will be validly issued, fully
      paid and nonassessable, and will be free of any liens or encumbrances, assuming
      that the Investors take the Note Shares with no notice thereof, other than
      any
      liens or encumbrances created or imposed on the Holder; provided, however,
      that
      the Note Shares will be subject to restrictions on transfer under state and/or
      federal securities laws.

     

    2.4
      Governmental Consent

     

    No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required in connection
      with the valid execution and delivery of this Agreement, or the offer, sale
      or
      issuance of the Notes, except qualification or registration (or taking such
      action as may be necessary to secure an exemption from qualification or
      registration requirements, if available) of the offer and sale of the Notes
      under applicable federal and state securities regulations, which filings and
      qualifications or registrations, if required, will be accomplished in a timely
      manner.

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 2 of 29

        
          

        

      

      
        
        

      

    

     

    2.5
      SEC Reports; Financial Statements 

     

    The
      Company has filed all reports required to be filed by it under the Securities
      Act of 1933, as amended, (the “Securities Act”) and the Securities Exchange Act
      of 1934 (the “Exchange Act”), including pursuant to Section 13(a) or 15(d)
      thereof, for the two years preceding the date hereof (or such shorter period
      as
      the Company was required by law to file such material) (the foregoing materials,
      including the exhibits thereto, being collectively referred to herein as the
      “SEC Reports”) on a timely basis or has received a valid extension of such time
      of filing and has filed any such SEC Reports prior to the expiration of any
      such
      extension. As of their respective dates, the SEC Reports complied in all
      material respects with the requirements of the Securities Act and the Exchange
      Act and the rules and regulations of the Securities Exchange Commission (the
      “Commission”) promulgated thereunder, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. The financial statements of the Company included in the SEC Reports
      comply in all material respects with applicable accounting requirements and
      the
      rules and regulations of the Commission with respect thereto as in effect at
      the
      time of filing. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles applied on a consistent
      basis during the periods involved (“GAAP”), except as may be otherwise specified
      in such financial statements or the notes thereto and except that unaudited
      financial statements may not contain all footnotes required by GAAP, and fairly
      present in all material respects the financial position of the Company and
      its
      consolidated subsidiaries as of and for the dates thereof and the results of
      operations and cash flows for the periods then ended, subject, in the case
      of
      unaudited statements, to normal, immaterial, year-end audit
      adjustments.

     

    2.6
      Compliance with Other Instruments 

     

    The
      Company is not in violation of any provisions of its Certificate of
      Incorporation or Bylaws or in violation or default of any provision of any
      instrument, judgment, order, writ, decree or contract to which it is a party
      or
      by which it is bound or any provision of federal or state statute, rule or
      regulation applicable to the Company, where such violation or default would
      have
      a material adverse effect on the financial condition or results of operations
      of
      the Company, and the consummation of the transactions contemplated hereby will
      not result in any such violation or default or require any consent under (which
      consent has not been obtained) or be in conflict with or constitute, with or
      without the passage of time and giving of notice, either a violation or default
      under any such material provision, instrument, judgment, order, writ, decree
      or
      contract or an event which results in the creation of any lien charge or
      encumbrance upon any assets of the Company.

     

    2.7
      Finder's Fees 

     

    No
      person
      is entitled, directly or indirectly, to compensation from the Company by reason
      of any contract or understanding or contact with the Company, as a finder or
      broker in connection with this sale and purchase of the Notes contemplated
      by this Agreement. The Company agrees to indemnify and hold the Investors
      harmless against and in respect of any claim of brokerage or other commissions
      or similar fees relative to this Agreement or the transactions contemplated
      hereby which arise as a result of a contract or understanding made by the
      Company with any such broker or finder in connection with this sale and purchase
      of the Notes contemplated by this Agreement.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 3 of 29

        
          

        

      

      
        
        

      

    

     

    2.8
      Disclosure 

     

    This
      Agreement and the Exhibits hereto and the documents provided to the Investors
      in
      connection with the purchase of the Notes do not contain any untrue statement
      of
      a material fact.

     

    3.
      Representations and Warranties of Investors 

     

    Each
      Investor hereby represents and warrants to the Company with respect to the
      purchase of such Investor's Note as follows:

     

    3.1
      Binding Obligation 

     

    Such
      Investor has full legal capacity, power and authority to execute and deliver
      this Agreement and to perform its obligations hereunder. Each of this Agreement
      and the Note issued to the Investor is a valid and binding obligation of the
      Investor, enforceable in accordance with its terms, except as limited by
      bankruptcy, insolvency or other laws of general application relating to or
      affecting the enforcement of creditors' rights generally and general principles
      of equity.

     

    3.2
      Investor Representation

     

    Such
      Investor understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof, has no present intention of distributing any of such Securities and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      such Investor’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws). Such Investor is acquiring the Securities hereunder in the
      ordinary course of its business. Such Investor does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

    3.3
      Investor Status

     

    At
      the
      time such Investor was offered the Securities, it was, and at the date hereof
      it
      is, and on each date on which it exercises any Warrants or converts any
      Debentures it will be either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii)
      a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
      Act. Such Investor is not required to be registered as a broker-dealer under
      Section 15 of the Exchange Act.

     

    3.4
      Experience of Such Investor

     

    Each
      Investor, either alone or together with its representatives, has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      Securities, and has so evaluated the merits and risks of such investment. Such
      Investor is able to bear the economic risk of an investment in the Securities
      and, at the present time, is able to afford a complete loss of such
      investment.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 4 of 29

        
          

        

      

      
        
        

      

    

    3.5
      General Solicitation

     

    Such
      Investor is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    3.6
      Short Sales

     

    Each
      Investor represents that prior to 8:30 a.m. ET on the Trading Day immediately
      following the date of this Agreement, neither it nor any Person over which
      the
      Investor has direct or indirect control, have made any purchases or sales of,
      or
      granted any option for the purchase of or entered into any hedging or similar
      transaction with the same economic effect as a short sale, of the Common Stock
      of the Company.

     

    3.7
      Reliance on Exemptions

     

    Each
      Investor understands that the Securities are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying in
      part
      upon the truth and accuracy of, and such Investor’s compliance with, the
      representations, warranties, agreements, acknowledgements and understandings
      of
      such Investor set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Investor to acquire the
      Securities.

     

    3.8
      Information

     

    Each
      Investor and its advisors, if any, have been furnished with all materials
      relating to the business, finances and operations of the Company and materials
      relating to the offer and sale of the Securities which have been requested
      by
      such Investor. Such Investor and its advisors, if any, have been afforded the
      opportunity to ask questions of the Company. Neither such inquiries nor any
      other due diligence investigations conducted by such Investor or its advisors,
      if any, or its representatives shall modify, amend or affect such Investor’s
      right to rely on the Company’s representations and warranties contained herein.
      Such Investor understands that its investment in the Securities involves a
      high
      degree of risk and such Investor is able to bear the risk of losing its
      investment in the Securities. Such Investor has sought such accounting, legal
      and tax advice as it has considered necessary to make an informed investment
      decision with respect to its acquisition of the Securities. Such Investor has
      (i) such knowledge and experience, and has made investments of a similar nature,
      so as to be aware of the risks and uncertainties inherent in the transactions
      contemplated by this Agreement, and (ii) independently and without reliance
      upon
      the Company, and based on such information as such Investor has deemed
      appropriate, made its own analysis and decision to enter into this Agreement.
      Such Investor acknowledges that the Company has not given such Investor any
      investment advice, credit information or opinion on whether the purchase of
      the
      Securities is prudent.

     

    3.9
      No Governmental Review

     

    Such
      Investor understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities nor have such authorities passed upon or endorsed
      the merits of the offering of the Securities.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 5 of 29

        
          

        

      

      
        
        

      

    

     

    3.10
      Finder's Fees 

     

    Each
      Investor represents and warrants to the Company that no person is entitled,
      directly or indirectly, to compensation from such Investor by reason of any
      contract
      or understanding or contact with the Investor, as a finder or broker in
      connection with the sale and purchase of the Note contemplated by this
      Agreement. The Investor agrees to indemnify and hold the Company harmless
      against and in respect of any claim for brokerage or other commissions or
      similar fees relative to this Agreement or the transactions contemplated hereby
      which arises as a result of a contract or understanding made by such Investor
      with any such broker or finder in connection with the sale and purchase of
      the
      Note contemplated by this Agreement.

     

    5.
      Warrants

     

    5.1
      Issuance of Warrants 

     

    Upon
      the
      Closing, the Company shall issue to each Investor a warrant for the purchase
      of
      common stock of the Company, in substantially the form attached hereto as
      Exhibit C (the "Warrant"), as follows: 

     

    (a)
      The
      Company shall issue to each Investor a Warrant to purchase that number of shares
      of common stock as is equal to the product (rounded to the nearest whole number)
      obtained by multiplying 0.15 by the quotient obtained by dividing (i) the
      original principal amount of such Investor's Note by (ii) the average per share
      price of the Company’s common stock for the five trading days preceding the
      Closing Date. 

     

    (b)
      The
      Company shall issue the Warrants in accordance with this Section
      5.1 within five (5) days after the Closing Date.

     

    5.2
      Exercise Price of Warrants 

     

    The
      per
      share exercise price of the Warrants shall be the average per share price of
      the
      Company’s common stock for the five trading days preceding the Closing
      Date.

     

    5.3
      Termination of Warrants

     

    Warrants
      issued pursuant to this Section 5 will terminate upon the fifth anniversary
      of
      the date of the issuance.

     

    6.
      Conversion

     

    6.1
      Investment by the Holder

     

    At
      the
      option of the Note Holder, the entire principal amount of and accrued interest
      on the Note shall be converted into shares of the Company's equity securities
      (the "Equity Securities") issued and sold at the closing of the Company's next
      equity financing in a single transaction or a series of related transactions
      yielding gross proceeds to the Company of at least $5,000,000 in the aggregate
      (including amounts converted under the Note and other similar convertible
      promissory notes) (the "Next Equity Financing"). The number of Note shares
      of
      Equity Securities to be issued upon such conversion shall be equal to the
      quotient obtained by dividing (i) the entire principal amount of the Note plus
      (if applicable) accrued interest by (ii) the price per share of the Equity
      Securities, rounded to the nearest whole share, and the issuance of such shares
      upon such conversion shall be upon the terms and subject to the conditions
      applicable to the Next Equity Financing.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 6 of 29

        
          

        

      

      
        
        

      

    

    6.2
      Mechanics and Effect of Conversion 

     

    No
      fractional shares of the Company's capital stock will be issued upon conversion
      of the Note. In lieu of any fractional share to which the Holder would otherwise
      be entitled, the Company will pay to the Holder in cash the amount of the
      unconverted principal and interest balance of the Note that would otherwise
      be
      converted into such fractional share. Upon conversion of the Note pursuant
      to
      this Section 3, the Holder shall surrender the Note, duly endorsed, at the
      principal offices of the Company or any transfer agent of the Company. At its
      expense, the Company will, as soon as practicable thereafter, issue and deliver
      to such Holder, at such principal office, a certificate or certificates for
      the
      number of shares to which such Holder is entitled upon such conversion, together
      with an other securities and property to which the Holder is entitled upon
      such
      conversion under the terms of the Note, including a check payable to the Holder
      for any cash amounts payable as described herein. Upon conversion of the Note,
      the Company will be forever released from all of its obligations and liabilities
      under the Note with regard to that portion of the principal amount and accrued
      interest being converted including without limitation the obligation to pay
      such
      portion of the principal amount and accrued interest.

     

    7.
      Restrictions on Transferability

     

    7.1
      Restrictions on Transferability 

     

    The
      Note
      and the Note Shares shall not be sold, assigned, transferred or pledged except
      upon the conditions specified in this Section 7, which conditions
      are intended to ensure compliance with the provisions of the Securities Act
      (as
      defined below). Each Investor will cause any proposed Investor, assignee,
      transferee, or pledgee of the Note and the Note Shares held by the Investor
      to
      agree to take and hold such securities subject to the provisions and upon the
      conditions specified in this Section 7.

     

    7.2
      Certain Definitions 

     

    As
      used
      in this Agreement, the following terms shall have the following respective
      meanings: 

     

    "Commission"
      shall mean the Securities and Exchange Commission or any other federal agency
      at
      the time administering the Securities Act. 

     

    "Holder"
      shall mean a holder of a Note or any Note Shares. 

     

    "Restricted
      Securities" shall mean the securities of the Company required to bear the legend
      set forth in Section 7.3 hereof. 

     

    "Requisite
      Holders" shall mean the holders of more than 50% of the outstanding principal
      amount of the Notes. 

     

    7.3
      Restrictive Legend 

     

    Each
      certificate or note representing a Note or Note Share and any other securities
      issued in respect of the Note Shares upon any stock split, stock dividend,
      recapitalization, merger, consolidation or similar event, shall (unless
      otherwise permitted by the provisions of Section 7.4 below) be stamped or
      otherwise imprinted with a legend in substantially the following form (in
      addition to any legend required under applicable state securities laws):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
      AND
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "ACT"). SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
      REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR A SIMILAR
      RULE AS THEN IN EFFECT UNDER THE ACT OR UNLESS THE CORPORATION RECEIVES AN
      OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
      TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
      OF
      THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES
      AND
      RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
      REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
      THE
      CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 7 of 29

        
          

        

      

      
        
        

      

    

    Each
      Investor and each Holder consents to the Company making a notation on its
      records and giving instructions to any transfer agent of the Note or Note Shares
      in order to implement the restrictions on transfer established in this Section
      7.

     

    7.4
      Notice of Proposed Transfers 

     

    The
      Holder of each certificate representing Restricted Securities by acceptance
      thereof agrees to comply in all respects with the provisions of this Section
      7.4. Prior to any proposed sale, assignment, transfer or pledge of any
      Restricted Securities, unless there is in effect a registration statement under
      the Securities Act covering the proposed transfer, the Holder thereof shall
      given written notice to the Company of such Holder's intention to effect such
      transfer, sale, assignment or pledge. Each such notice shall describe the manner
      and circumstances of the proposed transfer, sale, assignment or pledge in
      sufficient detail, and shall be accomplished at such Holder's expense by either
      (i) an unqualified written opinion of legal counsel who shall be, and whose
      legal opinion shall be, reasonably satisfactory to the Company, addressed to
      the
      Company, to the effect that the proposed transfer of the Restricted Securities
      may be effected without registration under the Securities Act, or (ii) a "no
      action" letter from the Commission to the effect that the transfer of such
      securities without registration will not result in a recommendation by the
      staff
      of the Commission that action be taken with respect thereto, whereupon the
      Holder of such Restricted Securities shall be entitled to transfer such
      Restricted Securities in accordance with the terms of the notice delivered
      by
      the Holder to the Company. Each certificate evidencing the Restricted Securities
      transferred as above provided shall bear, except if such transfer is made
      pursuant to Rule 144, the appropriate restrictive legend set forth in Section
      7.3 above, except that such certificate shall not bear such restrictive legend
      if, in the opinion of counsel for such Holder and the Company, such legend
      is
      not required in order to establish compliance with any provisions of the
      Securities Act.

     

    8.
      Miscellaneous

     

    8.1
      Governing Law 

     

    This
      Agreement and the Note shall in all respects be governed by and construed
      and enforced in accordance with the laws of the State of California, as such
      laws apply to contracts entered into and wholly to be performed within such
      state.

     

    8.2
      Corporate Securities Law 

     

    THE
      SALE
      OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
      REGISTERED WITH THE SECURITIES COMMISSION OF ANY STATE AND THE ISSUANCE OF
      SUCH
      SECURITIES OR THE PAYMENT AND RECEIPT OF ANY PART OF THE CONSIDERATION THEREFROM
      PRIOR TO SUCH REGISTRATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
      FROM REGISTRATION PURSUANT TO THE RELEVANT STATE SECURITIES LAWS. THE RIGHTS
      OF
      ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON REGISTRATION BEING
      OBTAINED, UNLESS THE SALE IS SO EXEMPT.

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 8 of 29

        
          

        

      

      
        
        

      

    

     

    8.3
      Survival 

     

    The
      representations, warranties, covenants and agreements made herein shall survive
      any investigation made by the Investors and the closing of the transactions
      contemplated hereby.

     

    8.4
      Successors and Assigns 

     

    Except
      as
      otherwise provided herein, the provisions hereof shall inure to the benefit
      of,
      and be binding upon, the successors, assigns, heirs, executors and
      administrators of the parties hereto, provided, however, that the rights of
      the
      Investors to purchase the Notes shall not be assignable without the consent
      of
      the Company and provided further that the Company may not assign its rights
      hereunder.

     

    8.5
      Entire Agreement and Amendment 

     

    This
      Agreement, the Notes and the other documents delivered pursuant hereto
      constitute the full and entire understanding and agreement between the parties
      with regard to the subjects hereof and thereof, and no party shall be liable
      or
      bound to any other party in any manner by any warranties, representations or
      covenants except as specifically set forth herein or therein. Except as
      expressly provided herein, neither this Agreement nor any term hereof may be
      amended, waived, discharged or terminated other than by a written instrument
      signed by the party against whom enforcement of any such amendment, waiver,
      discharge or termination is sought; provided,
      however,
      that
      the Requisite Holders may, with the Company's prior written consent, waive,
      modify or amend any provisions hereof.

     

    8.6
      Notices 

     

    All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be mailed by registered or certified mail, postage prepaid,
      or
      otherwise delivered by hand, by messenger or by telecopy, addressed (a) if
      to an
      Investor, at the Investor's address set forth on Exhibit A hereto, or at such
      other address as the Investor shall have furnished to the Company in writing
      or
      (b) if to any other Holder of a Note or Note Shares, at such address as such
      Holder shall have furnished the Company in writing, or, until any such Holder
      so
      furnishes an address to the Company, then to and at the address of the last
      Holder of the Note or Note Shares, who has so furnished an address to the
      Company or (c) if to the Company, one copy should be sent to its principal
      executive offices located at 6060 Sepulveda Blvd., Van Nuys, CA 91411, and
      addressed to the attention of the Chief Financial Officer, or to such other
      address as the Company shall have furnished to the Investors. Each such notice
      or other communication shall for all purposes of this Agreement be treated
      as
      effective or having been given when delivered if delivered personally, by
      messenger or by telecopy, or, if sent by mail, at the earlier of its receipt
      or
      72 hours after the same has been deposited in a regularly maintained receptacle
      for the deposit of the United States mail, addressed
      and mailed as aforesaid.

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 9 of 29

        
          

        

      

      
        
        

      

    

     

    8.7
      Delays or Omissions 

     

    Except
      as
      expressly provided herein, no delay or omission to exercise any right, power
      or
      remedy accruing to any Holder of a Note or the Note Shares, upon any breach
      or
      default of the Company under this Agreement, shall impair any such right, power
      or remedy of such Holder nor shall it be construed to be a waiver of any such
      breach or default, or an acquiescence therein, or of or in any similar breach
      or
      default thereafter occurring; nor shall any waiver of any single breach or
      default be deemed a waiver of any other breach or default theretofore or
      thereafter occurring. Any waiver, permit, consent or approval of any kind or
      character on the part of any Holder of any breach or default under this
      Agreement, or any waiver on the part of any Holder of any provisions or
      conditions of this agreement, must be in writing and shall be effective only
      to
      the extent specifically set forth in such writing. All remedies, either under
      this Agreement or by law or otherwise afforded to any Holder, shall be
      cumulative and not alternative.

     

    8.8
      Expenses 

     

    The
      Company and each Investor shall bear its own expenses incurred on its behalf
      with respect to this Agreement and the transactions contemplated
      hereby.

     

    8.9
      Counterparts 

     

    This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      enforceable against the party or parties actually executing such counterparts,
      and all of which together shall constitute one instrument.

     

    8.10
      Severability 

     

    In
      the
      event that any provision of this Agreement becomes or is declared by a court
      of
      competent jurisdiction to be illegal, unenforceable or void, this Agreement
      shall continue in full force and effect without said provision.

     

    8.11
      Titles and Subtitles 

     

    The
      titles and subtitles used in this Agreement are used for convenience only and
      are not considered in construing or interpreting this Agreement. 

     

    8.12
      Confidentiality

    

    The
      parties hereto agree that the existence of this Agreement and of any Notes
      and
      Warrants issued hereunder, and the terms hereof, shall be held in the strictest
      confidence and shall not be disclosed to any third party unless (a) such
      disclosure is required by law, or (b) such disclosure is agreed upon in writing
      by the Investor and the Company.

     

    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
      and
      delivered by their proper and duly authorized officers as of the date and year
      first written above.

     

    
      	TechnoConcepts
              Inc.	 	Investor
	 	 	 	 	 
	By:	 	 	By:	 
	 	
              
Antonio
              Turgeon, CEO	 	 	
              

            

    

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 10 of 29

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    Schedule
      of Investors

     

     

    
      	
              Name

            	
              Principal
                Amount

            	
              Interest

            	
              Loan
                Fee

            	
              Warrants

            	
              Exercise
                Price

            
	 	 	 	 	 	 
	 	 	 	 	 	 

    

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 11 of 29

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Form
      of Note

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
      AND
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "ACT"). SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
      REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR A SIMILAR
      RULE AS THEN IN EFFECT UNDER THE ACT OR UNLESS THE CORPORATION RECEIVES AN
      OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
      TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
      OF
      THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES
      AND
      RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE
      BY
      THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION
      AT
      THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

     

    

     

    Convertible
      Subordinated Promissory Note

     

    

    
      	$_____________________ 	 	
              [DATE]

            

    

     

    Los
      Angeles, California 

     

    For
      value
      received, TECHNOCONCEPTS INC., a Colorado corporation (the "Company"), promises
      to pay to the undersigned (the "Holder"), the principal sum of the amount
      written above, together with interest from the date of this Note on the unpaid
      principal balance as provided in Section 2 below. This Note is subject to the
      following terms and conditions.

     

    1.
      Maturity 

     

    Subject
      to Section 3, the principal and all accrued interest under this Note shall
      be
      due and payable upon demand by the Holder at any time after ___________, 20___
      (the "Maturity Date"). Notwithstanding the foregoing, the entire unpaid
      principal sum of this Note, together with all accrued interest thereon, shall
      become immediately due and payable upon the occurrence of an Event of Default
      (as hereinafter defined).

     

    2.
      Interest

     

    (a)
      Interest Rate

     

    The
      outstanding principal will bear interest at the rate of eight (8%) percent
      per
      annum.

     

    (b)
      Interest Payments

     

    Interest
      on the outstanding principal shall be payable at the rate set forth above and
      shall be payable at such time as the outstanding principal amount hereof is
      otherwise due and payable. Interest shall be computed on the basis of a three
      hundred sixty (360)-day year and actual days elapsed.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 12 of 29

        
          

        

      

      
        
        

      

    

     

    (c)
      Reduction of Interest

     

    If
      at any
      time, the rate of interest, together with all amounts which constitute interest
      and which are reserved, charged or taken by the Holder as compensation for
      fees,
      services or expenses incidental to the making, negotiating or collection of
      any
      advance evidenced hereby, shall be deemed by any competent court of law,
      governmental agency or tribunal to exceed the maximum of rate of interest
      permitted to be charged by the Holder to the Company, then, during such time
      as
      such rate of interest would be deemed excessive, that portion of each sum paid
      attributable to that portion of such interest rate that exceeds the maximum
      rate
      of interest so permitted shall be deemed a voluntary prepayment of
      principal.

     

    3.
      Conversion

     

    (a)
      Investment by the Holder

     

    At
      the
      option of the Holder, the entire principal amount of and accrued interest on
      this Note shall be converted into shares of the Company's equity securities
      (the
      "Equity Securities") issued and sold at the closing of the Company's next equity
      financing in a single transaction or a series of related transactions yielding
      gross proceeds to the Company of at least $5 million in the aggregate (including
      amounts converted under this Note and other similar convertible promissory
      notes) (the "Next Equity Financing"). The number of shares of Equity Securities
      to be issued upon such conversion shall be equal to the quotient obtained by
      dividing (i) the entire principal amount of this Note plus (if applicable)
      accrued interest by (ii) the price per share of the Equity Securities, rounded
      to the nearest whole share, and the issuance of such shares upon such conversion
      shall be upon the terms and subject to the conditions applicable to the Next
      Equity Financing.

     

    (b)
      Mechanics and Effect of Conversion

     

    No
      fractional shares of the Company's capital stock will be issued upon conversion
      of this Note. In lieu of any fractional share to which the Holder would
      otherwise be entitled, the Company will pay to the Holder in cash the amount
      of
      the unconverted principal and interest balance of this Note that would otherwise
      be converted into such fractional share. Upon conversion of this Note pursuant
      to this Section 3, the Holder shall surrender this Note, duly endorsed, at
      the
      principal offices of the Company or any transfer agent of the Company. At its
      expense, the Company will, as soon as practicable thereafter, issue and deliver
      to such Holder, at such principal office, a certificate or certificates for
      the
      number of shares to which such Holder is entitled upon such conversion, together
      with any other securities and property to which the Holder is entitled upon
      such
      conversion under the terms of this Note, including a check payable to the Holder
      for any cash amounts payable as described herein. Upon conversion of this Note,
      the Company will be forever released from all of its obligations and liabilities
      under this Note with regard to that portion of the principal amount and accrued
      interest being converted including without limitation the obligation to pay
      such
      portion of the principal amount and accrued interest.

     

    (c)
      Payment of Interest 

     

    Upon
      conversion of the principal amount of this Note into Equity Securities or Common
      Stock, any interest accrued on this Note that is not by reason of this Section
      3
      hereof simultaneously converted into Equity Securities or Common Stock shall
      be
      immediately paid to the Holder.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 13 of 29

        
          

        

      

      
        
        

      

    

     

    4.
      Payment 

     

    All
      payments shall be made in lawful money of the United States of America at such
      place as the Holder hereof may from time to time designate in writing to the
      Company. Payment shall be credited first to the accrued interest then due and
      payable and the remainder applied to principal. At any time following the
      determination of the terms of the next Equity Financing, the Company shall
      have
      the right to prepay this Note, in whole or in part, prior to the Maturity Date
      without penalty; provided that the Holder have the right to convert as set
      forth
      in Section 3(a) for a period of ten days following receipt of notice of such
      prepayment.

     

    5.
      Events of Default 

     

    The
      occurrence of any of the following shall constitute an "Event of Default"
      hereunder:

     

    (a)
      Failure to Pay

     

    The
      Company shall fail to pay (i) any principal payment on the due date hereunder
      or
      (ii) any interest or other payment required pursuant to the terms hereof. on
      the
      date due and such payment shall not have been made within twenty (20) days
      of
      Company's receipt of Holder's written notice to the Company of such failure
      to
      pay; or

     

    (b)
      Breaches of Covenants

     

    The
      Company shall fail to observe or perform any covenant, obligation, condition
      or
      agreement contained herein (other than those covenants specified in Section
      5(a)
      of this Note) and (i) such failure shall continue for twenty (20) days, or
      (ii)
      if such failure is not curable within such twenty (20) day period, but is
      reasonably capable of cure within 180 days, either (A) such failure shall
      continue for 180 days or (B) Company shall not have commenced a cure in a manner
      reasonably satisfactory to Holder within the initial 45 day period;
      or

     

    (c)
      Voluntary Bankruptcy or Insolvency Proceedings

     

    The
      Company shall (i) apply for or consent to the appointment of a receiver,
      trustee, liquidator or custodian of itself or of all or a substantial part
      of
      its property, (ii) be unable, or admit in writing its inability, to pay its
      debts generally as they mature, (iii) make a general assignment for the benefit
      of its or any of its creditors, (iv) be dissolved or liquidated in full or
      in
      part, (v) become insolvent (as such term may be defined or interpreted pursuant
      to any applicable statute), (vi) commence a voluntary case or other proceeding
      seeking liquidation, reorganization or other relief with respect to itself
      or
      its debts pursuant to any bankruptcy, insolvency or other similar law now or
      hereafter in effect or consent to any such relief or to the appointment of
      or
      taking possession of its property by any official in an involuntary case or
      other proceeding commenced against it, or (vii) take any action for the purpose
      of
      effecting any of the foregoing; or

     

    (d)
      Involuntary Bankruptcy or Insolvency Proceedings 

     

    Proceedings
      for the appointment of a receiver, trustee, liquidator or custodian of the
      Company or of all or a substantial part of the property thereof, or an
      involuntary case or other proceedings seeking liquidation, reorganization or
      other relief with respect to the Company or the debts thereof pursuant to any
      bankruptcy, insolvency or other similar law now or hereafter in effect shall
      be
      commenced and an order for relief entered or such proceeding shall not be
      dismissed or discharged within 180 days of commencement.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 14 of 29

        
          

        

      

      
        
        

      

    

     

    6.
      Rights of Holder upon Default

     

    Upon
      the
      occurrence or existence of any Event of Default and at any time thereafter
      during the continuance of such Event of Default, Holder may, by written notice
      to the Company, declare all outstanding obligations payable by the Company
      hereunder to be immediately due and payable without presentment, demand, protest
      or any other notice of any kind, all of which are hereby expressly waived.
      In
      addition to the foregoing remedies, upon the occurrence or existence of any
      Event of Default, Holder may exercise any other right, power or
      remedy
      granted to it hereunder or pursuant to applicable law. The Company agrees to
      pay
      all taxes levied or assessed upon the outstanding principal against any holder
      of this Note and to pay all reasonable costs, including attorneys' fees, costs
      relating to the appraisal and/or valuation of assets and all other costs and
      expenses incurred in the collection, protection, defense, preservation, or
      enforcement of this Note or any endorsement of this Note or in any litigation
      arising out of the transactions of which this Note or any endorsement of this
      Note is a part.

     

    7.
      Transfer, Successors and Assigns 

     

    The
      terms
      and conditions of this Note shall inure to the benefit of and be binding upon
      the respective successors and assigns of the parties. Notwithstanding the
      foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
      without the prior written consent of the Company, except for transfers to
      affiliates of the Holder. Subject to the preceding sentence, this Note may
      be
      transferred only upon surrender of the original Note for registration of
      transfer, duly endorsed, or accompanied by a duly executed written instrument
      of
      transfer in form satisfactory to the Holder. Thereupon, a new note for the
      same
      principal amount and interest will be issued to, and registered in the name
      of,
      the transferee. Interest and principal are payable only
      to
      the registered holder of this Note. Neither this Note nor any of the rights,
      interests or obligations hereunder may be assigned, by operation of law or
      otherwise, in whole or in part, by the Company without the prior written consent
      of Holder except in connection with an assignment in whole to a successor
      corporation to the Company, provided that such successor corporation acquires
      all or substantially all of the Company's property and assets and provided
      further that none of the Holder's rights hereunder are
      impaired.

     

    8.
      Governing Law 

     

    This
      Note
      and all acts and transactions pursuant hereto and the rights and obligations
      of
      the parties hereto shall be governed, construed and interpreted in accordance
      with the laws of the State of California, without giving effect to principles
      of
      conflicts of law.

     

    9.
      Notices 

     

    Any
      notice required or permitted by this Note shall be in writing and shall be
      deemed sufficient upon delivery, when delivered personally or by a
      nationally-recognized delivery service (such as Federal Express or UPS), or
      five
      (5) days after being deposited in the U.S. mail, as certified or registered
      mail, with postage prepaid, addressed to the party to be notified at such
      party's address as set forth below or as subsequently modified by written
      notice.

     

    10.
      Amendments and Waivers 

     

    Any
      term
      of this Note may be amended or waived only with the written consent of the
      Company and holders of in excess of 50% of the principal amount of notes issued
      on about the date of the Note, provided that all such notes are amended, waived
      or modified in a like manner. Any amendment or waiver effected in accordance
      with this Section 10 shall be binding upon the Company, the Holder and each
      transferee of the Note.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 15 of 29

        
          

        

      

      
        
        

      

    

     

    11.
      Shareholders, Officers and Directors Not Liable 

     

    In
      no
      event shall any shareholder, officer or director of the Company be liable for
      any amounts due or payable pursuant to this Note.

     

    12.
      Subordination 

     

    This
      Note
      shall be subject to the forms of subordination agreement requested from time
      to
      time by holders of Senior Indebtedness (as defined below), and the Holder agrees
      to enter into such forms of subordination agreement upon request of such holders
      of Senior Indebtedness and be bound by such agreements. "Senior Indebtedness"
      as
      used herein shall mean the principal of (and premium, if any) and unpaid
      interest on, indebtedness of the Company, or with respect to which the Company
      is a guarantor, investors or to banks, insurance companies, lease financing
      institutions or other lending institutions or business units of such
      institutions regularly and primarily engaged in the business of lending money,
      which is for money borrowed (or purchase or lease of equipment in the case
      of
      lease financing) by the Company, and which is approved by the Board of Directors
      of the Company, whether or not secured, and whether or not previously incurred
      or incurred in the future.

     

    13.
      Representations and Warranties of Holder and Transfer
      Restrictions 

     

    Holder
      hereby represents and warrants to the Company with respect to the purchase
      of
      this Note and any Equity Securities of the Company issued upon conversion of
      (or
      with respect to) this Note (the "Note Shares"):

     

    (a)
      Binding Obligation

     

    The
      Holder has full legal capacity, power and authority to execute and deliver
      this
      Note and to perform its obligations hereunder. This Note is a valid and binding
      obligation of the Holder, enforceable in accordance with its terms, except
      as
      limited by bankruptcy, insolvency or other laws of general application relating
      to or affecting the enforcement of creditors' rights generally and general
      principles of equity.

     

    (b)
      Investment and Accredited Investor

     

    The
      Holder understands that the investment in the Note and the Note Shares is a
      speculative investment, and represents that it is aware of the business affairs
      and financial condition of the Company, and has acquired sufficient information
      about the Company to reach an informed and knowledgeable decision to acquire
      the
      Note, and that it is purchasing the Note for investment for its own account
      only
      and not with a view to, or for resale in connection with, any "distribution"
      within the meaning of the Securities Act of 1933, as amended (the "Securities
      Act") or applicable state securities laws. Holder further represents that it
      understands that the Note and the Note Shares have not been registered under
      the
      Securities Act or applicable state securities laws by reason of specific
      exemptions therefrom, which exemptions depend upon, among other things, the
      bona
      fide nature of the Holder's investment intent as expressed herein. The Holder
      acknowledges and understands that the Note and the Note Shares must be held
      indefinitely unless subsequently registered under the Securities Act and
      qualified under applicable state securities laws or unless exemptions from
      such
      registration and qualification requirements are available, and that the Company
      is under no obligation to register or qualify the Note or the Note Shares.
      The
      Holder is an accredited investor as such term is defined in Rule 501 of
      Regulation D promulgated pursuant to the Securities Act.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 16 of 29

        
          

        

      

      
        
        

      

    

     

    (c)
      Access to Data 

     

    The
      Holder acknowledges that it has had an opportunity to discuss the Company's
      business, management and financial affairs with its officers and directors.
      The
      Holder understands that such discussions as well as any written information
      issued by the Company were intended to describe the aspects of the Company's
      business and prospects which it believes to be material but were not necessarily
      a thorough or exhaustive description.

     

    (d)
      Restrictions on Transferability 

     

    The
      Note
      and the Note Shares shall not be sold, assigned, transferred or pledged except
      upon the conditions specified in this Section 13(d), which conditions are
      intended to ensure compliance with the provisions of the Securities Act. Each
      Investor will cause any proposed purchaser, assignee, transferee, or pledgee
      of
      the Note and the Note Shares held by the Investor to agree to take and hold
      such
      securities subject to the provisions and upon the conditions specified in this
      Section 13(d). Prior to any proposed sale, assignment, transfer or pledge of
      this Note or the Note Shares (collectively the "Restricted Securities"), unless
      there is in effect a registration statement under the Securities Act covering
      the proposed transfer, the Holder shall give written notice to the Company
      of
      the Holder's intention to effect such transfer, sale, assignment or pledge.
      Each
      such notice shall describe the manner and circumstances of the proposed
      transfer, sale, assignment or pledge in sufficient detail, and shall be
      accomplished at the Holder's expense by either (i) an unqualified written
      opinion of legal counsel who shall be, and whose legal opinion shall be,
      reasonably satisfactory to the Company, addressed to the Company, to the effect
      that the proposed transfer of the Restricted Securities may be effected without
      registration under the Securities Act, or (ii) a "no action" letter from the
      Securities and Exchange Commission (the "Commission") to the effect that the
      transfer of such securities without registration will not result in a
      recommendation by the staff of the Commission that action be taken with respect
      thereto, whereupon the Holder of such Restricted Securities shall be entitled
      to
      transfer such Restricted Securities in accordance with the terms of the notice
      delivered by the Holder to the Company. Each certificate evidencing the
      Restricted Securities transferred as above provided shall bear, except if such
      transfer is made pursuant to the Commission's Rule 144, an appropriate
      restrictive legend, except that such certificate shall not bear such restrictive
      legend if, in the opinion of counsel for the Holder and the Company, such legend
      is not required in order to establish compliance with any provisions of the
      Securities Act.

     

    14.
      Treatment of Note 

     

    To
      the
      extent permitted by generally accepted accounting principles, the Company will
      treat, account and report the Note as debt and not equity for accounting
      purposes and with respect to any returns filed with federal, state or local
      tax
      authorities. 

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 17 of 29

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
      first written above. 

     

    COMPANY:
      

    

    TechnoConcepts
      Inc.

    

    
      	 	 	 	 	 
	By:	 	 	 	 
	 	
              
Antonio
              Turgeon, Chairman & CEO	 	 	
            

     

    

    AGREED
      TO
      AND ACCEPTED: 

    

    HOLDER:
      

    

    
      	 	 	 	 	 
	By:	 	 	 	 
	 	
              

              Name:

              Title:
                

            	 	 	
            

    

     

    
 

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 18 of 29

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    Form
      of Warrant

    

    NEITHER
      THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
      WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "ACT") AND THIS WARRANT CANNOT BE SOLD OR TRANSFERRED, AND THE SHARES OF COMMON
      STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT CANNOT BE SOLD OR TRANSFERRED,
      UNLESS AND UNTIL (i) THEY ARE SO REGISTERED OR, (ii) RULE 144, RULE 144A OR
      ANY
      SUCCESSOR RULE UNDER THE ACT PERMITS SUCH SALE OR TRANSFER, OR (iii) UNLESS
      SUCH
      REGISTRATION IS NOT THEN REQUIRED UNDER THE CIRCUMSTANCES OF SUCH EXERCISE,
      SALE
      OR TRANSFER UNDER ANY OTHER EXEMPTION UNDER THE ACT, PROVIDED THAT THE HOLDER
      OF
      THIS WARRANT OR SHARES OF COMMON STOCK ISSUABLE HEREUNDER DELIVERS TO THE
      COMPANY AN OPINION OF HOLDER'S COUNSEL THAT AN EXEMPTION FROM REGISTRATION
      UNDER
      THE ACT IS AVAILABLE. 

    

    

    WARRANT
      TO PURCHASE COMMON STOCK OF

    

    TECHNOCONCEPTS,
      INC.

    

    

    THIS
      CERTIFIES that, for value received, ________________________ (herein called
      "Holder") is entitled, upon the terms and subject to the limitations on exercise
      and the conditions hereinafter set forth, at any time on or prior to the close
      of business on the five year anniversary of the effective date of this Warrant
      (the “Termination Date”) but not thereafter, to subscribe for and purchase from
      TechnoConcepts, Inc. (herein called the "Company") a corporation organized
      and
      existing under the laws of the State of Colorado, at the price of $_________
      per
      share (the "Warrant Exercise Price"), ________________ fully paid and
      nonassessable shares of the Company’s Common Stock, no par value per share,
      subject to adjustment as set forth in Paragraph 3 below. 

    

    This
      Warrant is subject to the following provisions, terms and
      conditions:

    

    
      	
            	1.	
              Exercise;
                Issuance of Certificates; Payment for
                Shares.

            

    

     

    The
      rights represented by this Warrant may be exercised by the Holder hereof, in
      whole or in part (but not as to a fractional share) at the principal office
      of
      the Company (or such office or agency of the Company as it may from time to
      time
      reasonably designate) at any time prior to the Termination Date, and by payment
      to the Company by certified check or bank draft of the Warrant Exercise Price
      for such shares. The notice accompanying the Warrant shall also set forth the
      number of shares remaining subject to the Warrant. The Company shall not be
      obligated to issue fractional shares of Common Stock upon exercise of this
      Warrant but shall pay to the Holder an amount in cash equal to the Current
      Market Price per share multiplied by such fraction (rounded to the nearest
      cent). The Company agrees that the shares so purchased shall be deemed to be
      issued to the Holder as the record owner of such shares as of the close of
      business on the date on which this Warrant shall have been surrendered and
      payment made for such shares as aforesaid. Subject to the provisions of the
      next
      succeeding paragraph and this Paragraph 1, certificates for the shares of stock
      so purchased shall be delivered to the Holder within two business days after
      the
      rights represented by this Warrant shall have been so exercised, and, unless
      this Warrant has expired, a new Warrant representing the number of shares,
      if
      any, with respect to which this Warrant shall not then have been exercised
      or
      surrendered shall also be delivered to the Holder hereof within two business
      days.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 19 of 29

        
          

        

      

      
        
        

      

    

    For
      the
      purpose of any computation under this Section the "Current Market Price" at
      any
      date (the "Computation Date") shall be deemed to be the average of the daily
      closing prices of the Common Stock for ten consecutive trading days ending
      the
      trading day immediately prior to the Computation Date. The closing price for
      each day shall be the last reported sale price or, in case no such reported
      sale
      takes place on such date, the average of the last reported asked prices, in
      either case on the principal national securities exchange on which the Common
      Stock is admitted to trading or listed if that is the principal market for
      the
      Common Stock or if not listed or admitted to trading on any national securities
      exchange or if such national securities exchange is not the principal market
      for
      the Common Stock, the closing bid prices reported by NASDAQ or its successor,
      if
      any, or such other generally accepted source of publicly reported bid and asked
      quotations as the Company may reasonably designate. If the price of the Common
      Stock is not so reported or the Common Stock is not publicly traded, the Current
      Market Price per share as of any Computation Date shall be determined by the
      Board of Directors in good faith, on such basis as it considers appropriate,
      and
      such determination shall be described in a duly adopted board resolution
      certified by the Company's secretary or assistant secretary.

    
       

      
        	 	2.	
                Shares
                  to be Fully Paid; Reservation of
                  Shares.

              

      

       

      The
        Company covenants and agrees:

    

    

    (i) That
      all
      Common Stock which may be issued upon the exercise of the rights represented
      by
      this Warrant, will, upon issuance, be fully paid and nonassessable and free
      from
      all pre-emptive rights, and taxes, liens and charges with respect to the
      issuance thereof;

    

    (ii) Without
      limiting the generality of the foregoing, that the Company will from time to
      time take all such action as may be necessary to assure that the par value
      per
      share of the Common Stock is at all times equal to or less than the then
      effective Warrant Exercise Price per share of the Common Stock issuable pursuant
      to this Warrant;

    

    (iii) That
      during the period within which the rights represented by this Warrant may be
      exercised, the Company will at all times have authorized and reserved for the
      purpose of the issuance upon exercise of the rights evidenced by this Warrant,
      a
      sufficient number of shares of Common Stock to provide for the exercise of
      the
      rights represented by this Warrant;

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 20 of 29

        
          

        

      

      
        
        

      

    

    (iv) That
      the
      Company will take all such action as may be necessary to assure that the Common
      Stock issuable upon the exercise hereof may be so issued without violation
      of
      any applicable law or regulation or of any requirements of any domestic
      securities exchange or market upon which any capital stock of the Company may
      be
      listed or traded; 

    

    (v) That
      the
      Company will not take any action if the total number of shares of Common Stock
      issuable after such action and upon exercise of all warrants and other rights
      to
      purchase or acquire Common Stock, together with all shares of Common Stock
      then
      outstanding, would exceed the total number of shares of Common Stock then
      authorized by the Company's Certificate of Incorporation. In the event any
      stock
      or securities of the Company other than Common Stock are issuable upon the
      exercise hereof, the Company will take or refrain from taking any action
      referred to in clauses (i) through (v) of this Paragraph 2 as though such
      clauses applied to such other shares or securities then issuable upon the
      exercise hereof;

    

    (vi)
       The
      Company has all requisite corporate power and authority to execute and deliver
      this Warrant; the execution and delivery of this Warrant have been duly and
      validly authorized by the Company's Board of Directors and no other corporate
      proceedings on the part of the Company are necessary to authorize this Warrant;
      this Warrant has been duly and validly executed and delivered by the Company
      and
      constitutes a legal, valid and binding agreement of the Company, enforceable
      against the Company in accordance with its terms;

    

    (vii) No
      order,
      permit, consent, approval, license, authorization or validation of, and no
      registration or filing of notice with, any governmental entity is necessary
      to
      authorize or permit, or is required in connection with, the execution, delivery
      or performance of this Warrant or the consummation by the Company of the
      transactions contemplated hereby; and

    

    (viii) Neither
      the execution, delivery nor compliance by the Company with any of the provisions
      hereof will (a) violate, conflict with or result in any breach of any provision
      of the Company's charter documents, (b) result in a violation or breach or
      termination of, or constitute a default under or conflict with any provision
      of,
      any note, bond, mortgage, indenture, license, lease, agreement or other
      instrument or obligation to which the Company is subject, or (c) violate any
      judgment, order, writ, injunction, decree, award, statute, rule or regulation
      to
      which the Company is subject.

    
       

      
        	 	3.	Adjustment of Shares Issuable
                or
                Warrant Exercise Price.

      

    

     

    The
      above
      provisions are subject to the following:

    

    If
      the
      Company shall pay a dividend or make a distribution in shares of its Common
      Stock, subdivide (split) its outstanding shares of Common Stock, combine
      (reverse split) its outstanding shares of Common Stock, issue by
      reclassification of its shares of Common Stock any shares or other securities
      of
      the Company, or distribute to holders of its Common Stock any securities or
      any
      assets of the Company or of another entity, the number of shares of Common
      Stock
      or other securities the Holder hereof is entitled to purchase pursuant to this
      Warrant immediately prior thereto shall be adjusted so that the Holder shall
      be
      entitled to receive upon exercise the number of shares of Common Stock or other
      securities or assets which such Holder would have owned or would have been
      entitled to receive after the happening of any of the events described above
      had
      this Warrant been exercised in full immediately prior to the happening of such
      event, and the Warrant Exercise Price per share shall be correspondingly
      adjusted and the aggregate price upon exercise for all Warrants issuable
      hereunder after giving effect to such adjustment shall not exceed the aggregate
      amount payable upon exercise of such Warrant prior to such adjustment. An
      adjustment made pursuant to this Section 3 shall become effective immediately
      after the record date in the case of a stock dividend or other distribution
      and
      shall become effective immediately after the effective date in the case of
      a
      subdivision, combination or reclassification. The Holder of this Warrant shall
      be entitled to participate in any subscription or other rights offering made
      to
      holders of shares of Common Stock as if such Holder had purchased the full
      number of shares as to which this Warrant remains unexercised immediately prior
      to the record date for such subscription rights offering. If the Company is
      consolidated or merged with or into another corporation or entity or if all
      or
      substantially all of its assets are conveyed to another corporation or entity
      this Warrant shall thereafter be exercisable for the purchase of the kind and
      number of shares of stock or other securities or property, if any, receivable
      upon such consolidation, merger or conveyance by a Holder of the number of
      shares of Common Stock of the Company which could have been purchased on the
      exercise of this Warrant in full immediately prior to such consolidation, merger
      or conveyance; and, in any such case, appropriate adjustment (as determined
      in
      good faith by the Board of Directors) shall be made in the application of the
      provisions herein set forth with respect to the rights and interests thereafter
      of the Holder of this Warrant to the end that the provisions set forth herein
      (including provisions with respect to changes in and other adjustments of the
      number of shares of Common Stock the Holder of this Warrant is entitled to
      purchase) shall thereafter be applicable, as nearly as possible, in relation
      to
      any shares of Common Stock or other securities or other property thereafter
      deliverable upon the exercise of this Warrant. 

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 21 of 29

        
          

        

      

      
        
        

      

    

    The
      Company shall not effect any such consolidation, merger or conveyance, unless
      upon or prior to the consummation thereof the successor corporation, or if
      the
      Company shall be the surviving corporation in any such transaction and is not
      the issuer of the shares of stock or other securities or property to be
      delivered to holders of shares of the Common Stock outstanding at the effective
      time thereof, then such issuer shall assume by written instrument the obligation
      to deliver to the Holder such shares of stock, securities, cash or other
      property as the Holder shall be entitled to purchase in accordance with the
      foregoing provisions.

    
       

      
        	 	4.	Notice of Adjustment. 

      

    

     

    Upon
      any
      adjustment of the number of shares of Common Stock issuable upon exercise of
      this Warrant or the Warrant Exercise Price, then and in each such case, the
      Company shall give written notice thereof by first class mail, postage prepaid,
      addressed to the Holder at the address of such Holder as shown on the books
      of
      the Company and pursuant to Paragraph 17, which notice shall state the Warrant
      Exercise Price resulting from such adjustment and the increase or decrease,
      if
      any, in the number of shares purchasable at such price upon the exercise of
      this
      Warrant, setting forth in reasonable detail the method of calculation and the
      facts upon which such calculation is based.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 22 of 29

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	5.	Other Notices.

      

       

    

    In
      case
      at any time prior to the Termination Date:

    

    1. The
      Company shall declare any cash dividend upon its Common Stock payable in stock
      or make any special dividend or other distribution (other than regular cash
      dividends) to the Holders of its Common Stock;

    

    2. The
      Company shall offer for subscription to the Holders of any of its Common Stock
      any additional shares of Common Stock of any class or other rights;

    

    3. There
      shall be any capital reorganization or reclassification of the capital stock
      of
      the Company or consolidation or merger of the Company with or sale of all or
      substantially of its assets to another corporation or entity; or

    

    4.
       There
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

    

    Then
      in
      any one or more of said cases the Company shall give by first class mail postage
      prepaid, addressed to the Holder of this Warrant at the address of such Holder
      as shown on the books of the Company and pursuant to Paragraph 17 (i) at least
      20 days prior written notice of the date on which the books of the Company
      shall
      close or a record shall be taken for such dividend, distribution or subscription
      rights or for determining rights to vote in respect of any such reorganization,
      reclassification, consolidation, merger or sale, dissolution, liquidation or
      winding and (ii) in the case of such reorganization or reclassification,
      consolidation, merger or sale, dissolution, liquidation or winding up, at least
      20 days prior written notice of the date when the same shall take place. Any
      notice required by clause (i) shall also specify in the case of any such
      dividend, distribution or subscription rights the date on which the holders
      of
      Common Stock shall be entitled thereto and a notice required by (ii) shall
      also
      specify the date on which the holders of the Common Stock shall be entitled
      to
      exchange their Common Stock for securities or other property deliverable upon
      such reorganization, reclassification, merger or sale, dissolution, liquidation
      or winding up as the case may be.

    
       

      
        	 	6.	Issue Tax.

      

    

    

    The
      issuance of certificates for shares of Common Stock upon the exercise of this
      Warrant shall be made without charge to the Holder for any issuance tax in
      respect thereof, provided that the Company shall not be required to pay any
      tax
      which may be payable in respect of any transfer involved in the issuance and
      delivery of any certificate in a name other that of the Holder of the Warrant
      exercised.

    
       

      
        	 	7.	Closing of Books.
                

      

       

    

    The
      Company will at no time close its transfer books against the transfer of this
      Warrant or of any shares of Common Stock issued or issuable upon the exercise
      of
      this Warrant in any matter which interferes with a timely exercise of this
      Warrant. The Company will not, by any action, seek to avoid the observance
      or
      performance of any of the terms of this Warrant, but will at all times in good
      faith seek to carry out all such terms and take all such action as may be
      necessary or appropriate in order to protect the rights of the Holder against
      impairment.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 23 of 29

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	8.	No Voting Rights. 

      

       

    

    This
      Warrant shall not entitle the Holder hereof to any voting rights or other rights
      as a stockholder of the Company.

    
       

      
        	 	9.	Registration and Transfer
                of
                Securities; Definitions.

      

    

    

    "Holder"
      means the Holder identified above, its successors, representatives and assigns.
      If there is more than one Holder at any time prior to the Termination Date,
      each
      such Holder shall be entitled to the rights and privileges granted
      hereunder.

    

    "Company"
      means TechnoConcepts, Inc. and its successors and assigns.

    

    "Registration",
      "register" and like words mean compliance with all of the Federal and state
      laws, rules, regulations and provisions of agreements and corporate documents
      pertaining to lawful and unconditional transfer of the securities by way of
      a
      public offering or distribution.

    

    "Security”
      or "securities" means the shares of stock of all classes, type and series,
      and
      all rights however evidenced or contained, to which the Holder shall be entitled
      upon the exercise of this Warrant.

    
       

      
        	 	10.	Transfers.

      

       

    

    Prior
      to
      any transfer or attempted transfer of any securities (except a transfer by
      a
      Holder to an affiliate, subsidiary, employee or shareholder of the Holder),
      the
      Holder shall give written notice to the Company of such Holder's intention
      to
      effect such transfer. Holder will not transfer or dispose of this Warrant and
      will not sell or transfer any securities except pursuant to (i) an effective
      registration statement under the Act, (ii) Rule 144, Rule 144A or any successor
      rule under the Act permitting such sale or transfer or (iii) any other exemption
      under the Act provided that the Holder delivers an opinion of Holder's counsel
      reasonably satisfactory to counsel to the Company that an exemption from
      registration under the Act is available. Each certificate evidencing the
      securities issued upon such transfer shall bear the restrictive legend set
      forth
      on the first page of this Warrant modified to delete references to the Warrant,
      if appropriate, unless in the reasonable opinion of Holder's counsel such legend
      is not required in order to insure compliance with the Act. 

    
       

      
        	 	11.	Registration.

      

       

    

    Each
      time
      the Company shall propose the registration under the Act of any securities
      of
      the Company, the Company shall give written notice (the "Company Notice") of
      such proposed registration to the Holder. The Company will include in any such
      Registration Statement any securities (or portion thereof) of any Holder who
      15
      days after the mailing of such notice shall request inclusion. Each Holder
      shall
      be entitled to all the benefits of this Paragraph 11; provided, however, that
      in
      the event that the managing underwriter for the proposed offering for which
      the
      registration is being effected shall determine that the inclusion of all
      securities requested to be included by the Holder would adversely affect the
      ability of the underwriter to sell all of the securities requested to be
      included in such offering, the Holder shall agree to reduce the number of
      securities to be included to the number recommended by the underwriter, provided
      that all Holders of Warrants issued hereunder are similarly treated. Nothing
      herein contained shall limit the right of the Company to terminate a proposed
      registration for any reason in its absolute discretion. The Company shall not
      grant to any holder of its securities rights to include securities in any
      offering of the type described in this Paragraph 11 which are superior to those
      of the Holder.

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 24 of 29

        
          

        

      

      
        
        

      

    

    The
      Company will pay the costs and expenses incident to the performance of its
      obligations under this Paragraph 11, including the fees and expenses of its
      counsel, the fees and expenses of its accountants and all other costs and
      expenses incident to the preparation, printing and filing under the Act of
      any
      such Registration Statement, each prospectus and all amendments and supplements
      thereof, the costs incurred in connection with the qualification of the
      securities under the laws of various jurisdictions (including fees and
      disbursements of counsel to the Company), the cost of furnishing to the Holder
      copies of any such Registration Statement, each preliminary prospectus, the
      final prospectus and each amendment and supplement thereto, all expenses
      incident to delivery of the security to any underwriter or underwriters, but
      not
      any underwriting commissions or discounts charged to the Holder. 

    

    Any
      Holder whose securities are included (in whole or in part) in a registration
      statement filed by the Company hereunder agrees, if requested by the managing
      underwriter of such offering, not to effect any public sale or distribution
      of
      securities of the same class as (or securities exchangeable or exercisable
      for
      or convertible into securities of the same class as) the securities included
      in
      the Registration Statement, including a sale pursuant to Rule 144 under the
      Act
      (except as part of such underwritten registration) during the 90-day period
      (or
      shorter period requested by the underwriter) beginning on the closing date
      of
      such underwritten offering to the extent timely notified in writing by the
      Company or the managing underwriter.

    

    The
      Company agrees not to effect any public or private sale or distribution of
      securities of the same class as the securities (or convertible into or
      exchangeable or exercisable for securities of the same class as the securities),
      including a sale pursuant to Section 4(2) or Regulation D under the Act, during
      the 90-day period beginning on the closing date of an offering made pursuant
      to
      this Paragraph 11 except that in the case of a "shelf" registration made
      pursuant to Rule 415 under the Act no public sale or distribution shall be
      made
      by the Company until 60 days following the effective date of the registration
      statement covering Holder's securities.

    
       

      
        	 	12.	Indemnification.

      

    

    

    The
      Company will indemnify and hold harmless each Holder and any underwriter (as
      defined in the Act) for such Holder and each person, if any, who controls the
      Holder or underwriter within the meaning of the Act against any losses, claims,
      damages or liabilities (or actions in respect thereof), joint or several, to
      which the Holder or underwriter or such controlling person may become subject,
      under the Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) are caused by any untrue statement
      or alleged untrue statement of any material fact contained in any Registration
      Statement under which the securities were registered under the Act, any
      preliminary prospectus or prospectus contained therein, or any amendment or
      supplement thereto, or arise out of or are based upon the omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein not misleading; and will reimburse
      the
      Holder, underwriter and each such controlling person for any legal or other
      expenses reasonably incurred by the Holder, underwriter or such controlling
      person in connection with investigating or defending any such loss, claim,
      damage, expense or liability or action; provided, however, that the Company
      will
      not be liable in any such case to the extent that any such loss, claim, damage,
      expense or liability arises out of or is based upon an untrue statement or
      alleged untrue statement or omission or alleged omission so made in conformity
      with written information furnished by the Holder or underwriter in writing
      specifically for use in the preparation thereof.

     

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 25 of 29

        
          

        

      

      
        
        

      

       

    

    Each
      Holder will indemnify and hold harmless the Company, each of its directors,
      each
      of its officers who have signed said Registration Statement, and each person,
      if
      any, who controls the Company within the meaning of the Act, against any losses,
      claims, damages or liabilities to which the Company, or any such director,
      officer or controlling person may become subject under the Act or otherwise,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereof) are caused by any untrue or alleged untrue statement of any material
      fact contained in said Registration Statement, said preliminary prospectus
      or
      prospectus, or amendment or amendments or supplements thereto, or arise out
      of
      or are based upon the omission or the alleged omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading; in each case to the extent, but only to the extent,
      that
      such untrue statement or alleged untrue statement or omission or alleged
      omission was so made in reliance upon and in conformity with written information
      furnished by the Holder specifically for use in the preparation thereof; and
      will reimburse any legal or other expenses reasonably incurred by the Company
      or
      any such director, officer or controlling person in connection with
      investigating or defending any such loss, claim, damage, liability or action.
      It
      shall be a condition of the Company under Paragraph 11 above that the Holder
      confirm to the Company in writing, prior to the effective date of any
      Registration Statement in which are included securities of such Holder, the
      agreement of such Holder as set forth in the previous sentence.

    

    Promptly
      after receipt by an indemnified party pursuant hereto of notice of any claim
      or
      the commencement of any action to which indemnity would apply, such indemnified
      party will, if a claim thereof is to be made against the indemnifying party
      pursuant hereto, notify the indemnifying party of such claim or action; but
      the
      omission so to notify the indemnifying party will not relieve it from any
      liability which it may have to any indemnified party otherwise than hereunder.
      In case such action is brought against any indemnified party, and it notifies
      the indemnifying party of the commencement thereof, the indemnifying party
      will
      be entitled to participate in, and, to the extent that it may wish, jointly
      with
      any other indemnifying party similarly notified, to assume the defense thereof,
      with counsel satisfactory to such indemnified party, provided, however, that
      any
      person entitled to indemnification hereunder shall have the right to employ
      separate counsel and to participate in the defense of such claim, but the fees
      and expenses of such counsel shall be at the expense of such person and not
      of
      the indemnifying party unless (a) the indemnifying party has agreed to pay
      such
      fees or expenses, or (b) the indemnifying party shall have failed to assure
      the
      defense of such claim and employ counsel reasonably satisfactory to such
      indemnified party, or (c) in the reasonable judgment of such indemnified party
      a
      conflict of interest may exist between such indemnified party and the
      indemnifying party with respect to such claims (in which case, if the
      indemnified party notifies the indemnifying part in writing that such
      indemnified party elects to employ separate counsel at the expense of the
      indemnifying party, the indemnifying party shall not have the right to assume
      the defense of such claim on behalf of such indemnified
      party.)

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 26 of 29

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	13.	Rights and Obligations Survive
                Exercise Of Warrant.

      

       

    

    The
      rights and obligations of the Company, of the Holder of this Warrant and of
      the
      Holder of the shares of Common Stock issuable upon exercise of this Warrant
      contained herein shall survive the exercise of this Warrant.

    
       

      
        	 	14.	Descriptive Headings and
                Governing
                Law.

      

       

    

    The
      descriptive headings of the several paragraphs of this Warrant are inserted
      for
      convenience only and do not constitute a part of this Warrant. This Warrant
      is
      being delivered and is intended to be performed in the State of California
      and
      shall be construed and enforced in accordance with such law and the rights
      of
      the Holder shall be governed by the law of such state.

    
       

      
        	 	15.	Rule
                144.

      

       

    

    The
      Company covenants that if it has registered any class of securities under the
      Securities Exchange Act of 1934 (the “34 Act”) it will file, on a timely basis,
      the reports required to be filed by it under the Act and the 34 Act, and the
      rules and regulations adopted by the Commission thereunder, and it will take
      such further action as the Holder may reasonably request, all to the extent
      required from time to time to enable such Holder to sell securities without
      registration under the Act within the limitation of the conditions provided
      by
      (a) Rule 144 and Rule 144A under the Act, as such Rules may be amended from
      time
      to time, or (b) any similar rule or regulation hereafter adopted by the
      Commission. Upon the request of the Holder the Company will deliver to such
      Holder a written statement verifying that it has complied with such information
      and requirements.

    

    The
      Company represents and warrants to the Holder that except as otherwise required
      by law the shares of Common Stock issuable upon conversion of the Warrant may
      be
      publicaly sold by the Holder pursuant to Rule 144 promulgated under the
      Securities Act of 1933, as amended ( the “Rule”) one year after the date of
      issuance of the Warrant, subject to compliance with (i) paragraphs (c), (e)
      and
      (h) of the Rule, and (ii) paragraphs (f) or (g) of the Rule..

    
       

      
        	 	16.	Reserved.

      

    

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 27 of 29

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	17.	Notices.

      

       

    

    All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be mailed by first class mail, postage prepaid, or delivered
      either by hand or by messenger, addressed (a) if to the Company, to the
      principal offices of the Company, to the attention of its General Counsel,
      6060
      Sepulveda Blvd., Suite #202, Van Nuys, CA 91411, or (b) if to the Holder, to
      such address as the Holder shall have furnished to the Company, or such other
      address as the Holder shall have furnished to the Company. All such notices
      of
      communications shall be deemed given when actually delivered by hand or
      messenger or, if mailed, three days after deposit in the U.S. Mail.

    
       

      
        	 	18.	Successors and
                Assigns.

      

       

    

    All
      covenants, agreements, representations and warranties contained in this Warrant
      shall bind the parties hereto and their respective successors and
      assigns.

    
       

      
        	 	19.	No Inconsistent
                Agreements.

      

       

    

    The
      Company has not previously entered into, and will not on or after the date
      of
      this Warrant enter into, any agreement with respect to its securities which
      is
      inconsistent with the terms of this Warrant, including any agreement which
      impairs or limits the rights granted to the Holder in this Warrant, or which
      otherwise conflicts with the provisions hereof or would preclude the Company
      from discharging its obligations hereunder.

    
       

      
        	 	20.	Nonwaiver and
                Expenses.

      

    

    

    No
      course
      of dealing or any delay or failure to exercise any right hereunder on the part
      of either party shall operate as a waiver of such right or otherwise prejudice
      the other party’s rights, powers or remedies, notwithstanding the fact that all
      of Holder’s rights hereunder terminate on the Termination Date. 

    
       

      
        	 	21.	Severability.

      

       

    

    In
      the
      event than any one or more of the provisions contained herein, or the
      application thereof in any circumstance, is held invalid, illegal or
      unenforceable, the validity, legality and enforceability of any such provision
      in every other respect and of the remaining provisions contained herein shall
      not be affected or impaired thereby.

    
       

      
        	 	22.	Entire
                Agreement.

      

       

    

    This
      Warrant constitutes the entire agreement of the parties with respect to the
      subject matter hereof.

    

      
        
          
          

        

        
          Note
            Purchase Agreement
            - Page 28 of 29

          
            

          

        

        
          
          

        

      

    

    
       

      
        	 	23.	Amendment. 

      

       

    

    Any
      provision of this Warrant may be amended, waived or modified by a writing signed
      by the Company and the Holder.

    
       

      
        	 	24.	Confidentiality.

      

       

    

    The
      parties hereto agree that the existence of this Warrant, and the terms hereof,
      shall be held in the strictest confidence and shall not be disclosed to any
      third party unless (a) such disclosure is required by law, or (b) such
      disclosure is agreed upon in writing by the Holder and the Company.

    

    DATED
      effective as of: _________________

     

    
      	 	 	 
	 	TECHNOCONCEPTS,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
ANTONIO
              E. TURGEON
	 	Chairman
              & CEO

    

    
      
        
        

      

      
        Note
          Purchase Agreement
          - Page 29 of 29NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED
      IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES. 

     

    Original
      Issue Date: ________________________

     

    Original
      Conversion Price (subject to adjustment herein): $1.50
      

    

    $_______________
      

     

    8%
      SECURED CONVERTIBLE DEBENTURE DUE 

    [EIGHTEEN
      MONTHS FROM DATE OF ISSUANCE] 

     

    THIS
      8%
      SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly
      issued 8% Secured Convertible Debentures of TechnoConcepts, Inc, a Colorado
      corporation, having a its principal place of business at 6060 Sepulveda Blvd,
      Suite 202, Van Nuys, CA 91411 (the “Company”), designated as its 8%
      Secured Convertible Debentures, due [Eighteen Months from Date of
      Issuance] (this, “Debenture” and collectively with the other such
      series of debentures, the “Debentures”). 

     

    FOR
      VALUE
      RECEIVED, the Company promises to pay to ________________________ or its
      registered assigns (the “Holder”), or shall have paid pursuant to the
      terms hereunder, the principal sum of $_______________ by [Eighteen Months
      from
      Date of Issuance], or such earlier date as this Debenture is required or
      permitted to be repaid as provided hereunder (the “Maturity Date”), and to pay
      interest to the Holder on the aggregate unconverted and then outstanding
      principal amount of this Debenture in accordance with the provisions hereof.
      This Debenture is subject to the following additional provisions: 

     

    Section
      1.Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Debenture,
      (a) capitalized terms not otherwise defined herein shall have the meanings
      set
      forth in the Subscription Agreement and (b) the following terms shall have
      the
      following meanings: 

     

    “Alternate
      Consideration” shall have the meaning set forth in Section 5(e).

     

    “Bankruptcy
      Event” means any of the following events: (a) the Company or any Significant
      Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof
      commences a case or other proceeding under any bankruptcy, reorganization,
      arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
      or
      liquidation or similar law of any jurisdiction relating to the Company or any
      Significant Subsidiary thereof; (b) there is commenced against the Company
      or
      any Significant Subsidiary thereof any such case or proceeding that is not
      dismissed within 60 days after commencement; (c) the Company or any Significant
      Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
      or other order approving any such case or proceeding is entered; (d) the Company
      or any Significant Subsidiary thereof suffers any appointment of any custodian
      or the like for it or any substantial part of its property that is not
      discharged or stayed within 60 calendar days after such appointment; (e) the
      Company or any Significant Subsidiary thereof makes a general assignment for
      the
      benefit of creditors; (f) the Company or any Significant Subsidiary thereof
      calls a meeting of its creditors with a view to arranging a composition,
      adjustment or restructuring of its debts; or (g) the Company or any Significant
      Subsidiary thereof, by any act or failure to act, expressly indicates its
      consent to, approval of or acquiescence in any of the foregoing or takes any
      corporate or other action for the purpose of effecting any of the foregoing.
      

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Base
      Conversion Price” shall have the meaning set forth in Section 5(b).

     

    “Business
      Day” means any day except Saturday, Sunday, and any day which shall be a
      federal legal holiday in the United States or any day on which banking
      institutions in the State of New York are authorized or required by law or
      other
      governmental action to close. 

     

    “Buy-In”
      shall have the meaning set forth in Section 4(d)(v). 

     

    “Change
      of Control Transaction” means the occurrence after the date hereof of any of
      (i) an acquisition after the date hereof by an individual or legal entity or
      “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
      effective control (whether through legal or beneficial ownership of capital
      stock of the Company, by contract or otherwise) of in excess of 50% of the
      voting securities of the Company (other than by means of conversion or exercise
      of the Debentures, the Warrants and the Additional Warrants), or (ii) the
      Company merges into or consolidates with any other Person, or any Person merges
      into or consolidates with the Company and, after giving effect to such
      transaction, the stockholders of the Company immediately prior to such
      transaction own less than 50% of the aggregate voting power of the Company
      or
      the successor entity of such transaction, or (iii) the Company sells or
      transfers all or substantially all of its assets to another Person and the
      stockholders of the Company immediately prior to such transaction own less
      than
      50% of the aggregate voting power of the acquiring entity immediately after
      the
      transaction, or (iv) a replacement at one time or within a three year period
      of
      more than one-half of the members of the Company’s board of directors which is
      not approved by a majority of those individuals who are members of the board
      of
      directors on the date hereof (or by those individuals who are serving as members
      of the board of directors on any date whose nomination to the board of directors
      was approved by a majority of the members of the board of directors who are
      members on the date hereof), or (v) the execution by the Company of an agreement
      to which the Company is a party or by which it is bound, providing for any
      of
      the events set forth in clauses (i) through (iv) above. 

     

    “Common
      Stock” means the common stock, no par value, of the Company and stock of any
      other class of securities into which such securities may hereafter be
      reclassified or changed. 

     

    “Common
      Stock Equivalents” means all shares of Common Stock or any securities of the
      Company which would entitle the holder thereof to acquire at any time Common
      Stock (including without limitation, any debt, preferred stock, rights, options,
      warrants or other instrument that is at any time convertible into or
      exchangeable for, or otherwise entitles the holder thereof to receive, Common
      Stock), whether by operation of purchase price adjustments, reset provisions,
      floating conversion, exercise or exchange prices or otherwise, or due to
      warrants, options or rights per share which is issued in connection with such
      issuance, at an effective price per share which is less than the Conversion
      Price then in effect. If the Company issues any securities convertible or
      exchangeable into Common Stock, the maximum number of shares of Common Stock
      issuable thereunder shall be deemed to be Common Stock Equivalents issued as
      of
      the time of such issue, if the consideration per share of such Common Stock
      Equivalents (as hereinafter determined) is less than the Conversion Price then
      in effect. Common Stock Equivalents, however, shall not include the issuance
      of
      (i) shares of Common Stock or options to employees, officers or directors of
      the
      Company pursuant to any stock or option plan duly adopted by a majority of
      the
      non-employee members of the Board of Directors of the Company or a majority
      of
      the members of a committee of non-employee directors established for such
      purpose, (ii) securities upon the conversion of any securities issued hereunder
      or other securities sold as part of the same offering, convertible securities,
      options or warrants issued and outstanding on the date of this Debenture,
      provided that such securities have not been amended since the date of this
      Debenture to increase the number of such securities, and (iii) securities issued
      pursuant to acquisitions or strategic transactions, provided any such issuance
      shall only be to an entity which is, itself or through its subsidiaries, an
      operating company in a business synergistic with the business of the Company
      and
      in which the Company receives benefits in addition to the investment of funds,
      but shall not include a transaction in which the Company is issuing securities
      primarily for the purpose of raising capital or to an entity whose primary
      business is investing in securities. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Conversion
      Date” shall have the meaning set forth in Section 4(a). 

     

    “Conversion
      Price” shall have the meaning set forth in Section 4(b). 

     

    “Conversion
      Shares” means, collectively, the shares of Common Stock issuable upon
      conversion of this Debenture in accordance with the terms hereof. 

     

    “Debenture
      Register” shall have the meaning set forth in Section 2(c). 

     

    “Dilutive
      Issuance” shall have the meaning set forth in Section 5(b). 

     

    “Dilutive
      Issuance Notice” shall have the meaning set forth in Section 5(b).

     

    “Effectiveness
      Period” shall have the meaning set forth in the Registration Rights
      Agreement. 

     

    “Equity
      Conditions” shall mean, during the period in question, (i) the Company shall
      have duly honored all conversions and redemptions scheduled to occur or
      occurring by virtue of one or more Notices of Conversion of the Holder, if
      any,
      (ii) the Company shall have paid all liquidated damages and other amounts owing
      to the Holder in respect of this Debenture, (iii) there is an effective
      Registration Statement pursuant to which the Holder is permitted to utilize
      the
      prospectus thereunder to resell all of the shares issuable pursuant to the
      Transaction Documents (and the Company believes, in good faith, that such
      effectiveness will continue uninterrupted for the foreseeable future), (iv)
      the
      Common Stock is trading on a Trading Market and all of the shares issuable
      pursuant to the Transaction Documents are listed for trading on such Trading
      Market (and the Company believes, in good faith, that trading of the Common
      Stock on a Trading Market will continue uninterrupted for the foreseeable
      future), (v) there is a sufficient number of authorized but unissued and
      otherwise unreserved shares of Common Stock for the issuance of all of the
      shares issuable pursuant to the Transaction Documents, (vi) there is no existing
      Event of Default or no existing event which, with the passage of time or the
      giving of notice, would constitute an Event of Default, 

    (vii)
      the
      issuance of the shares in question (or, in the case of a Forced Conversion,
      the
      shares issuable upon conversion in full of the Forced Conversion) to the Holder
      would not violate the limitations set forth in Section 4(c) herein, (viii)
      there
      has been no public announcement of a pending or proposed Fundamental Transaction
      or Change of Control Transaction that has not been consummated, (ix) the Holder
      is not in possession of any information that constitutes, or may constitute,
      material non-public information and (x) for a period of 20 consecutive Trading
      Days prior to the applicable date in question, the daily trading volume for
      the
      Common Stock on the principal Trading Market exceeds 100,000 shares per Trading
      Day and the VWAP on each such Trading Day exceeds $6.00 per share (subject
      to
      adjustment for forward and reverse stock splits and the like). 

     

    “Event
      of Default” shall have the meaning set forth in Section 8. 

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder. 

     

    “Forced
      Conversion” shall have the meaning set forth in Section 6. 

     

    “Forced
      Conversion Notice” shall have the meaning set forth in Section 6.

     

    “Forced
      Conversion Notice Date” shall have the meaning set forth in Section 6.

     

    “Fundamental
      Transaction” shall have the meaning set forth in Section 5(d). 

     

    “Interest
      Payment Date” shall have the meaning set forth in Section 2(a).

     

    “Late
      Fees” shall have the meaning set forth in Section 2(d). 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Mandatory
      Default Amount”
means
      the sum of (i) the greater of (A) 130% of the outstanding principal amount
      of
      this Debenture (except that such percentage shall be increased to 150% of the
      outstanding principal amount with respect to any Change of Control Transaction
      that is an Event of Default under Section 9(a)(ix)), plus all accrued and unpaid
      interest hereon, or (B) the outstanding principal amount of this Debenture
      (except that such amount shall be increased to 135% of the outstanding principal
      amount with respect to any Change of Control Transaction that is an Event of
      Default under Section 9(a)(ix)), plus all accrued and unpaid interest hereon,
      divided by the Conversion Price on the date the Mandatory Default Amount is
      either (a) demanded (if demand or notice is required to create an Event of
      Default) or otherwise due or (b) paid in full, whichever has a lower Conversion
      Price, multiplied by the VWAP on the date the Mandatory Default Amount is either
      (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP,
      and (ii) all other amounts, costs, expenses and liquidated damages due in
      respect of this Debenture. 

     

    “Milestone
      Default” shall have the meaning set forth in Section 9(a). 

     

    “Milestone
      Default Amount”
means
      the sum of (i) (A) 120% of the outstanding principal amount of this Debenture
      (in the case of a default under Section 9(a)(i), (B) 115% of the outstanding
      principal amount of this Debenture (in the case of a default under Section
      9(a)(ii), or (C) 110% of the outstanding principal amount of this Debenture
      (in
      the case of a default under Section 9(a)(iii), (ii) all accrued and unpaid
      interest hereon, and (ii) all other amounts, costs, expenses and liquidated
      damages due in respect of this Debenture. 

     

    “New
      York Courts” shall have the meaning set forth in Section 10(d).

     

    “Notice
      of Conversion” shall have the meaning set forth in Section 4(a).

     

    “Operating
      Income” means Revenue, less Cost of Goods Sold, less General &
Administrative Expenses, plus Depreciation, plus Amortization, plus cash
      and
      non-cash expenses associated with (i) the issuance and conversion of the
      Debentures, (ii) the issuance and exercise of the warrants issued pursuant
      to
      the Transaction Documents in connection with the Debentures, (iii) the
      conversion of the Company’s Series A Subordinated Secured Promissory Notes
      (originally issued between May 2006 and January 2007), and 

    (iv)
      the
      issuance and exercise of warrants issued in connection with the conversion
      of
      any of the Company’s Series A Subordinated Secured Promissory Notes.

     

    “Original
      Issue Date” shall mean the date of the first issuance of the Debentures
      regardless of the number of transfers of any Debenture and regardless of the
      number of instruments which may be issued to evidence such Debenture.

     

    “Permitted
      Indebtedness” means (a) the Indebtedness existing on the Original Issue Date
      and set forth on Schedule 4(bb) of the Subscription Agreement, (b) up to
      $750,000 in additional Indebtedness, 

    (c)
      lease
      obligations and purchase money indebtedness of up to $250,000, in the aggregate,
      incurred in connection with the acquisition of capital assets and lease
      obligations with respect to newly acquired or leased assets, and (d)
      Indebtedness of Asante Networks, Inc. in connection with lines of credit from
      financial institutions tied to Asante Networks, Inc.’s accounts receivable or
      inventory. 

     

    “Permitted
      Lien” means the individual and collective reference to the following: (a)
      Liens for taxes, assessments and other governmental charges or levies not yet
      due or Liens for taxes, assessments and other governmental charges or levies
      being contested in good faith and by appropriate proceedings for which adequate
      reserves (in the good faith judgment of the management of the Company) have
      been
      established in accordance with GAAP; (b) Liens imposed by law which were
      incurred in the ordinary course of the Company’s business, such as carriers’,
      warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
      similar Liens arising in the ordinary course of the Company’s business, and
      which (x) do not individually or in the aggregate materially detract from the
      value of such property or assets or materially impair the use thereof in the
      operation of the business of the Company and its consolidated Subsidiaries
      or
      (y) are being contested in good faith by appropriate proceedings, which
      proceedings have the effect of preventing for the foreseeable future the
      forfeiture or sale of the property or asset subject to such Lien; (c) Liens
      incurred in connection with Permitted Indebtedness under clause (a) thereunder,
      provided that no more than $1,000,000 of the principal amount of such
      Indebtedness (not including interest, fees or liquidated damages thereon) ranks
      senior in priority to the Debentures; (d) Liens incurred in connection with
      Permitted Indebtedness under clauses (b) and (d) thereunder, and (e) Liens
      incurred in connection with Permitted Indebtedness under clause (c) thereunder
      provided that such Liens are not secured by assets of the Company or its
      Subsidiaries other than the assets so acquired or leased. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Person”
      means an individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or other entity
      of any kind. 

     

    “Registration
      Rights Agreement”
means
      Section 5 of the Subscription Agreement, entitled “Registration Rights”.

     

    “Registration
      Statement” means a registration statement that registers the resale of all
      Conversion Shares of the Holder, who shall be named as a “selling stockholder”
therein, and meets the requirements of the Registration Rights Agreement.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder. 

     

    “Subscription
      Agreement”
means
      the subscription agreement to which the Company and each original Holder is
      a
      party, with respect to the private placement which commenced on January 19,
      2007. 

     

    “Share
      Delivery Date” shall have the meaning set forth in Section 4(d).

     

    “Subsidiary”
      shall have the meaning set forth in the Subscription Agreement. 

     

    “Trading
      Day” means a day on which the principal Trading Market is open for business.
      

     

    “Trading
      Market” means the following principal market or exchange on which the Common
      Stock is listed or quoted for trading on each date in question: the American
      Stock Exchange, the Archipelago Exchange, the Nasdaq Over-the-Counter Bulletin
      Board, the Nasdaq Capital Market, the Nasdaq Global Market, or the New York
      Stock Exchange. 

     

    “Transaction
      Documents” shall mean this Debenture, the Subscription Agreement, the
      Warrants, the Additional Warrants, the Security Agreement, each Subsidiary
      Guarantee, and any other documents or agreements executed in connection with
      the
      transactions contemplated under the Subscription Agreement. 

     

    “VWAP”
      means, for any date, the price determined by the first of the following clauses
      that applies: (a) if the Common Stock is then listed or quoted on a Trading
      Market, the daily volume weighted average price of the Common Stock for such
      date (or the nearest preceding date) on the Trading Market on which the Common
      Stock is then listed or quoted for trading as reported by Bloomberg Financial
      L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m.
      (New York City time); or 

    (b)
      in
      all other cases, the fair market value of a share of Common Stock as determined
      by an independent appraiser selected in good faith by the Company, provided
      Holder does not have a reasonable objection to such selection. 

     

    Section
      2.
      Interest.
      

     

    a)
      Payment of Interest in Cash. The Company shall pay interest to the Holder
      on the aggregate unconverted and then outstanding principal amount of this
      Debenture at the rate of 8% per annum, payable on each Conversion Date (as
      to
      that principal amount then being converted), and on the Maturity Date (except
      that, if any such date is not a Business Day, then such payment shall be due
      on
      the next succeeding Business Day) (each such date, an “Interest Payment
      Date”), in cash. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    b)
      Intentionally
      Omitted.
      

     

    c)
      Interest Calculations. Interest shall be calculated on the basis of a 360-day
      year and shall accrue daily commencing on the Original Issue Date until payment
      in full of the principal sum, together with all accrued and unpaid interest,
      liquidated damages and other amounts which may become due hereunder, has been
      made. Interest shall cease to accrue with respect to any principal amount
      converted, provided that the Company actually delivers the Conversion Shares
      within the time period required by Section 4(d)(ii). Interest hereunder will
      be
      paid to the Person in whose name this Debenture is registered on the records
      of
      the Company regarding registration and transfers of this Debenture (the
“DebentureRegister”).
      

     

    d)
      Late
      Fee.
      All
      overdue accrued and unpaid interest to be paid hereunder shall entail a late
      fee
      at an interest rate equal to the lesser of 18% per annum or the maximum rate
      permitted by applicable law (“Late Fees”) which shall accrue daily from
      the date such interest is due hereunder through and including the date of
      payment in full. 

     

    e)
      Prepayment.
      Except
      as otherwise set forth in this Debenture, the Company may not prepay any portion
      of the principal amount of this Debenture without the prior written consent
      of
      the Holder. 

     

    Section
      3. Registration of Transfers and Exchanges.
      

     

    a)
      Different Denominations. This Debenture is exchangeable for an equal
      aggregate principal amount of Debentures of different authorized denominations,
      as requested by the Holder surrendering the same. No service charge will be
      payable for such registration of transfer or exchange. 

     

    b)
      Investment Representations. This Debenture has been issued subject to
      certain investment representations of the original Holder set forth in the
      Subscription Agreement and may be transferred or exchanged only in compliance
      with the Subscription Agreement and applicable federal and state securities
      laws
      and regulations. 

     

    c)
      Reliance on Debenture Register. Prior to due presentment to the Company
      for transfer of this Debenture, the Company and any agent of the Company may
      treat the Person in whose name this Debenture is duly registered on the
      Debenture Register as the owner hereof for the purpose of receiving payment
      as
      herein provided and for all other purposes, whether or not this Debenture is
      overdue, and neither the Company nor any such agent shall be affected by notice
      to the contrary. 

     

    Section
      4. Conversion.
      

     

    a)
      Voluntary Conversion. At any time after the Original Issue Date until
      this Debenture is no longer outstanding, this Debenture shall be convertible,
      in
      whole or in part, into shares of Common Stock at the option of the Holder,
      at
      any time and from time to time (subject to the conversion limitations set forth
      in Section 4(c) hereof). The Holder shall effect conversions by delivering
      to
      the Company a Notice of Conversion, the form of which is attached hereto as
      Annex A (a “Notice of Conversion”), specifying therein the
      principal amount of this Debenture to be converted and the date on which such
      conversion shall be effected (a “Conversion Date”). If no Conversion Date
      is specified in a Notice of Conversion, the Conversion Date shall be the date
      that such Notice of Conversion is deemed delivered hereunder. To effect
      conversions hereunder, the Holder shall not be required to physically surrender
      this Debenture to the Company unless the entire principal amount of this
      Debenture plus all accrued and unpaid interest thereon has been so converted.
      Conversions hereunder shall have the effect of lowering the outstanding
      principal amount of this Debenture in an amount equal to the applicable
      conversion. The Holder and the Company shall maintain records showing the
      principal amount(s) converted and the date of such conversion(s). The Company
      may deliver an objection to any Notice of Conversion within 2 Business Days
      of
      delivery of such Notice of Conversion. In the event of any dispute or
      discrepancy, the records of the Company shall be controlling and determinative
      in the absence of manifest error. The
      Holder and any assignee,
      by acceptance of this Debenture, acknowledge and agree that, by reason of the
      provisions of this
      paragraph, following conversion of a portion of this Debenture, the unpaid
      and
      unconverted principal amount of this Debenture may be less than the amount
      stated on the face hereof. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    b)
      Conversion
      Price.
      The
      conversion price in effect on any Conversion Date shall be equal to $1.50
      (subject
      to adjustment herein) (the “Conversion Price”). 

     

    c)
      Conversion
      Limitations.
      The
      Company shall not effect any conversion of this Debenture, and a Holder shall
      not have the right to convert any portion of this Debenture, to the extent
      that
      after giving effect to the conversion set forth on the applicable Notice of
      Conversion, such Holder (together with such Holder’s Affiliates, and any other
      person or entity acting as a group together with such Holder or any of such
      Holder’s Affiliates) would beneficially own in excess of the Beneficial
      Ownership Limitation (as defined below). For purposes of the foregoing sentence,
      the number of shares of Common Stock beneficially owned by such Holder and
      its
      Affiliates shall include the number of shares of Common Stock issuable upon
      conversion of this Debenture with respect to which such determination is being
      made, but shall exclude the number of shares of Common Stock which are issuable
      upon (A) conversion of the remaining, unconverted principal amount of this
      Debenture beneficially owned by such Holder or any of its Affiliates and (B)
      exercise or conversion of the unexercised or unconverted portion of any other
      securities of the Company subject to a limitation on conversion or exercise
      analogous to the limitation contained herein (including, without limitation,
      any
      other Debentures or the Warrants) beneficially owned by such Holder or any
      of
      its Affiliates. Except as set forth in the preceding sentence, for purposes
      of
      this Section 4(c), beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder. To the extent that the limitation contained in this Section 4(c)
      applies, the determination of whether this Debenture is convertible (in relation
      to other securities owned by such Holder together with any Affiliates) and
      of
      which principal amount of this Debenture is convertible shall be in the sole
      discretion of such Holder, and the submission of a Notice of Conversion shall
      be
      deemed to be such Holder’s determination of whether this Debenture may be
      converted (in relation to other securities owned by such Holder together with
      any Affiliates) and which principal amount of this Debenture is convertible,
      in
      each case subject to such aggregate percentage limitations. To ensure compliance
      with this restriction, each Holder will be deemed to represent to the Company
      each time it delivers a Notice of Conversion that such Notice of Conversion
      has
      not violated the restrictions set forth in this paragraph and the Company shall
      have no obligation to verify or confirm the accuracy of such determination.
      In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. For purposes of this Section 4(c),
      in
      determining the number of outstanding shares of Common Stock, a Holder may
      rely
      on the number of outstanding shares of Common Stock as stated in the most recent
      of the following: (A) the Company’s most recent Form 10-QSB or Form 10-KSB, as
      the case may be; (B) a more recent public announcement by the Company; or (C)
      a
      more recent notice by the Company or the Company’s transfer agent setting forth
      the number of shares of Common Stock outstanding. Upon the written request of a
      Holder, the Company shall within two Trading Days confirm orally and in writing
      to such Holder the number of shares of Common Stock then outstanding. In any
      case, the number of outstanding shares of Common Stock shall be determined
      after
      giving effect to the conversion or exercise of securities of the Company,
      including this Debenture, by such Holder or its Affiliates since the date as
      of
      which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the
      Common Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock issuable upon conversion of this Debenture held by the
      Holder. The Beneficial Ownership Limitation provisions of this Section 4(c)
      may
      be waived by such Holder, at the election of such Holder, upon not less than
      61
      days’ prior written notice to the Company, to change the Beneficial Ownership
      Limitation to 9.99% of the number of shares of the Common Stock outstanding
      immediately after giving effect to the issuance of shares of Common Stock upon
      conversion of this Debenture held by the Holder, and the provisions of this
      Section 4(c) shall continue to apply. Upon such a change of the Beneficial
      Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the
      Beneficial Ownership Limitation may not be further waived. The provisions of
      this paragraph shall be construed and implemented in a manner otherwise than
      in
      strict conformity with the terms of this Section 4(c) to correct this paragraph
      (or any portion hereof) which may be defective or inconsistent with the intended
      Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such limitation.
      The limitations contained in this paragraph shall apply to a successor holder
      of
      this Debenture. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    d)
      Mechanics
      of Conversion.
      

     

    i.
      Conversion
      Shares Issuable Upon Conversion of Principal Amount.
      The
      number of shares of Common Stock issuable upon a conversion hereunder shall
      be
      determined by the quotient obtained by dividing (x) the outstanding principal
      amount of this Debenture to be converted by (y) the Conversion Price.

     

    ii.
      Delivery of Certificate Upon Conversion. Not later than three (3) Trading
      Days after each Conversion Date (the “Share Delivery Date”), the Company
      shall deliver, or cause to be delivered, to the Holder (A) a certificate or
      certificates representing the Conversion Shares which, on or after the Effective
      Date, shall be free of restrictive legends and trading restrictions (other
      than
      those which may then be required by the Subscription Agreement) representing
      the
      number of shares of Common Stock being acquired upon the conversion of this
      Debenture and (B) a bank or corporate check in the amount of accrued and unpaid
      interest. On or after the Effective Date, the Company shall use its best efforts
      to deliver any certificate or certificates required to be delivered by the
      Company under this Section 4 electronically through the Depository Trust Company
      or another established clearing corporation performing similar functions.

     

    iii.
      Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the third Trading Day
      after the Conversion Date, the Holder shall be entitled to elect by written
      notice to the Company at any time on or before its receipt of such certificate
      or certificates, to rescind such Notice of Conversion, in which event the
      Company shall promptly return to the Holder any original Debenture delivered
      to
      the Company and the Holder shall promptly return to the Company the Common
      Stock
      any certificates representing the principal amount of this Debenture tendered
      for conversion under such rescinded Notice of Conversion. 

     

    iv.
      Obligation
      Absolute; Partial Liquidated Damages.
      If the
      Company fails for any reason to deliver to the Holder such certificate or
      certificates pursuant to Section 4(d)(ii) by the third Trading Day after the
      Conversion Date, the Company shall pay to such Holder, in cash, as liquidated
      damages and not as a penalty, for each $1000 of principal amount being
      converted, $10 per Trading Day (increasing to $20 per Trading Day after 5
      Trading Days after such damages begin to accrue) for each Trading Day after
      such
      third Trading Day until such certificates are delivered. The Company’s
      obligations to issue and deliver the Conversion Shares upon conversion of this
      Debenture in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other Person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance of
      such
      Conversion Shares; provided, however, that such delivery shall not
      operate as a waiver by the Company of any such action the Company may have
      against the Holder. In the event the Holder of this Debenture shall elect to
      convert any or all of the outstanding principal amount hereof, the Company
      may
      not refuse conversion based on any claim that the Holder or anyone associated
      or
      affiliated with the Holder has been engaged in any violation of law, agreement
      or for any other reason, unless an injunction from a court, on notice to Holder,
      restraining and or enjoining conversion of all or part of this Debenture shall
      have been sought and obtained, and the Company posts a surety bond for the
      benefit of the Holder in the amount of 150% of the outstanding principal amount
      of this Debenture, which is subject to the injunction, which bond shall remain
      in effect until the completion of arbitration/litigation of the underlying
      dispute and the proceeds of which shall be payable to such Holder to the extent
      it obtains judgment. In the absence of such injunction, the Company shall issue
      Conversion Shares or, if applicable, cash, upon a properly noticed conversion.
      Nothing herein shall limit a Holder’s right to pursue actual damages or declare
      an Event of Default pursuant to Section 8 herein for the Company’s failure to
      deliver Conversion Shares within the period specified herein and such Holder
      shall have the right to pursue all remedies available to it hereunder, at law
      or
      in equity including, without limitation, a decree of specific performance and/or
      injunctive relief. The exercise of any such rights shall not prohibit the Holder
      from seeking to enforce damages pursuant to any other Section hereof or under
      applicable law. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    v.
      Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon Conversion.
      In addition to any other rights available to the Holder, if the Company fails
      for any reason to deliver to the Holder such certificate or certificates by
      the
      Share Delivery Date pursuant to Section 4(d)(ii), and if after such Share
      Delivery Date the Holder is required by its brokerage firm to purchase (in
      an
      open market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by such Holder of the Conversion Shares which the Holder
      was entitled to receive upon the conversion relating to such Share Delivery
      Date
      (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in
      addition to any other remedies available to or elected by the Holder) the amount
      by which (x) the Holder’s total purchase price (including any brokerage
      commissions) for the Common Stock so purchased exceeds (y) the product of (1)
      the aggregate number of shares of Common Stock that such Holder was entitled
      to
      receive from the conversion at issue multiplied by (2) the actual sale price
      at
      which the sell order giving rise to such purchase obligation was executed
      (including any brokerage commissions) and (B) at the option of the Holder,
      either reissue (if surrendered) this Debenture in a principal amount equal
      to
      the principal amount of the attempted conversion or deliver to the Holder the
      number of shares of Common Stock that would have been issued if the Company
      had
      timely complied with its delivery requirements under Section 4(d)(ii). For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted conversion of this
      Debenture with respect to which the actual sale price of the Conversion Shares
      (including any brokerage commissions) giving rise to such purchase obligation
      was a total of $10,000 under clause (A) of the immediately preceding sentence,
      the Company shall be required to pay the Holder $1,000. The Holder shall provide
      the Company written notice indicating the amounts payable to the Holder in
      respect of the Buy-In and, upon request of the Company, evidence of the amount
      of such loss. Nothing herein shall limit a Holder’s right to pursue any other
      remedies available to it hereunder, at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief with
      respect to the Company’s failure to timely deliver certificates representing
      shares of Common Stock upon conversion of this Debenture as required pursuant
      to
      the terms hereof. 

     

    vi.
      Reservation of Shares Issuable Upon Conversion. The Company covenants
      that it will at all times reserve and keep available out of its authorized
      and
      unissued shares of Common Stock for the sole purpose of issuance upon conversion
      of this Debenture and payment of interest on this Debenture, each as herein
      provided, free from preemptive rights or any other actual contingent purchase
      rights of Persons other than the Holder (and the other holders of the
      Debentures), not less than such aggregate number of shares of the Common Stock
      as shall (subject to the terms and conditions set forth in the Subscription
      Agreement) be issuable (taking into account the adjustments and restrictions
      of
      Section 5) upon the conversion of the outstanding principal amount of this
      Debenture and payment of interest hereunder. The Company covenants that all
      shares of Common Stock that shall be so issuable shall, upon issue, be duly
      authorized, validly issued, fully paid and nonassessable and, if the
      Registration Statement is then effective under the Securities Act, shall be
      registered for public sale in accordance with such Registration Statement.
      

     

    vii.
      Fractional
      Shares.
      Upon a
      conversion hereunder, in the event the conversion yields a fractional share,
      the
      Holder shall be entitled to receive, in lieu of the final fraction of a share,
      one (1) whole share of Common Stock. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    viii.
      Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder hereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificates, provided that the Company shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of this Debenture so converted and the Company shall not be required
      to issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Company the amount of
      such tax or shall have established to the satisfaction of the Company that
      such
      tax has been paid. 

     

    Section
      5.
      Certain
      Adjustments.
      

     

    a)
      Stock
      Dividends and Stock Splits.
      If the
      Company, at any time while this Debenture is outstanding: (A) pays a stock
      dividend or otherwise makes a distribution or distributions payable in shares
      of
      Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
      for avoidance of doubt, shall not include any shares of Common Stock issued
      by
      the Company upon conversion of, or payment of interest on, the Debentures);
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares;
      (C) combines (including by way of a reverse stock split) outstanding shares
      of
      Common Stock into a smaller number of shares; or (D) issues, in the event of
      a
      reclassification of shares of the Common Stock, any shares of capital stock
      of
      the Company, then the Conversion Price shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      any
      treasury shares of the Company) outstanding immediately before such event and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a subdivision,
      combination or re-classification. 

     

    b)
      Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this
      Debenture is outstanding, sells or grants any option to purchase or sells or
      grants any right to reprice its securities, or otherwise disposes of or issues
      (or announces any sale, grant or any option to purchase or other disposition)
      any Common Stock Equivalents entitling any Person to acquire shares of Common
      Stock at an effective price per share that is lower than the then in effect
      Conversion Price (such lower price, the “Base Conversion Price” and such
      issuances collectively, a “Dilutive Issuance”) (if the holder of the
      Common Stock Equivalents so issued shall at any time, whether by operation
      of
      purchase price adjustments, reset provisions, floating conversion, exercise
      or
      exchange prices or otherwise, or due to warrants, options or rights per share
      which are issued in connection with such issuance, be entitled to receive shares
      of Common Stock at an effective price per share that is lower than the
      Conversion Price, such issuance shall be deemed to have occurred for less than
      the Conversion Price on such date of the Dilutive Issuance), then the Conversion
      Price shall be reduced to equal the Base Conversion Price. Such adjustment
      shall
      be made whenever such Common Stock Equivalents are issued. The Company shall
      notify the Holder in writing, no later than the second Business Day following
      the issuance of any Common Stock Equivalents subject to this Section 5(b),
      indicating therein the applicable issuance price, or applicable reset price,
      exchange price, conversion price and other pricing terms (such notice, the
      “Dilutive Issuance Notice”). For purposes of clarification, whether or
      not the Company provides a Dilutive Issuance Notice pursuant to this Section
      5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled
      to
      receive a number of Conversion Shares based upon the Base Conversion Price
      on or
      after the date of such Dilutive Issuance, regardless of whether the Holder
      accurately refers to the Base Conversion Price in the Notice of Conversion.
      

     

    c)
      Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Debenture is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share that is lower than the VWAP on the record date referenced below,
      then
      the Conversion Price shall be multiplied by a fraction of which the denominator
      shall be the number of shares of the Common Stock outstanding on the date of
      issuance of such rights or warrants plus the number of additional shares of
      Common Stock offered for subscription or purchase, and of which the numerator
      shall be the number of shares of the Common Stock outstanding on the date of
      issuance of such rights or warrants plus the number of shares which the
      aggregate offering price of the total number of shares so offered (assuming
      delivery to the Company in full of all consideration payable upon exercise
      of
      such rights, options or warrants) would purchase at such VWAP. Such adjustment
      shall be made whenever such rights or warrants are issued, and shall become
      effective immediately after the record date for the determination of
      stockholders entitled to receive such rights, options or warrants. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    d)
Pro
      Rata Distributions. If the Company, at any time while this Debenture is
      outstanding, distributes to all holders of Common Stock (and not to the Holders)
      evidences of its indebtedness or assets (including cash and cash dividends)
      or
      rights or warrants to subscribe for or purchase any security (other than the
      Common Stock, which shall be subject to Section 5(b)), then in each such case
      the Conversion Price shall be adjusted by multiplying such Conversion Price
      in
      effect immediately prior to the record date fixed for determination of
      stockholders entitled to receive such distribution by a fraction of which the
      denominator shall be the VWAP determined as of the record date mentioned above,
      and of which the numerator shall be such VWAP on such record date less the
      then
      fair market value at such record date of the portion of such assets or evidence
      of indebtedness so distributed applicable to one (1) outstanding share of the
      Common Stock as determined by the Board of Directors of the Company in good
      faith. In either case the adjustments shall be described in a statement
      delivered to the Holder describing the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one (1)
      share of Common Stock. Such adjustment shall be made whenever any such
      distribution is made and shall become effective immediately after the record
      date mentioned above. 

     

    e)
      Fundamental Transaction. If, at any time while this Debenture is
      outstanding, (A) the Company effects any merger or consolidation of the Company
      with or into another Person, (B) the Company effects any sale of all or
      substantially all of its assets in one transaction or a series of related
      transactions, (C) any tender offer or exchange offer (whether by the Company
      or
      another Person) is completed pursuant to which holders of Common Stock are
      permitted to tender or exchange their shares for other securities, cash or
      property, or (D) the Company effects any reclassification of the Common Stock
      or
      any compulsory share exchange pursuant to which the Common Stock is effectively
      converted into or exchanged for other securities, cash or property (in any
      such
      case, a “Fundamental Transaction”), then, upon any subsequent conversion
      of this Debenture, the Holder shall have the right to receive, for each
      Conversion Share that would have been issuable upon such conversion immediately
      prior to the occurrence of such Fundamental Transaction, the same kind and
      amount of securities, cash or property as it would have been entitled to receive
      upon the occurrence of such Fundamental Transaction if it had been, immediately
      prior to such Fundamental Transaction, the holder of one (1) share of Common
      Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one (1) share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Debenture following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new debenture consistent with the foregoing
      provisions and evidencing the Holder’s right to convert such debenture into
      Alternate Consideration. The terms of any agreement pursuant to which a
      Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this Section
      5(d)
      and insuring that this Debenture (or any such replacement security) will be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. 

     

    f)
      Calculations.
      All
      calculations under this Section 5 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      5,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      any treasury shares of the Company) issued and outstanding. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    g)
      Notice
      to the Holder.
      

     

    i.
      Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any provision of this
      Section 5, the Company shall promptly mail to each Holder a notice setting
      forth
      the Conversion Price after such adjustment and setting forth a brief statement
      of the facts requiring such adjustment. If the Company issues a variable rate
      security in a Variable Rate Transaction (as defined in the Subscription
      Agreement), despite the prohibition thereon in the Subscription Agreement,
      the
      Company shall be deemed to have issued Common Stock Equivalents at the lowest
      possible conversion or exercise price at which such securities may be converted
      or exercised. 

     

    ii.
      Notice
      to Allow Conversion by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock, (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock, (C) the Company shall
      authorize the granting to all holders of the Common Stock of rights or warrants
      to subscribe for or purchase any shares of capital stock of any class or of
      any
      rights, (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property
      or
      (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Company, then, in each case,
      the
      Company shall cause to be filed at each office or agency maintained for the
      purpose of conversion of this Debenture, and shall cause to be delivered to
      the
      Holder at its last address as it shall appear upon the Debenture Register,
      at
      least 20 calendar days prior to the applicable record or effective date
      hereinafter specified, a notice stating (x) the date on which a record is to
      be
      taken for the purpose of such dividend, distribution, redemption, rights or
      warrants, or if a record is not to be taken, the date as of which the holders
      of
      the Common Stock of record to be entitled to such dividend, distributions,
      redemption, rights or warrants are to be determined or (y) the date on which
      such reclassification, consolidation, merger, sale, transfer or share exchange
      is expected to become effective or close, and the date as of which it is
      expected that holders of the Common Stock of record shall be entitled to
      exchange their shares of the Common Stock for securities, cash or other property
      deliverable upon such reclassification, consolidation, merger, sale, transfer
      or
      share exchange, provided
      that the
      failure to deliver such notice or any defect therein or in the delivery thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to convert this Debenture during the
      20-day period commencing on the date of such notice through the effective date
      of the event triggering such notice. 

     

    Section
      6.
      Forced
      Conversion.
      Notwithstanding anything herein to the contrary, after the 6 month anniversary
      of the Effective Date, on any date upon which all of the Equity Conditions
      have
      been met, the Company may, within two Trading Days of such date, deliver a
      notice to the Holder (a “Forced Conversion Notice” and the date such notice is
      received by the Holder, the “Forced Conversion Notice Date”) to cause the Holder
      to immediately convert all or part of the then outstanding principal amount
      of
      Debentures pursuant to Section 4 (a “Forced Conversion”). The Company may only
      effect a Forced Conversion Notice if all of the Equity Conditions are met
      through the date of the applicable Forced Conversion. Any Forced Conversion
      shall be applied ratably to all Holders based on their initial purchases of
      Debentures pursuant to the Subscription Agreement. For purposes of clarity,
      a
      Forced Conversion shall be subject to all of the conditions of Section 4,
      including the conversion limitations set forth in Section 4(c) and the Company’s
      obligation to timely deliver certificates and interest payments, except
      that
      a Forced
      Conversion may be effected by the Company regardless of whether the Holder
      submits a Notice of Conversion provided that all other conditions are met.
      

     

    Section
      7.
      Negative Covenants. As long as more than 20% of the aggregate principal amount
      of the Debentures issued on the Original Issue Date pursuant to the Subscription
      Agreements between the Company and the investors signatory thereto remain
      outstanding and unconverted, the Company shall not, and shall not permit any
      of
      its Subsidiaries to, directly or indirectly, without the prior written approval
      of those Holders owning more than a majority of the outstanding principal amount
      of Debentures: 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    a)
      other
      than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
      suffer to exist any indebtedness for borrowed money of any kind, including
      but
      not limited to, a guarantee, on or with respect to any of its property or assets
      now owned or hereafter acquired or any interest therein or any income or profits
      therefrom; 

     

    b)
      other
      than Permitted Liens, enter into, create, incur, assume or suffer to exist
      any
      Liens of any kind, on or with respect to any of its property or assets now
      owned
      or hereafter acquired or any interest therein or any income or profits
      therefrom; 

     

    c)
      amend
      its charter documents, including without limitation, the certificate of
      incorporation and bylaws, in any manner that materially and adversely affects
      any rights of the Holder; 

     

    d)
      repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
deminimis number of shares of its Common Stock or Common Stock
      Equivalents other than as to (a) this Debenture, the Conversion Shares or
      Warrant Shares as permitted or required under the Transaction Documents, and
      (b)
      repurchases of Common Stock or Common Stock Equivalents of departing officers
      and directors of the Company (provided that such repurchases shall not exceed
      an
      aggregate of $100,000 for all officers and directors during the term of this
      Debenture); 

     

    
      e)
enter
        into any agreement with respect to any of the foregoing; 

       

      
        
          f)
            pay
            cash dividends or distributions on any equity securities of the Company;
            or  

        

      

    

     

      Section
        8. Events
        of Default.

    

     

      
        a)
          “Event of Default” means, wherever used herein, any of the following
          events (whatever the reason for such event and whether such event shall be
          voluntary or involuntary or effected by operation of law or pursuant to
          any
          judgment, decree or order of any court, or any order, rule or regulation
          of any
          administrative or governmental body): 

      

    

     

    i.
      any
      default in the payment of (A) the principal amount of any Debenture or (B)
      interest, liquidated damages and other amounts owing to a Holder on any
      Debenture, as and when the same shall become due and payable (whether on a
      Conversion Date or the Maturity Date or by acceleration or otherwise) which
      default, solely in the case of an interest payment or other default under clause
      (B) above, is not cured within 10 Trading Days; 

     

    ii.
      the
      Company shall fail to observe or perform any other covenant or agreement
      contained in the Debentures which failure is not cured, if possible to cure,
      within 10 Trading Days; 

     

    iii.
      a
      default or event of default (subject to any grace or cure period provided in
      the
      applicable agreement, document or instrument) shall occur under (A) any of
      the
      Transaction Documents or (B) any other material agreement, lease, document
      or
      instrument to which the Company or any Subsidiary is obligated (and not covered
      by clause (vi) below); 

     

    iv.
      any
      representation or warranty made in this Debenture, any other Transaction
      Documents, any written statement pursuant hereto or thereto or any other report,
      financial statement or certificate made or delivered to the Holder or any other
      holder of Debentures shall be untrue or incorrect in any material respect as
      of
      the date when made or deemed made; 

     

    v.
      the
      Company or any Significant Subsidiary shall be subject to a Bankruptcy Event;
      

    

    vi.
      the
      Company or any Subsidiary shall default on any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced, any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement that (a) involves an
      obligation greater than $150,000, whether such indebtedness now exists or shall
      hereafter be created, and (b) results in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable; 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    vii.
      the
      Company shall provide at any time notice to the Holder, including by way of
      public announcement, of the Company’s intention to not honor requests for
      conversions of any Debentures in accordance with the terms hereof; or

     

    viii.
      the
      Common Stock shall not be eligible for listing or quotation for trading on
      a
      Trading Market and shall not be eligible to resume listing or quotation for
      trading thereon within five Trading Days; or 

     

    ix.
      the
      Company shall be party to a Change of Control Transaction. 

     

    b)
      Remedies Upon Event of Default. If any Event of Default occurs, the
      outstanding principal amount of this Debenture, plus accrued but unpaid
      interest, liquidated damages and other amounts owing in respect thereof through
      the date of acceleration, shall become, at the Holder’s election, immediately
      due and payable in cash at the Mandatory Default Amount. Commencing 5 days
      after
      the occurrence of any Event of Default that results in the eventual acceleration
      of this Debenture, the interest rate on this Debenture shall accrue at an
      interest rate equal to the lesser of 18% per annum or the maximum rate permitted
      under applicable law. Upon the payment in full of the Mandatory Default Amount,
      the Holder shall promptly surrender this Debenture to or as directed by the
      Company. In connection with such acceleration described herein, the Holder
      need
      not provide, and the Company hereby waives, any presentment, demand, protest
      or
      other notice of any kind, and the Holder may immediately and without expiration
      of any grace period enforce any and all of its rights and remedies hereunder
      and
      all other remedies available to it under applicable law. Such acceleration
      may
      be rescinded and annulled by Holder at any time prior to payment hereunder
      and
      the Holder shall have all rights as a holder of the Debenture until such time,
      if any, as the Holder receives full payment pursuant to this Section 8(b).
      No
      such rescission or annulment shall affect any subsequent Event of Default or
      impair any right consequent thereon. 

     

    Section
      9.
      Milestone
      Defaults.
      

     

    a)
      “Milestone Default” means, wherever used herein, whenever the Company
      shall fail to achieve any of the following as reported in its periodic filings
      on Forms 10-QSB, 10-KSB or other applicable filings with the Securities and
      Exchange Commission: 

     

    i.
      Revenue exceeding $12,000,000 and Operating Income (Loss) exceeding ($2,000,000)
      for the period of January 1, 2007 through June 30, 2007; 

     

    ii.
      Revenue exceeding $29,000,000 and Operating Income exceeding $4,000,000 for
      the
      period of January 1, 2007 through September 30, 2007; and 

     

    iii.
      Revenue exceeding $47,000,000 and Operating Income exceeding $10,000,000 for
      the
      period of January 1, 2007 through December 31, 2007. 

     

    b)
      Remedies Upon Milestone Defaults. If any Milestone Default occurs, at the
      election of the Holder provided in writing to the Company within thirty (30)
      calendar days of the filing of the applicable 10-QSB, 10-KSB or other filing
      with the Securities and Exchange Commission, one-third (1/3) of the initial
      principal amount of this Debenture, plus accrued but unpaid interest, liquidated
      damages and other amounts owing in respect thereof through the date of
      acceleration, shall become immediately due and payable in cash at the Milestone
      Default Amount. Commencing 10 days after Holder gives notice for payment of
      a
      Milestone Default Amount, the Milestone Default Amount shall accrue interest
      at
      an interest rate equal to the lesser of 18% per annum or the maximum rate
      permitted under applicable law. Upon the payment in full of the Milestone
      Default Amount, the Holder shall promptly surrender this Debenture to or as
      directed by the Company and, if any principal balance remains on the Debenture,
      the Company shall reissue to the Holder a new Debenture reflecting such balance.
      In connection with such acceleration described herein, the Holder need not
      provide, and the Company hereby waives, any presentment, demand, protest or
      other notice of any kind, and the Holder may immediately and without expiration
      of any grace period enforce any and all of its rights and remedies hereunder
      and
      all other remedies available to it under applicable law. Such acceleration
      may
      be rescinded and annulled by Holder at any time prior to payment hereunder
      and
      the Holder shall have all rights as a holder of the Debenture until such time,
      if any, as the Holder receives full payment pursuant to this Section 9(b).
      No
      such rescission or annulment shall affect any subsequent Milestone Default
      or
      impair any right consequent thereon. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      10.
      Miscellaneous.
      

     

    a)
      Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder, including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, or sent by a nationally
      recognized overnight courier service, addressed to the Company, at the address
      set forth above, facsimile number 818-988-1813 Attn: Michael Handelman, CFO
      or
      such other facsimile number or address as the Company may specify for such
      purpose by notice to the Holder delivered in accordance with this Section 10.
      Any and all notices or other communications or deliveries to be provided by
      the
      Company hereunder shall be in writing and delivered personally, by facsimile,
      or
      sent by a nationally recognized overnight courier service addressed to each
      Holder at the facsimile number or address of such Holder appearing on the books
      of the Company, or if no such facsimile number or address appears, at the
      principal place of business of the Holder. Any notice or other communication
      or
      deliveries hereunder shall be deemed given and effective on the earliest of
      (i)
      the date of transmission, if such notice or communication is delivered via
      facsimile at the facsimile number specified in this Section 10 prior to 5:30
      p.m. (New York City time), (ii) the date immediately following the date of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number specified in this Section 10 between 5:30 p.m. (New York City
      time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business
      Day following the date of mailing, if sent by nationally recognized overnight
      courier service, or (iv) upon actual receipt by the party to whom such notice
      is
      required to be given. 

     

    b)
      Absolute Obligation. Except as expressly provided herein, no provision of
      this Debenture shall alter or impair the obligation of the Company, which is
      absolute and unconditional, to pay the principal of, liquidated damages and
      accrued interest, as applicable, on this Debenture at the time, place, and
      rate,
      and in the coin or currency, herein prescribed. This Debenture is a direct
      debt
      obligation of the Company. This Debenture ranks pari passu with all other
      Debentures now or hereafter issued under the terms set forth herein.

     

    c)
      Lost
      or Mutilated Debenture.
      If this
      Debenture shall be mutilated, lost, stolen or destroyed, the Company shall
      execute and deliver, in exchange and substitution for and upon cancellation
      of a
      mutilated Debenture, or in lieu of or in substitution for a lost, stolen or
      destroyed Debenture, a new Debenture for the principal amount of this Debenture
      so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
      of
      such loss, theft or destruction of such Debenture, and of the ownership hereof,
      reasonably satisfactory to the Company and customary and reasonable indemnity,
      if requested. 

     

    d)
      Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Debenture 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 conflict of laws thereof. Each party agrees that all legal
      proceedings concerning the interpretation, enforcement and defense of the
      transactions contemplated by any of the Transaction Documents (whether brought
      against a party hereto or its respective Affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced in the state and federal
      courts sitting in the City of New York, Borough of Manhattan (the “New York
      Courts”). Each party hereto hereby irrevocably submits to the exclusive
      jurisdiction of the New York Courts for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby
      or discussed herein (including with respect to the enforcement of any of the
      Transaction Documents), and hereby irrevocably waives, and agrees not to assert
      in any suit, action or proceeding, any claim that it is not personally subject
      to the jurisdiction of such New York Courts, or such New York Courts are
      improper or inconvenient venue for such proceeding. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or 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 Debenture
      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 other manner permitted by applicable
      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 Debenture or the transactions
      contemplated hereby. If either party shall commence an action or proceeding
      to
      enforce any provisions of this Debenture, then the prevailing party in such
      action or proceeding shall be reimbursed by the other party for its attorneys
      fees and other costs and expenses incurred in the investigation, preparation
      and
      prosecution of such action or proceeding. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    e)
      Waiver.
      Any
      waiver by the Company or the Holder of a breach of any provision of this
      Debenture shall not operate as or be construed to be a waiver of any other
      breach of such provision or of any breach of any other provision of this
      Debenture. The failure of the Company or the Holder to insist upon strict
      adherence to any term of this Debenture on one or more occasions shall not
      be
      considered a waiver or deprive that party of the right thereafter to insist
      upon
      strict adherence to that term or any other term of this Debenture. Any waiver
      by
      the Company or the Holder must be in writing. 

     

    f)
      Severability.
      If any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any Person or circumstance, it shall nevertheless remain applicable to all
      other
      Persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder violates the applicable law governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum rate of interest permitted under applicable law.
      The Company covenants (to the extent that it may lawfully do so) that it shall
      not at any time insist upon, plead, or in any manner whatsoever claim or take
      the benefit or advantage of, any stay, extension or usury law or other law
      which
      would prohibit or forgive the Company from paying all or any portion of the
      principal of or interest on this Debenture as contemplated herein, wherever
      enacted, now or at any time hereafter in force, or which may affect the
      covenants or the performance of this indenture, and the Company (to the extent
      it may lawfully do so) hereby expressly waives all benefits or advantage of
      any
      such law, and covenants that it will not, by resort to any such law, hinder,
      delay or impeded the execution of any power herein granted to the Holder, but
      will suffer and permit the execution of every such as though no such law has
      been enacted. 

     

    g)
      Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day. 

     

    h)
      Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Debenture and shall not be deemed to limit or affect any of the provisions
      hereof. 

     

    i)
      Assumption.
      Any
      successor to the Company or any surviving entity in a Fundamental Transaction
      shall (i) assume, prior to such Fundamental Transaction, all of the obligations
      of the Company under this Debenture and the other Transaction Documents pursuant
      to written agreements in form and substance satisfactory to the Holder (such
      approval not to be unreasonably withheld or delayed) and (ii) issue to the
      Holder a new debenture of such successor entity evidenced by a written
      instrument substantially similar in form and substance to this Debenture,
      including, without limitation, having a principal amount and interest rate
      equal
      to the principal amount and the interest rate of this Debenture and having
      similar ranking to this Debenture, which shall be satisfactory to the Holder
      (any such approval not to be unreasonably withheld or delayed). The provisions
      of this Section 10(i) shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      of this Debenture. 

     

    j)
      Secured
      Obligation.
      The
      obligations of the Company under this Debenture are secured by all assets of
      the
      Company and each of the Company’s United States-based subsidiaries pursuant to
      the Security Agreement, dated as of ____________, between the Company, Asante
      Networks Inc., TechnoConcepts, Inc. (Nevada), and the Secured Parties (as
      defined therein), subject to Permitted Liens ranking in priority to the
      Debentures. 

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Debenture to be duly executed
      by a
      duly authorized officer as of the date first above indicated. 

    
      	 	 	 
	 	
              TECHNOCONCEPTS,
                INC. 

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

            
	 	
              Title:
                

            

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A 

     

    NOTICE
      OF CONVERSION 

     

    The
      undersigned hereby elects to convert principal under the 8% Secured Convertible
      Debenture of TechnoConcepts, Inc., a Colorado corporation (the “Company”), due
      on [____________ , into shares of common stock, no par value (the “Common
      Stock”), of the Company according to the conditions hereof, as of the date
      written below. If shares are to be issued in the name of a person other than
      the
      undersigned, the undersigned will pay all transfer taxes payable with respect
      thereto and is delivering herewith such certificates and opinions as reasonably
      requested by the Company in accordance therewith. No fee will be charged to
      the
      holder for any conversion, except for such transfer taxes, if any. 

     

    By
      the
      delivery of this Notice of Conversion the undersigned represents and warrants
      to
      the Company that its ownership of the Common Stock does not exceed the amounts
      determined in accordance with Section 13(d) of the Exchange Act, specified
      under
      Section 4 of the Debenture. 

     

    The
      undersigned agrees to comply with the prospectus delivery requirements under
      the
      applicable securities laws in connection with any transfer of the aforesaid
      shares of Common Stock. 

    

      
        	
                Conversion
                  calculations: 

              	 	
                Date
                  to Effect Conversion: _________________ 

              
	
                 

              	 	 
	
              	 	
                Principal
                  Amount of Debenture to be Converted: $________________ 

              
	
                 

              	 	 
	
              	 	
                Number
                  of shares of Common Stock to be issued: _________________
                  

              
	
                 

              	 	 
	
              	 	
                Signature:
                  ________________________________________________ 

                 

                Name:
                  ___________________________________________________ 

                 

                Address:
                  _________________________________________________

                 

                 _________________________________________________
                  

                 

              
	
              	 	
                Address
                  for delivery of shares (if different from above): 

              
	 	 	
                 

                __________________________________________________

              
	 	 	
                 

                __________________________________________________

              

      

    

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Schedule
      1 

     

    CONVERSION
      SCHEDULE 

     

    The
      8%
      Secured Convertible Debentures due on [________, in the aggregate principal
      amount of $____________ issued by TechnoConcepts, Inc. This Conversion Schedule
      reflects conversions made under Section 4 of the above referenced Debenture.
      

     

    Dated:
      

     

    
      	
              Date
                of Conversion 

              (or
                for first entry, 

              Original
                Issue Date) 

            	
               

            	
              Amount
                of Conversion 

            	
               

            	
              Aggregate
                Principal 

              Amount
                Remaining 

              Subsequent
                to 

              Conversion
                

              (or
                original 

              Principal
                Amount) 

            	
               

            	
              Company
                Attest 

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        19

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