THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CONVERSION SERVICES INTERNATIONAL, INC.THAT
SUCH REGISTRATION IS NOT REQUIRED.
 
Right to Purchase up to 1,785,714 Shares of Common Stock of
 
CONVERSION SERVICES INTERNATIONAL, INC.
 
(subject to adjustment as provided herein)
 
COMMON STOCK WARRANT
 
 

No. _________________Issue
Date: March 1, 2007

 
CONVERSION SERVICES INTERNATIONAL, INC., 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 Issue Date of this Warrant and at any time or from time to time, up to
1,785,714 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.001 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 “Company” shall include CONVERSION SERVICES INTERNATIONAL, INC.
and any corporation that shall succeed, or assume the obligations of, CONVERSION
SERVICES INTERNATIONAL, INC. hereunder.
 
(b)    The term “Common Stock” includes (i) the Company’s Common Stock, $0.001
per value 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.
 

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(c)    The “Exercise Price” applicable under this Warrant shall be a price of
$0.01 per share.
 
(d)    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 at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, 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.
 
1.    Exercise of Warrant.
 
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 Warrant 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.
Notwithstanding anything herein to the contrary, in no event shall the Holder be
entitled to exercise any portion of this Warrant in excess of that portion of
this Warrant upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates (other than
shares of Common Stock which may be deemed beneficially owned through the
ownership of the unexercised portion of the Warrant or the unexercised or
unconverted portion of any other security of the Holder subject to a limitation
on conversion analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the exercise of the portion of this
Warrant with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its Affiliates of any
amount greater than 9.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such exercise, the Holder and its Affiliates
beneficially own more than 9.99% of the then outstanding shares of Common
Stock). As used herein, the term “Affiliate” means any person or entity that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a person or entity, as such terms
are used in and construed under Rule 144 under the Securities Act.   For
purposes of the second preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided
in clause (1) of such sentence.  For any reason at any time, upon written or
oral request of the Holder, the Company shall within one (1) business day
confirm orally and in writing to the Holder the number of shares of Common Stock
outstanding as of any given date. The limitations set forth herein (x) may be
waived by the Holder upon provision of no less than sixty-one (61) days prior
written notice to the Company and (y) shall automatically become null and void
following notice to the Company upon the occurrence and during the continuance
of an Event of Default (as defined in the Security Agreement), except that at no
time shall the Company be obligated to issue any shares of Common Stock pursuant
to the terms of this Warrant, the Security Agreement or any other Ancillary
Agreement (as defined in the Security Agreement) if the issuance of such shares
of Common Stock would exceed the aggregate number of shares of Common Stock
which the Company may issue pursuant to the terms of this Warrant, the Security
Agreement or any Ancillary Agreement without violating the rules or regulations
of the Principal Market (the “Principal Market”), except that such limitation
shall not apply in the event that the Company obtains the approval of its
stockholders as required by the applicable rules or regulations of the Principal
Market for issuances of Common Stock in excess of such amount.
 

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1.2    Fair Market Value. For purposes hereof, the “Fair Market Value” of a
share of Common Stock as of a particular date (the “Determination Date”) shall
mean:
 
(a)    If the Company’s Common Stock is traded on the American Stock Exchange or
another national exchange or is quoted on the National or SmallCap Market of The
Nasdaq Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.
 
(b)    If the Company’s Common Stock is not traded on the American Stock
Exchange or another national exchange or on the Nasdaq but is quoted on the NASD
Over The Counter Bulletin Board, then the mean of the average of the closing bid
and asked prices reported for the last business day immediately preceding the
Determination Date.
 
(c)    Except as provided in clause (d) below, if the Company’s Common Stock is
not publicly traded, then as the Holder and the Company agree or in the absence
of agreement by arbitration in accordance with the rules then in effect of the
American Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the matter to be
decided.
 
(d)    If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s charter, then all amounts to be payable per share to
holders of the Common Stock pursuant to the charter in the event of such
liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming
for the purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination Date.
 
1.3    Company Acknowledgment. The Company will, at the time of the exercise of
the Warrant, 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 Warrant. 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.
 

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1.4    Trustee for Warrant Holders. In the event that a bank or trust company
shall have been appointed as trustee for the Holder of the Warrant pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of an warrant 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 Warrant 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 Warrant 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 in accordance herewith. As soon as practicable
after the exercise of this Warrant 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, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share, 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.
 
2.2    Exercise.
 
(a)    Subject to subsection (b) below, 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 Warrant) 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.
 
(b)    Notwithstanding any provisions herein to the contrary, in the event there
is no effective registration statement with respect to the shares issuable upon
exercise of this Warrant or a Default or an Event of Default (as such terms are
defined in the Security Agreement dated as of the date hereof among the Holder
and the Company, as amended, modified, restated and/or supplemented from time to
time),) has occurred and is continuing, if the Fair Market Value of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise
Notice in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
 

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X=Y
(A-B) 
 
A

 
Where X = the number of shares of Common Stock to be issued to the Holder
 
Y = the number of shares of Common Stock purchasable under the Warrant or, if
only a portion of the Warrant is being exercised, the portion of the Warrant
being exercised (at the date of such calculation)
 
A = the Fair Market Value of one share of the Company’s Common Stock (at the
date of such calculation)
 
B = Exercise Price (as adjusted to the date of such calculation)
 
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, 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 Warrant, 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 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 (the “Trustee”).
 

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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 Warrant 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 Warrant 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 Warrant as provided in Section 4. In the
event this Warrant 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 will be delivered to Holder or the Trustee as contemplated by Section
3.2.
 
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 all outstanding Common Stock or preferred 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 (each of
the preceding clauses (a) through (c), inclusive, an “Event”), then, in each
such event, the number of shares of Common Stock that the Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be increased or decreased to a number determined by multiplying
the number of shares of Common Stock that would, immediately prior to such
Event, be issuable upon the exercise of this Warrant by a fraction of which (a)
the numerator is the number of issued and outstanding shares of Common Stock
immediately after such Event, and (b) the denominator is the number of issued
and outstanding shares of Common Stock immediately prior to such Event.
 
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 Warrant, 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 Warrant 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
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder and any Warrant agent of the
Company (appointed pursuant to Section 10 hereof).
 
6.    Reservation of Stock, Etc., Issuable on Exercise of Warrant. The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of the Warrant, shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of the Warrant.
 

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7.    Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”) in whole or in
part. On the surrender for exchange of this Warrant, 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 Warrant 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 Warrant so surrendered by the Transferor.
 
8.    Replacement of Warrant. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, 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 Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
 
9.    Registration Rights. The Holder has been granted certain registration
rights by the Company to file a registration statement on Form S-1 (or Form S-3
if then eligible) with the Securities and Exchange Commission to register the
shares of Common Stock underlying this Warrant, the shares of Common Stock
underlying that certain Common Stock Purchase Warrant issued by the Company to
Laurus as of August 16, 2004, and (iii) that certain Option issued by the
Company to Laurus as of February 1, 2006, within 120 days of the date hereof.
 
10.   Warrant Agent. The Company may, by written notice to each Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant 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.
 
11.   Transfer on the Company’s Books. Until this Warrant 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.
 
12.   Notices, Etc. All notices and other communications from the Company to the
Holder 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 who has so furnished an address to
the Company.
 

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13. Miscellaneous. THIS WARRANT 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 WARRANT 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 Warrant 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 Warrant 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 Warrant 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 Warrant.
The headings in this Warrant 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 Warrant 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
Warrant to favor any party against the other party.
 
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]
 

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
 

   
CONVERSION SERVICES INTERNATIONAL, INC.
WITNESS:
       
By:
/s/ Scott Newman
   
Name:
Scott Newman
Lawrence F. Metz
 
Title:
President and CEO

 

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EXHIBIT A
 
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrants)
 
TO:
CONVERSION SERVICES INTERNATIONAL, INC.

 

 

 
Attention:
Chief Financial Officer

 
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ____), hereby irrevocably elects to purchase (check applicable box):
 

________
________ shares of the Common Stock covered by such Warrant; or

 

________
the maximum number of shares of Common Stock covered by such Warrant pursuant to
the cashless exercise procedure set forth in Section 2.

 
The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or boxes):
 
________
$__________ in lawful money of the United States; and/or

 

________
the cancellation of such portion of the attached Warrant as is exercisable for a
total of _______ shares of Common Stock (using a Fair Market Value of $_______
per share for purposes of this calculation); and/or

 

________
the cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2.2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.

 
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to ____________________________________________ whose
address is ___________________________________________________________.
 

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The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant 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
Warrant)
               
Address:
           

 

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EXHIBIT B
 
FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)
 
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 Warrant to purchase the percentage and number of shares of Common
Stock of CONVERSION SERVICES INTERNATIONAL, INC.into which the within Warrant
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
CONVERSION SERVICES INTERNATIONAL, INC.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
Warrant)
     
Address:
           

 

   
SIGNED IN THE PRESENCE OF:
         
(Name)

 
ACCEPTED AND AGREED:
 
[TRANSFEREE]
 

 
_____________________________
(Name)
 

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