CONVERTIBLE LINE OF CREDIT NOTE AGREEMENT

CONVERTIBLE LINE OF CREDIT NOTE AGREEMENT

Date: April 23, 2007

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

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

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

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

2.  Representations, Warranties and Covenants of Company .

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

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

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

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

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

4.  Optional Conversion .

(a) At Holder’s sole and exclusive option, at any time after the effective date of this Agreement or within three (3) business days following receipt of notice by the Company that it wishes to exercise its prepayment rights set forth in Section 3, the Principal Amount outstanding under the loan as of the Conversion Date ¹ evidenced by this Agreement shall be convertible, without the payment of any additional consideration by the Holder and at the option of the Holder, into shares of common stock of the Company. In the event the Holder elects to convert, Company shall issue the number of shares of common stock equivalent to the amount calculated by converting the Principal Amount outstanding and all unpaid and accrued interest due under the loan evidenced by this Agreement, as of the Conversion Date, into such shares of common stock at a price per share of $0.35. The Principal Amount outstanding shall continue to accrue interest, and Company shall be obligated to pay such interest, according to the terms and conditions of this Agreement until the Conversion Date. All unpaid and accrued interest due under the loan as of the Conversion Date evidenced by this Agreement shall be paid in cash within three (3) business days from the Conversion Date.

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

(c) Company agrees (a) that the shares issuable upon conversion of this Agreement shall be “Registrable Securities” under the Registration Rights Agreement (the “Registration Rights Agreement”) between Company and Holder, a copy o