THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS OPTION AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS OPTION MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS OPTION UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IVIEW HOLDING CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.

 
Right to Purchase up to 20 Shares of Common Stock of Iview Holding Corp.
(subject to adjustment as provided herein)
 
OPTION
 

 No. _________________
 Issue Date: February 13, 2006

 
Iview Holding Corp. a corporation organized under the laws of the State of
Delaware (“Company”), hereby certifies that, for value received, LAURUS MASTER
FUND, LTD. or assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company (as defined herein) from and after the
date of this Option and at any time or from time to time, up to 20 fully paid
and nonassessable shares of Common Stock (as hereinafter defined), $0.01 par
value per share, at the applicable Exercise Price per share (as defined below).
The number and character of such shares of Common Stock and the applicable
Exercise Price per share are subject to adjustment as provided herein.
 
As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:
 
(a) The term “Affiliate” means any person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the person specified. For purposes of this definition, control of a
person means the ownership, directly or indirectly, of more than 50% of the
voting or equity securities or other interests of any such person.
 
(b) The term “Company” shall include Iview Holding Corp. and any corporation
which shall succeed, or assume the obligations of, Iview Holding Corp.
hereunder.
 
(c) The term “Common Stock” includes (i) the Company’s Common Stock, par value
$0.01 per share; and (ii) any other securities into which or for which any of
the securities described in (a) may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.
 
(d) The “Exchange Act” shall mean the Securities Exchange Act (1934).
 

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(e) The “Exercise Price” applicable under this Option shall be a price of $0.01.
 
(f) The term “Other Securities” refers to any stock (other than Common Stock)
and other securities of the Company or any other person (corporate or otherwise)
which the holder of the Option at any time shall be entitled to receive, or
shall have received, on the exercise of the Option, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 4 or otherwise.
 
(g) The term “Purchase Agreement” refers to that certain Securities Purchase
Agreement dated as of the date hereof among the Holder, Iview Digital Video
Solutions Inc. and the Company.
 
1. Exercise of Option.
 
1.1 Number of Shares Issuable upon Exercise. From and after the date hereof, the
Holder shall be entitled to receive, upon exercise of this Option in whole or in
part, by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of
the Company, subject to adjustment pursuant to Section 4.
 
1.2 Company Acknowledgment. The Company will, at the time of the exercise of the
Option, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of the Option. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such holder any such rights.
 
1.3 Trustee for Option Holders. In the event that a bank or trust company shall
have been appointed as trustee for the holders of the Option pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of an option agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Option pursuant to this Section 1.
 
2. Procedure for Exercise.
 
2.1 Delivery of Stock Certificates, Etc., on Exercise. The Company agrees that
the shares of Common Stock purchased upon exercise of this Option 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 Option shall have been surrendered
and payment made for such shares in accordance herewith. As soon as practicable
after the exercise of this Option in full or in part, and in any event within
three (3) business days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, together
with any other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to
Section 1 or otherwise.
 
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2.2 Exercise. Payment shall be made in cash or by certified or official bank
check payable to the order of the Company equal to the applicable aggregate
Exercise Price for the number of Common Shares specified in such Exercise Notice
(as such exercise number shall be adjusted to reflect any adjustment in the
total number of shares of Common Stock issuable to the Holder per the terms of
this Option) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.
 
3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.
 
3.1 Reorganization, Consolidation, Merger, Etc. In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Option, on the
exercise hereof as provided in Section 1 at any time after the consummation of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Option, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
 
3.2 Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
concurrently with any distributions made to holders of its Common Stock, shall
at its expense deliver or cause to be delivered to the Holder the stock and
other securities and property (including cash, where applicable) receivable by
the Holder of the Option pursuant to Section 3.1, or, if the Holder shall so
instruct the Company, to a bank or trust company specified by the Holder and
having its principal office in New York, NY as trustee for the Holder of the
Option (the “Trustee”).
 
3.3 Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Option shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Option after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Option as provided in Section 4. In the
event this Option does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holders of the Option will be delivered to Holder or the Trustee as contemplated
by Section 3.2.
 
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4. Extraordinary Events Regarding Common Stock. In the event that the Company
shall (a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding shares
of Common Stock, or (c) combine its outstanding shares of the Common Stock into
a smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The number
of shares of Common Stock that the holder of this Option shall thereafter, on
the exercise hereof as provided in Section 1, be entitled to receive shall be
increased to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Exercise Price that would otherwise (but for the provisions of this Section 4)
be in effect, and (b) the denominator is the Exercise Price in effect on the
date of such exercise.
 
5. Certificate as to Adjustments. In each case of any adjustment or readjustment
in the shares of Common Stock (or Other Securities) issuable on the exercise of
the Option, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Option and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price and the
number of shares of Common Stock to be received upon exercise of this Option, in
effect immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Option. The Company will forthwith mail a copy of
each such certificate to the holder of this Option and any Option agent of the
Company (appointed pursuant to Section 9 hereof).
 
6. Reservation of Stock, Etc., Issuable on Exercise of Option. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of the Option, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Option.
 
7. Assignment: Exchange of Option. Subject to compliance with applicable
securities laws, this Option, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”), in whole or in
part, at any time, to any person other than, upon and during the continuance of
an event of default under any indebtedness owed by the Company or any of its
Affiliates to the Holder or any of its Affiliates (after the expiry of all
applicable grace periods), a competitor of the Company or any of its Affiliates
or a person or entity whom senior management of the Company determines, acting
reasonably, to be adverse in interest to the Company or its business. On the
surrender for exchange of this Option, with the Transferor’s endorsement in the
form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and
together with evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, which shall include, without
limitation, the provision of a legal opinion from the Transferor’s counsel (at
the Company’s expense) that such transfer is exempt from the registration
requirements of applicable securities laws, and with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Option of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Option
so surrendered by the Transferor.
 
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8. Replacement of Option. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Option and, in the
case of any such loss, theft or destruction of this Option, on delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Option, the Company at its expense will execute and
deliver, in lieu thereof, a new Option of like tenor.
 
9. Option Agent. The Company may, by written notice to each Holder of the
Option, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Option pursuant to Section 1, exchanging
this Option pursuant to Section 7, and replacing this Option pursuant to Section
8, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
 
10. Transfer on the Company’s Books. Until this Option is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
 
11. Notices, Etc. All notices and other communications from the Company to the
Holder of this Option shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder of this Option who has
so furnished an address to the Company.
 
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12. Miscellaneous. This Option and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Option shall be governed by and construed in accordance with the
laws of State of New York without regard to principles of conflicts of laws. Any
action brought concerning the transactions contemplated by this Option shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York; provided, however, that the Holder may choose to waive
this provision and bring an action outside the state of New York. The
individuals executing this Option on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Option is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this Option. The
headings in this Option are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision hereof. The Company acknowledges that legal counsel
participated in the preparation of this Option and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Option to
favor any party against the other party.
 
[Balance of the page intentionally left blank; signature page follows.]
 
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IN WITNESS WHEREOF, the Company has executed this Option as of the date first
written above.
 
WITNESS:
 
 
IVIEW HOLDING CORP. (Delaware)
 
/s/ HEUNG HUNG LEE
By:
/s/ DOMINIC BURNS
   
Name: Dominic Burns
Title: President

 

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EXHIBIT A
 
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Options)
 
TO: Iview Holding Corp.
 
Attention: Chief Financial Officer
 
The undersigned, pursuant to the provisions set forth in the attached Option
(No. _____), hereby irrevocably elects to purchase _______ shares of the Common
Stock covered by such Option.
 
The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Option, which is $_________.
Such payment takes the form of $_______ in lawful money of the United States.
 
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to ____________________________________________ whose
address is ___________________________________________________________.
 
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Option shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the “Securities Act”) or pursuant to an exemption from
registration under the Securities Act.
 
Dated:
       
(Signature must conform to name of holder as specified on the face of the
Option)
   
Address:
         

 

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EXHIBIT B
 
FORM OF TRANSFEROR ENDORSEMENT
 
(To Be Signed Only On Transfer Of Option)
 
For value received, the undersigned hereby sells, assigns, and transfers unto
the person(s) named below under the heading “Transferees” the right represented
by the within Option to purchase the percentage and number of shares of Common
Stock of Iview Holding Corp. into which the within Option relates specified
under the headings “Percentage Transferred” and “Number Transferred”,
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Iview Holding
Corp. with full power of substitution in the premises.
 
Transferees
 
Address
 
Percentage
Transferred
 
Number
Transferred
                                                       

Dated:
       
(Signature must conform to name of holder as specified on the face of the
Option)
   
Address:
     

   
SIGNED IN THE PRESENCE OF:
 
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
   
(Name)

 
 

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