EXHIBIT 10.40
 
NOTE PURCHASE AGREEMENT
 
This Note Purchase Agreement (this "Agreement") is made and entered into as of
the 30th day of March, 2012, by and between Options Media Group Holdings, Inc.,
a Nevada corporation (the "Company"), and the investor set forth on Exhibit A
attached to this Agreement (the "Investor").
 
RECITALS
 
WHEREAS, the Company wishes to sell and the Investor wishes to purchase a
secured convertible promissory note in the form annexed hereto as Exhibit B (the
"Note") and warrants in the form annexed hereto as Exhibit C ("Warrants") on the
terms set forth herein; and
 
WHEREAS, the repayment of the Note shall be secured through the Security
Agreement and Personal Guaranty annexed hereto as Exhibits D and E,
respectively;

 
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises set forth in this Agreement, the parties to this Agreement agree as
follows:
 
Section 1.    Subscription and Sale.
 
1.1    Subscription. On the terms and subject to the conditions set forth in
this Agreement, the Investor hereby subscribes for, and agrees to accept as
evidence for the Investor Loan, the Note in the original principal amount
indicated opposite the Investor's name on Exhibit A with an original issue
discount of 10% (the "Purchase Price") and Warrants to purchase 300% of the
number of shares of the Company's $0.001 par value per share common stock (the
"Common Stock") into which the Note is initially convertible.
 
1.2    Closing. The issuance of the Note (the "Closing") shall take place at
such time and place as the Company and the Investor mutually agree upon. At the
Closing, the Investor shall transfer to the Company the amount of the Investor
Loan and the Company shall deliver to the Investor the Note in the principal
amount of the Investor Loan.
 
Section 2.    Representations, Warranties and Certain Agreements of the Company.
 
The Company represents and warrants to, and agrees with, the Investor, as
follows:
 
2.1    Organization, Good Standing and Qualification. The Company is a limited
liability company formed under the laws of the State of Nevada. The Company has
all requisite limited liability company power and authority to execute, deliver
and perform its obligations under this Agreement and the Note and Warrants;
provided, however, that the Company does not currently have sufficient reserved
authorized shares of Common Stock to allow for conversion of the Note and
Warrants. The Company hereby covenants and agreed to increase its authorized
share capital to allow for conversion of the Note and exercise of the Warrants
no later than 120 days following the execution of this Agreement.
 
 
 

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2.2    Due Authorization. This Agreement constitutes, and the Note and Warrants,
when executed and delivered, shall constitute, valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except as may be limited by (a) applicable bankruptcy, insolvency,
reorganization, or other laws of general application relating to or affecting
the enforcement of creditors' rights generally and (b) the effect of rules of
law governing the availability of equitable remedies.
 
Section 3. Representations, Warranties and Certain Agreements of the Investor.
The Investor represents and warrants to, and agrees with, the Company, as
follows:
 
3.1    Authorization. The Investor has full power and authority to enter into
this Agreement and this Agreement constitutes the Investor's valid and legally
binding obligation, enforceable in accordance with its terms except (a) as may
be limited by applicable bankruptcy, insolvency, reorganization, or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally, and (b) as may be limited by the effect of rules of law
governing the availability of equitable remedies.
 
3.2    Acquired for Own Account. The Note and Warrants shall be acquired for
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the public resale or distribution of the Note within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same.
 
3.3    Investor Status. At the time the Investor was offered the Note and
Warrants, it was, and at the date of the Closing it is, an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
 
3.4    General Solicitation. The Investor is not purchasing the Note as a result
of any advertisement, article, notice or other communication regarding the Note
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.
 
3.5    Access to Information. The Investor acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Note and Warrants and the merits and
risks of investing in the Note and Warrants; (ii) access to information about
the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. The Investor believes that it has received all the information it
considers necessary or appropriate for deciding whether to purchase the Note and
Warrants.
 
 
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3.6    Exempt Offering. The Investor acknowledges that the Note, the Warrants
and the shares of Common Stock for which the Warrants may be exercised (the
"Warrant Shares") have not been registered under the Securities Act and are
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon the representations of the Investor
contained in this Agreement.
 
3.7    Investment Experience. The Investor has experience as an investor and
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment in the Note, and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of
this investment in the Note and Warrants.
 
3.8    Restricted Securities. The Investor understands that the Note, the
Warrants and Warrant Shares are "restricted securities" under the Securities Act
inasmuch as it is being (or shall be) acquired from the Company in a transaction
not involving a public offering and that under the Securities Act and applicable
regulations the Note, Warrants and Warrant Shares may be resold without
registration under the Securities Act only in certain limited circumstances. The
Investor understands that the Company is under no obligation to register the
Note, Warrants or Warrant Shares for resale by the Investor under the Securities
Act.
 
Section 4. COVENANTS.
 
4.1    Adjustment of Prior Purchase. The Company hereby acknowledges and agrees
that Investor previously purchased Common Stock from the Company (the "Prior
Investment"). The Company hereby agrees that in consideration of the investment
hereunder, it shall issue 53,575,715 additional shares of Common Stock to the
Investor to adjust the purchase price of such Prior Investment.
 
4.2    Structuring Fee. In consideration of the investment hereunder, the
Company hereby agrees to pay to Investor a structuring fee of $15,000 upon
receipt of the Purchase Price from Investor.
 
4.3    Most Favored Nations. Other than with respect to any Exempt Issuance (as
defined below), the holders of Note shall have the right to convert the
principal amount then outstanding plus accrued but unpaid interest, in whole or
in part, into securities of the Company being issued in a Subsequent Financing
(as defined below), upon the terms and conditions of such offering, at a rate
equal to, for each $1 of principal amount of the Note then outstanding plus
accrued but unpaid interest surrendered, $1 of new consideration offered for
such securities in the Subsequent Financing.
 
 
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4.3.1    "Exempt Issuance" means the issuance of (a) shares of Common Stock or
options to employees, officers or directors of the Company pursuant to any stock
or option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a person or entity which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional 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.
 
4.3.2    "Subsequent Financing" means any issuance by the Company or any of its
subsidiaries of Common Stock, Common Stock equivalents for cash consideration,
indebtedness, or a combination of units thereof while the Note is outstanding.
 
Section 5. MISCELLANEOUS
 
5.1    Survival of Representations and Warranties. The representations,
warranties, and covenants of the Company and the Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Investor, its counsel,
or the Company, as the case may be.
 
5.2    Successors and Assigns. Except as otherwise provided in this Agreement,
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the respective successors and permitted assigns ofthe parties to this
Agreement.
 
5.3    Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of New York
without reference to its conflicts of law principles.
 
5.4    Counterparts. This Agreement may be executed in two or more counterparts
(including, without limitation, facsimile counterparts), each of which shall be
deemed an original, but all of which together shall constitute one and the same
agreement.
 
5.5    Headings. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, subsections, exhibits,
and schedules shall, unless otherwise provided, refer to sections and
subsections of this Agreement and exhibits and schedules attached to this
Agreement, all of which exhibits and schedules are incorporated in this
Agreement by this reference.
 
5.6    Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be delivered personally or by
facsimile transmission or by nationally recognized overnight delivery service or
by first class certified or registered mail, return receipt requested, postage
prepaid:
 
If to the Company, at 123 NW 13th Street, Suite 300, Boca Raton, Florida 33432,
or at such other address or addresses as may have been furnished by giving five
days advance written notice to all other parties.
 
If to the Investor, at its address set forth on Exhibit A, or at such other
address or addresses as may have been furnished to the Company by giving five
days advance written notice.
 
Notices provided in accordance with this Section shall be deemed delivered upon
personal delivery (including confirmed facsimile) or three business days after
deposit in the mail.
 
5.7    Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section shall be binding upon the Investor and
the Company.
 
5.8    Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
 
5.9    Entire Agreement. This Agreement, together with the Note and all exhibits
and schedules to this Agreement, constitutes the entire agreement and
understanding of the parties with respect to the subject matter of this
Agreement and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties, or obligations between the parties with
respect to the subject matter of this Agreement.
 
5.10    Further Assurances. From and after the date of this Agreement, upon the
request of the Investor or the Company, the Company and the Investor shall
execute and deliver such instruments, documents, or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes ofthis Agreement.
 
[Signature Page Follows]

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 
OPTIONS MEDIA GROUP HOLDINGS, INC.
         
 
By:
        Name :       Title :  

 
 
 
 

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EXHIBIT A
 

 Principal Amount: ________________             
 
 
 
 
Signature
 
Signature (if purchasing jointly)
          Name Typed or Printed   Name Typed or Printed           Entity Name  
Entity Name           Address   Address  
 
 
 
 
City, State and Zip Code
  City, State and Zip Code          
Telephone - Business
  Telephone - Business          
Telephone - Residence
  Telephone - Residence           Facsimile - Business   Facsimile - Business  
        Facsimile - Residence   Facsimile - Residence          
Tax ID # or Social Security #
  Tax ID # or Social Security #          
Name in which securities should be issued:
              Dated:___, 2012      

 
 
 

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EXHIBIT B
 
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
 
OPTIONS MEDIA GROUP HOLDINGS, INC.
 
SECURED CONVERIBLE PROMISSORY NOTE
 

$150,000    March 30, 2012     Boca Raton, Florida      

 
FOR VALUE RECEIVED, and upon and subject to the terms and conditions set forth
herein, Options Media Group Holdings, Inc., a Nevada corporation ("Issuer"),
hereby promises to pay to the order of Cape One Financial Master Fund, Ltd.
(together with its successors and assigns, "Holder"), the principal sum of ONE
HUNDRED THOUSAND UNITED STATED DOLLARS (U.S. $150,000) on the Maturity Date,
together with interest as provided herein. Repayment of this Note is secured
pursuant to the security agreement between the Issuer and Holder dated of even
date herewith.
 
1.  Maturity Date; Issuance of Warrants on Maturity Date. This Note will mature,
and be due and payable in full, on July 4, 2012, unless Holder shall in writing
notify the Issuer that it wishes to extend such date for an additional 90 days
or such longer term as may be agreed upon (the "Maturity Date").
 
2.  Interest. From and after the date hereof, all outstanding principal of this
Note will bear interest at the rate of ten percent (10.0%) per annum. Within
five (5) days after the Maturity Date, Issuer shall pay the accrued interest and
principal on this Note to Holder on the unconverted principal balance.
 
3.  Prepayment; Repayment; Priority. Issuer may prepay this Note prior to the
Maturity Date, without premium or penalty upon written notice to Holder;
provided that prior to any prepayment of this Note, Issuer shall provide Holder
with not less than ten (10) calendar days written notice of its intention to
prepay to give Holder the opportunity to convert pursuant to Section 5 below.
Issuer hereby agrees that it will repay this Note from the first $150,000 of net
profits earned by Issuer from its Rock 2 Live Music Festival. In the event such
Rock 2 Live Music Festival does not occur prior to the Maturity Date, Issuer
shall repay this Note from the sales of its products by allocating as much
revenue to repayment as practicable. Issuer further agrees that it will not pay
off any other debt prior to repayment of this Note.
 
 
 

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4.  Transfer. Holder may transfer this Note in compliance with applicable U.S.
federal and state and/or foreign securities laws.
 
5.  Conversion. Holder shall have, and be subject to, the following conversion
rights:
 
(a)         Option of Holder to Convert. At any time and from time to time until
the Maturity Date, all or any portion of the outstanding principal and accrued
interest on this Note, at the option of Holder, may be converted into such
number of fully paid and non-assessable shares of Issuer's Common Stock, par
value $.001 per share ("Common Stock") which results by dividing (i) the amount
of principal and accrued interest being converted, by (ii) the conversion price
in effect at the time of conversion (the "Conversion Price"). The Conversion
Price shall initially be equal to $0.005 per share.
 
(b)         Procedure. If Holder elects to convert all or a portion of the
principal and accrued interest on this Note, Holder shall give written notice to
Issuer at Issuer's office that Holder elects to convert the same and shall state
therein the amount of principal and accrued interest being converted in the form
annexed hereto as Exhibit A (a "Notice of Conversion"). Upon receipt of a Notice
of Conversion, Issuer shall promptly issue and deliver to Holder a certificate
or certificates for the number of shares of Common Stock which Holder is
entitled to receive upon the conversion. The conversion shall be deemed to have
been made immediately prior to the close of business on the date of the delivery
of the Conversion Notice.
 
(c)         Anti-Dilution Protection.
 
(i)          Adjustment Upon Common Stock Event. At any time or from time to
time upon the happening of a Common Stock Event (as hereinafter defined), the
Conversion Price shall, simultaneously with the happening of such Common Stock
Event, be adjusted by multiplying the Conversion Price in effect immediately
prior to such Common Stock Event by a fraction, (A) the numerator of which shall
be the number of shares of Common Stock issued and outstanding immediately prior
to such Common Stock Event, and (B) the denominator of which shall be the number
of shares of Common Stock issued and outstanding immediately after such Common
Stock Event, and the product so obtained shall thereafter be the Conversion
Price. The Conversion Price shall be readjusted in the same manner upon the
happening of each subsequent Common Stock Event. As used herein, the term
"Common Stock Event" shall mean (1) the issuance by Issuer of additional shares
of Common Stock as a dividend or other distribution on outstanding Common Stock,
(2) a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, or (3) a combination of the outstanding shares
of Common Stock into a smaller number of shares of Common Stock.
 
(ii)         Adjustments for Other Dividends and Distributions. If at any time
or from time to time Issuer pays a dividend or makes another distribution to the
holders of the Common Stock payable in securities of Issuer, then in each such
event provision shall be made so that Holder shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable upon
conversion of this Note, the amount of securities of Issuer which they would
have received had this Note been converted into Common Stock on the date of such
event (or such record date, as applicable) and had Holder thereafter, during the
period from the date of such event (or such record date, as applicable) to and
including the conversion date, retained such securities receivable by Holder as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 5(c)(i) with respect to the rights of Holder or
with respect to such other securities by their terms.
 
 
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(iii)        Adjustment for Reclassification, Exchange and Substitution. If at
any time or from time to time the Common Stock issuable upon the conversion of
this Note is changed into the same or a different number of shares of any class
or classes of stock, whether by recapitalization, reclassification or otherwise
(other than by a stock dividend, reorganization, merger, or consolidation
provided for elsewhere in this Section 6), then in any such event, Holder shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the number of shares of Common
Stock into which this Note could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.
 
(iv)        Reorganizations, Mergers and Consolidations. If at any time or from
time to time there is a reorganization of Issuer (other than a recapitalization,
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Section 6) or a merger or consolidation of Issuer with or into
another corporation, then, as a part of such reorganization, merger or
consolidation, provision shall be made so that the Holder thereafter shall be
entitled to receive, upon conversion of this Note, the number of shares of stock
or other securities or property of Issuer, or of such successor corporation
resulting from such reorganization, merger or consolidation, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
reorganization, merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
6(c)(iii) with respect to the rights of the Holder after the reorganization,
merger or consolidation to the end that the provisions of this Section 6 shall
be applicable after that event and be as nearly equivalent to the provisions
hereof as may be practicable. This Section 6(c)(iii) shall similarly apply to
successive reorganizations, mergers and consolidations.
 
(v)         Share Issuance. If, at any time prior to the Maturity Date, the
Company shall issue any Common Stock, except for the Excepted Issuances (as
hereinafter defined), for a consideration per share that is less than the
Conversion Price that would be in effect at the time of such issue, then, and
thereafter successively upon each such issuance, Conversion Price shall be
reduced to such other lower issue price. For purposes of this adjustment and
except for the Excepted Issuances, the issuance of any security or debt
instrument of the Company carrying the right to convert such security or debt
instrument into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Conversion Price upon the
issuance of the above-described security, debt instrument, warrant, right, or
option and again upon the issuance of shares of Common Stock upon exercise of
such conversion or purchase rights if such issuance is at a price lower than the
then applicable Conversion Price. Common Stock issued or issuable by the Company
for no consideration will be deemed issuable or to have been issued for $0.001
per share of Common Stock. The reduction of the Series A Conversion Price
described in this paragraph is in addition to the other rights of the Holder
described in this Certificate of Designation. For purposes of this Certificate
of Designation, "Excepted Issuance" shall mean any sale by the Company of its
Common Stock or equity linked debt obligations, except in connection with (i)
full or partial consideration in connection with a strategic merger,
acquisition, consolidation or purchase of the securities or assets of a
corporation or other entity (or any division or business unit thereof) so long
as such issuances are not for the purpose of raising capital, (ii) the Company's
issuance of securities in connection with strategic supply, sale or license
agreements and other partnering arrangements so long as such issuances are not
for the purpose of raising capital, (iii) the Company's issuance of Common Stock
or the issuances or grants of options to purchase Common Stock to employees,
directors, and consultants issued and outstanding on or before the date hereof,
(iv) securities upon the exercise or exchange of or conversion of any securities
exercisable or exchangeable for or convertible into shares of Common Stock.
 
 
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6.        Events of Default. An "Event of Default" will occur if:
 
(a)         Issuer fails to pay (a) any principal of this Note when such amount
becomes due and payable in accordance with the terms thereof and such payment is
not made within three (3) business days of when it is due, or (b) any interest
on the Note or any other payment of money required to be made to the Holder
pursuant to this Note and such payment is not made within three (3) business
days of when it is due and Issuer receives notice thereof; or
 
(b)         Issuer (i) commences any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or (ii) is the debtor named in any other case, proceeding or other
action of a nature referred to in clause (i) above which results in the entry of
an order for relief or any such adjudication or appointment and remains
undismissed, undischarged or unbonded for a period of sixty (60) days, or (iii)
takes any action in furtherance of, or indicating its consent to, approval of,
or acquiescence to, any order, adjudication or appointment of a nature referred
to in clause (i) or (ii) above, or (iv) shall generally not be paying, shall be
unable to pay, or shall admit in writing its inability to pay its debts as they
become due, or (v) shall make a general assignment for the benefit of its
creditors; or
 
(c)         On or at any time after the date of this Note, this Note for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void.
 
7.        Remedies. Upon any occurrence of an Event of Default, the Conversion
Price will reset to a price per share equal to 50% of the 5-day VWAP for the
Issuer's Common Stock, if lower than the applicable Conversion Price and the
Holder will have the right to cause the Company to redeem the entire outstanding
principle of the Note together with all accrued and unpaid interest, at the
Holder's option to be made in writing. Until such time as the event of default
has been cured in its entirety, the interest rate will be increased to a penalty
rate of 18%, and the Holder will be entitled to receive additional warrants in
an amount equal to 50% of the original warrants issued in connection with the
purchase of this Note for each 90 day period that the event of Default remains
uncured.
 
 
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8.        Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder will be in writing and will be
deemed given and effective on the earliest of (a) the date of transmission if
such notice or communication is delivered by fax prior to 5:30 p.m. (Eastern
Time) on a business day, (b) the next business day after the date of
transmission if such notice or communication is delivered via fax on a day that
is not a business day or later than 5:30 p.m. (Eastern Time) on a business day,
(c) the 2nd business day after the date of mailing if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The facsimile number and address for
such notices and communications are as set forth in a separate writing signed by
Issuer and the initial Holder of this Note, as such information may be changed
by written notice of Issuer to Holder or Holder to Issuer in accordance herewith
from time to time.
 
9.        Maximum Lawful Rate. In no event shall the amount of interest due or
payments in the nature of interest payable hereunder exceed the maximum
non-usurious interest permitted by applicable law (the "Maximum Lawful Rate").
If from any possible construction of any document or from receipt of anything of
value by Holder, interest would otherwise be payable in excess of the Maximum
Lawful Rate, any such construction or receipt shall be subject to the provisions
of this Section 9 and such document shall be automatically reformed and the
interest payable shall be automatically reduced to the Maximum Lawful Rate,
without the necessity of execution of any amendment or new document, and any
interest in excess of the Maximum Lawful Rate shall be applied to the reduction
of the principal amount owing under this Note, or refunded to Issuer or other
payor thereof if and to the extent such excessive amount exceeds such unpaid
principal amount.
 
10.        Governing Law: Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of New York. Issuer and
Holder hereto irrevocably consent to the jurisdiction of the United States
federal courts and state courts located in the State of New York and New York
County in any suit or proceeding based on or arising under this Note or the
transactions contemplated hereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts. Issuer
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding in such forum. Issuer further agrees that service of
process upon Issuer, mailed by the first class mail in accordance with Section 8
shall be deemed in every respect effective service of process upon Issuer in any
suit or proceeding arising hereunder. Nothing herein shall affect the right of
the Holder to serve process in any other manner permitted by law.
 
 
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SIGNED, SEALED AND DELIVERED as of the date first above written.
 

 
OPTIONS MEDIA GROUP HOLDINGS, INC.
         
 
By:
        Name : Scott Frohman       Title: CEO  

 
 
 

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EXHIBIT A
 
NOTICE OF CONVERSION
 
(To be Executed by the Holder in order to Convert the Note)

 
The undersigned, the holder of the below-referenced Note, hereby irrevocably
elects to convert $_____________ of the principal and accrued interest of the
Convertible Promissory Note Due March ______ , 2013 issued by Options Media
Group
Holdings, Inc. (the "Company") into shares of Common Stock of the Company
according to the conditions and as of the date set forth below.
 
 

Date of Conversion:  _____________________________________________________      
    Principal Amount to be Converted: __________________________________________
         
Accrued Interest to be Converted: ___________________________________________
         
Applicable Conversion Price: _______________________________________________
          Signature:
_____________________________________________________________           Name:
________________________________________________________________          
Address: ______________________________________________________________        
                  
______________________________________________________________    

 
 
 
 

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EXHIBIT C
 
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED   OR ASSIGNED   (I)  IN  THE  ABSENCE  OF  (A)  AN  EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECUIRITIES.
 

    Right to Purchase 90,000,000 shares of Common Stock of Options Media Group
Holdings, Inc. (subject to adjustment as provided herein)      

 
COMMON STOCK PURCHASE WARRANT
 
Original Issue Date: March 30, 2012
 
OPTIONS MEDIA GROUP HOLDINGS, INC., a corporation organized under the laws of
the State of Nevada (the "Company"), hereby certifies that, for value received,
Cape One Financial Master Fund, Ltd. (the "Holder"), or its assigns, is
entitled, subject to the terms set forth below, to purchase from the Company at
any time after the Original Issue Date until 5:00 p.m., E.S.T. on the date which
is five years after the Original Issue Date (the "Expiration Date"), up to
Ninety Million (90,000,000) fully paid and non-assessable shares of Common Stock
at a per share purchase price of $0.005. The aforedescribed purchase price per
share, as adjusted from time to time as herein provided, is referred to herein
as the "Purchase Price." The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein. The Company
may reduce the Purchase Price for some or all of the Warrants, temporarily or
permanently, provided such reduction is made as to all outstanding Warrants for
all Holders of such Warrants. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Note Purchase Agreement
(the "Purchase Agreement"), dated as of March 30, 2012, entered into by the
Company, the Holder and the other signatories thereto.
 
As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:
 
(a)   The term "Company" shall mean Options Media Group Holdings, Inc., a Nevada
corporation, and any corporation which shall succeed or assume the obligations
of Options Media Group Holdings, Inc. hereunder.
 
(b)   The term "Common Stock" includes (i) the Company's Common Stock, $0.001
par value per share, as authorized on the date of the Purchase Agreement, and
(ii) any other securities into which or for which any of the securities
described in (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
 
(c)   The term "Note" means the Note purchase pursuant to the Purchase
Agreement.
 
 
 

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(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 of the Warrant 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.
 
(e)   The term "Warrant Shares" shall mean the Common Stock issuable upon
exercise of this Warrant.
 
1.     Exercise of Warrant.
 
1.1.    Number of Shares Issuable upon Exercise. From and after the Issue Date
through and including the Expiration Date, the Holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of Section 1.2 or upon exercise of this Warrant in part in accordance with
Section 1.3, shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4 below.
 
1.2.    Full Exercise. This Warrant may be exercised in full by the Holder
hereof by delivery to the Company of an original or facsimile copy of the form
of subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and delivery within two days thereafter of payment, in
cash, wire transfer or by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the Purchase Price
then in effect. The original Warrant is not required to be surrendered to the
Company until it has been fully exercised.
 
1.3.    Partial Exercise. This Warrant may be exercised in part (but not for a
fractional share) by delivery of a Subscription Form in the manner and at the
place provided in Section 1.2, except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of whole shares of Common Stock designated by the Holder in the Subscription
Form by (b) the Purchase Price then in effect. On any such partial exercise,
provided the Holder has surrendered the original Warrant, the Company, at its
expense, will forthwith issue and deliver to or upon the order of the Holder
hereof a new Warrant of like tenor, in the name of the Holder hereof or as such
Holder (upon payment by such Holder of any applicable transfer taxes) may
request, the whole number of shares of Common Stock for which such Warrant may
still be exercised.
 
1.4.    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 this 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.
 
1.5.    Cashless Exercise:
 
(a)            If there is not an effective registration statement, which covers
the shares of Common Stock underlying this Warrant, in effect at any time
beginning one year from the Original Issue Date, the Holder may also exercise
this Warrant by surrendering such number of shares of Common Stock received upon
exercise of this Warrant with an aggregate Fair Market Value (as defined below)
equal to the Purchase Price, as described in the following paragraph (a
"Cashless Exercise").
 
(b)            Subject to the provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Purchase 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 cancelled) by
delivery of a properly endorsed Subscription Form delivered to the Company by
any means described in Section 13, in which event the Company shall issue to the
holder a number of shares of Common Stock computed using the following formula:
 
 
2

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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= Fair Market Value
 
B= Purchase Price (as adjusted to the date of such calculation) For purposes of
Rule 144 promulgated under the 1933 Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
in the manner described above shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Purchase Agreement, i.e. December , 2011.
 
1.6    Fair Market Value. For purposes of this Warrant, 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 an exchange or is
quoted on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the NYSE Amex, LLC, then the
average of the closing sale prices of the Common Stock for the five (5) Trading
Days immediately prior to (but not including) the Determination Date;
 
(b)            If the Company's Common Stock is not traded on an exchange or on
the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital
Market, the New York Stock Exchange or the NYSE Amex, LLC, but is traded on the
OTC Bulletin Board, OTCQB or other over-the-counter market, then the average of
the closing bid and ask prices reported for the five (5) Trading Days
immediately prior to (but not including) the Determination Date;
 
(c)            Except as provided in clause (d) below and Section 3.1, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing 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; or
 
(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 all of the Warrants are outstanding
at the Determination Date.
 
1.7    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 this 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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2.    Delivery of Stock Certificates, etc. on Exercise. The Company agrees that,
provided the purchase price listed in the Subscription Form is received as
specified in Section 1.2, the shares of Common Stock purchased upon exercise of
this Warrant shall be deemed to be issued to the Holder hereof as the record
owner of such shares as of the close of business on the date on which delivery
of a Subscription Form shall have occurred and payment made for such shares as
aforesaid. As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within five (5) business days thereafter ("Warrant
Share Delivery Date"), 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 hereof, 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 non-assessable 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 of Common Stock, 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
 
3.    Adjustment for Reorganization, Consolidation, Merger, etc.
 
3.1.    Fundamental Transaction. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another entity, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another entity) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, (D) the Company
consummates a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, or spin-off) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "person"
or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Company, or (F) 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 exercise of this Warrant, the Holder shall have the right to receive,
for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the
option of the Holder, (a) upon exercise of this Warrant, the number of shares of
Common Stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and any additional consideration (the "Alternate
Consideration") receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in (1) a
transaction where the consideration paid to the holders of the Common Stock
consists solely of cash, (2) a "Rule 13e-3 transaction" as defined in Rule 13e-3
under the 1934 Act, or (3) a transaction involving a person or entity not traded
on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq
Global Market or the Nasdaq Capital Market, cash equal to the Black-Scholes
Value. For purposes of any such exercise, the determination of the Purchase
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Purchase 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 exercise of this Warrant 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 warrant consistent with the foregoing provisions
and evidencing the Holder's right to exercise such warrant 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 3.1 and insuring
that this Warrant (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
"Black-Scholes Value" shall be determined in accordance with the Black-Scholes
Option Pricing Model obtained from the "OV" function on Bloomberg L.P. using (i)
a price per share of Common Stock equal to the VWAP of the Common Stock for the
Trading Day immediately preceding the date of consummation of the applicable
Fundamental Transaction, (ii) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the remaining term of this Warrant as
of the date of such request and (iii) an expected volatility equal to the 100
day volatility obtained from the HVT function on Bloomberg L.P. determined as of
the Trading Day immediately following the public announcement of the applicable
Fundamental Transaction.
 
 
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3.2.    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 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 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.
 
3.3    Share Issuance. Until the Expiration Date, if the Company shall issue any
Common Stock except for the Excepted Issuances (as defined below), prior to the
complete exercise of this Warrant for a consideration less than the Purchase
Price that would be in effect at the time of such issuance, then, and thereafter
successively upon each such issuance, the Purchase Price shall be reduced to
such other lower price for then outstanding Warrants. For purposes of this
adjustment, the issuance of any security or debt instrument of the Company
carrying the right to convert such security or debt instrument into Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Purchase Price upon the issuance of the above-described
security, debt instrument, warrant, right, or option if such issuance is at a
price lower than the Purchase Price in effect upon such issuance and again at
any time upon any subsequent issuances of shares of Common Stock upon any
exercise of such conversion or purchase rights if such issuance is at a price
lower than the Purchase Price in effect upon any such issuance. Common Stock
issued or issuable by the Company for no consideration will be deemed issuable
or to have been issued for $0.001 per share of Common Stock. The reduction of
the Purchase Price described in this Section 3.3 is in addition to the other
rights of the Holder described in the Purchase Agreement. Upon any reduction of
the Purchase Price, the number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof, be entitled to receive shall
be adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 3.3) be
issuable on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this Section 3.3)
be in effect, and (b) the denominator is the Purchase Price in effect on the
date of such exercise. Excepted Issuances shall mean the issuance of (a) shares
of Common Stock or options to employees, officers, directors of and consultants
(other than consultants whose services relate to the raising of funds) of the
Company or its subsidiaries pursuant to any stock or option plan that was or may
be adopted by the Board of Directors, (b) securities upon the exercise or
conversion of any securities issued under the Subscription Agreement and (c)
securities issued pursuant to acquisitions, licensing agreements, or other
strategic transactions.
 
3.4    Note Event of Default. In the event of the occurrence of an Event of
Default under the Note, the Purchase Price shall be reduced to a price equal to
the 5-day VWAP, if lower than the then-current Purchase Price.
 
4.    Extraordinary Events Regarding Common Stock. In the event that the Company
shall (a) issue additional shares of 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 Common Stock, then, in each such event, the
Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase 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 Purchase Price then in effect. The Purchase
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 Warrant shall thereafter, on
the exercise hereof, be entitled to receive shall be adjusted 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 Purchase Price that
would otherwise (but for the provisions of this Section 4) be in effect, and (b)
the denominator is the Purchase Price in effect on the date of such exercise.
 
 
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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 Warrants or the Purchase Price, 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 Purchase 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 of the Warrant and any Warrant Agent of the Company (appointed pursuant
to Section 11 hereof). Holder will be entitled to the benefit of the adjustment
regardless of the giving of such notice. The timely giving of such notice to
Holder is a material obligation of the Company.
 
6.    Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant.
 
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"). 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
an opinion of counsel reasonably satisfactory to the Company that the transfer
of this Warrant will be in compliance with applicable securities laws, the
Company will issue and deliver to or on the order of the Transferor thereof a
new Warrant or Warrants 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, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
 
9.    Warrant Agent. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a "Warrant 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 Warrant Agent.
 
10.  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.
 
 
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11.   Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: if to the Company, to: Options Media Group Holdings,
Inc., 123 NW 13th Street, Suite 300, Boca Raton, FL 33432, Attn: Jeffrey Yesner,
CFO, facsimile: (561) 892-2618, with an additional copy by fax only to: Ofsink,
LLC at 900 Third Avenue, 5th Floor, New York, NY 10022, facsimile: (212)
688-7273, and (ii) if to the Holder, to the address and facsimile number listed
on the first paragraph of this Warrant.
 
12.  Law Governing This Warrant. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other 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 and county of New York. The parties to this Warrant hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based
upon forum non conveniens. The Company and Holder 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 or any other agreement delivered in connection herewith 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 any agreement.
Each party hereby irrevocably waives personal service of process and consents to
process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document 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 Agreement
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 law.

[-Signature Page Follows-]

 
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IN WITNESS WHEREOF, the Company has executed this Warrantas ofthe date
firstwrittenabove.
 

 
OPTIONS MEDIA GROUP HOLDINGS, INC.
         
 
By:
       
Name: Scott Frohman
     
Title: CEO
         

 
 
 

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Exhibit A
 
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
 
TO: OPTIONS MEDIA GROUP HOLDINGS, INC.
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 1.4.
 
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, 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 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.

Date:____________
 
       
(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 OPTIONS MEDIA GROUP HOLDINGS, INC. to 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 OPTIONS MEDIA
GROUP HOLDINGS, INC. with full power of substitution in the premises.
 
Transferees
Percentage Transferred
Number Transferred
                 

Dated  
(Signature must conform to name of holder as specified on the face of the
warrant)
          Signed in the presence of:                  
 
  (Name)    (address)                   ACCEPTED AND AGREED:        [TRANSFEREE]
   (address)           (Name)      

 
 
 

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EXHIBIT D

SECURITY AGREEMENT
 
1.     GRANT OF SECURITY INTEREST. For value received, as security for the
Obligations (as defined below) Options Media Group Holdings, Inc., a Nevada
corporation("Debtor"), hereby grants to the persons set forth on Schedule A
hereto (the "Secured Parties") pursuant to the Notes (as defined below), a
second priority security interest in the following property:
 
(a)
All of Debtor's inventory now owned or hereafter acquired.

 
(b)
All of Debtor's goods, including, without limitation, all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor's businesses and all improvements thereto.

 
(c)
All of Debtor's accounts, deposit accounts, investment property, letter of
credit rights, and supporting obligations, now existing or hereafter arising,
together with all interest of Debtor in any goods, the sale or lease of which
give rise to any of Debtor's accounts, and all chattel paper, documents and
instruments relating to accounts.

 
(d)
 All of Debtor's contract rights and general intangibles now owned or hereafter
acquired in which Debtor has any interest.

 
(e)
All of Debtor's equipment now owned or hereafter acquired.

 
(f)
All of Debtor's fixtures on the real estate leased by the Debtor.

 
(g)
All of Debtor's commercial tort claims.

 
(h)
All of Debtor's files, records, books of account, business papers, and computer
programs.

 

(i)
All of Debtor's intellectual property rights and any other patents, trademarks
or copyrights.

 

together with the proceeds, products, increase, issue, accessions, attachments,
accessories, parts, additions, repairs, replacements and substitutes of, to, and
for all of the foregoing. Debtor will promptly deliver to Secured Parties, duly
endorsed when necessary, all such chattel paper, documents and instruments and
related guaranties, now on hand or hereafter received. The lien and security
interest granted hereby is junior and subordinate to all Permitted Liens (as
defined in the Note Purchase Agreement (as defined below)), including without
limitation the lien and security interest (the "FGI Security Interest")
previously and separately granted by the Debtor to RVH Inc. or its assigns (the
"Senior Lender").
 
All such property in which a security interest is granted is herein called the
"Collateral."
 
2.    OBLIGATIONS. The aforesaid security interests secure payment and
performance of the following obligations (the "Obligations"): (a) All
obligations of Debtor to Secured Parties under any agreement of even date
therewith, including, without limitation, under the Secured Convertible Note,
from Debtor to Secured Parties in the aggregate principal amount of $150,000.00
(the "Notes"), and under the Note Purchase Agreement between Debtor and the
Secured Parties dated of even date herewith (the "Note Purchase Agreement") and
including, but not limited to, amounts advanced and expenses and reasonable
attorneys' fees incurred pursuant to this Security Agreement; (b) all costs
incurred by the Secured Parties to obtain, preserve, perfect and enforce the
Notes, Note Purchase Agreement or any Security Document, collect the
Obligations, and maintain, preserve, collect and enforce the Collateral,
including, without limitation, taxes, assessments, attorney fees and reasonable
legal expenses and expenses of sale; and (c) any of the foregoing that arises
after the filing of a petition by or against Debtor under the Bankruptcy Code,
even if the obligations do not accrue because of the automatic stay under
Bankruptcy Code Section 362 or otherwise.
 
 
 

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3.    COPY - FILING. A carbon, photocopy or other reproduction of this Security
Agreement may be filed as a financing statement. The Debtor authorizes the
Secured Parties to file from time to time such lien filings, financing or
continuation statements or amendments thereto, as the Secured Parties may
reasonably determine to be necessary or desirable, to perfect and preserve the
security interest created or purported to be created hereby. Upon reasonable
request of a Secured Party, the Debtor will cause to be filed lien filings,
financing or continuation statements or amendments thereto, naming as debtor
such lessee or lessees as may be designated by the Secured Parties and assigning
the Debtor's rights under such filing statements to the Secured Parties.
 
4.    REPRESENTATIONS. Debtor represents, warrants and agrees:
 
(b)    All Collateral is owned by Debtor with full ownership rights, and is bona
fide and genuine and Debtor is authorized to grant a security interest in the
Collateral, free and clear of all liens and encumbrances other than the
Permitted Liens.
 
(c)    Debtor's principal place of business is the address shown herein, and
Debtor shall promptly give Secured Parties written notice of any change thereof,
unless prior written consent of Secured Parties is obtained. All Collateral,
except for Collateral located at Debtor's Statesville, North Carolina warehouse,
and all of the Debtor's business records are now kept, and shall continue to be
kept, unless prior written consent of Secured Parties is obtained, at such
address.
 
(d)    Debtor is a corporation organized under the laws of the State of Nevada.
Debtor's exact legal name is: Options Media Group Holdings, Inc..
 
5.    TERMINATION. Upon payment or performance in full of all of the
Obligations, the Secured Parties will, at Debtor's request and expense, release
the security interest granted herein and deliver such termination statements as
may be necessary therefor.

[Intentionally Left Blank]
 
 
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THIS AGREEMENT SPECIFICALLY INCLUDES ALL OF THE ADDITIONAL PROVISIONS SET FORTH
ON THE FOLLOWING PAGES. DEBTOR ACKNOWLEDGES RECEIPT OF A FULLY COMPLETED COPY OF
THIS SECURITY AGREEMENT.
 
DATED: __________
 
Debtor and Secured Parties Acknowledge Receipt
 
[INVESTORS]

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ADDRESS OF DEBTOR (FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY
BE OBTAINED)
 
Number and Street:
City:_________
County:______
State:________
Zip:_________
[Additional Provisions Follow]
 
 
3

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ADDITIONAL PROVISIONS
 
1.     REPRESENTATIONS AND AGREEMENTS. Debtor represents and warrants to Secured
Parties, and agrees that:
 
Debtor is a corporation duly organized and currently existing under Nevada law
and is in good standing in any state where Debtor conducts business. The
execution, delivery and performance of this Security Agreement are within
Debtor's powers, have been duly authorized, and are not in contravention of law
or the terms of Debtor's Certificate of Incorporation, Bylaws, or any indenture,
agreement or undertaking to which Debtor is a party, or by which it is bound.
Debtor will not change its name, state of formation or type of entity unless
written notice is given to Secured Parties at least 30 days in advance.
Notwithstanding the foregoing, the Secured Parties acknowledge that the Debtor
intends to change its name promptly following the issuance of the Notes and
hereby consents to and waives any right to notice hereunder with respect to such
name change.
 
Debtor shall at all times maintain Collateral which is tangible property in good
condition and repair, defend at Debtor's expense all Collateral from all adverse
claims and shall not use any of the Collateral for any illegal purpose.
 
Debtor shall (i) keep such books and records pertaining to the Collateral and to
Debtor's business operations as shall be reasonably satisfactory to Secured
Parties; (ii) permit representatives of Secured Parties to inspect the
Collateral and inspect and make abstracts from Debtor's books and records during
regular business hours upon at least three days' notice. If an event of default
(as defined in the Notes) has occurred and is continuing, the Secured Parties
are hereby authorized to request confirmation of such information or additional
information of any kind whatsoever directly from any third party having dealings
with Debtor.
 
During the continuance of an event of default under the Notes subject to the
rights of the holders of the Permitted Liens, Debtor shall give such notice in
writing (including but not limited to notice of assignment or notice to pay the
Secured Parties directly) as the Secured Parties may require at any time to any
or all account debtors, with respect to accounts which are Collateral, and, if
the Secured Parties shall so request, deliver to the Secured Parties copies of
any and all such notices.
 
Upon Secured Parties' reasonable request and subject to the rights of the
holders of the Permitted Liens, Debtor shall promptly transmit to Secured
Parties all information that it may have or receive with respect to Collateral
or with respect to any account debtor which might in any way affect the value of
the Collateral or Secured Parties' rights or remedies with respect thereto.
 
Debtor shall not otherwise consume, assign or transfer any Collateral except:
(i) pursuant to this Agreement or the Transaction Documents, (ii) in favor of
any holder of the Permitted Liens, including the Senior Lender (or any
replacement lender), or (iii) as the Secured Parties may consent in writing.
Subject to the rights of the Senior Lender, the provision of this Security
Agreement granting a security interest in proceeds shall not be construed to
mean that Secured Parties consents to any sale or disposition of any Collateral.
 
 
4

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Debtor shall pay when due all taxes, assessments, and any other governmental
levy which is, or may be, levied against any Collateral, and shall otherwise
maintain the Collateral free of all liens, charges, and encumbrances (except
liens in existence on the date hereof and liens created hereby and Permitted
Liens (as defined in the Note Purchase Agreement).
 
Debtor shall not store any Collateral with any warehouseman other than in the
ordinary course of business without Secured Parties' consent.
 
During the continuance of an event of default under the Notes and subject to the
rights of the holders of the Permitted Liens, Debtor shall promptly, unless the
Secured Parties shall waive such requirement in writing, deliver to the Secured
Parties all certificates of title, if any (or any other documents evidencing
title), to all Collateral with such proper notations, assignments or
endorsements as may be necessary or appropriate to create, preserve or perfect
the Secured Parties' security interest in the Collateral.
 
Debtor shall, at its cost and expense, execute, deliver, file or record (in such
manner and form as the Secured Parties may reasonably require) any assignment,
financing statement or other paper that may be necessary or desirable, or that
that Secured Parties may reasonably request, in order to create, preserve or
perfect any security interest granted hereby or to enable the Secured Parties to
exercise and enforce their rights hereunder or under any Collateral. The Secured
Parties are further granted the power, coupled with an interest, to sign on
behalfof Debtor as attorney-in-fact (if signature is required) and to file one
or more financing statements under the Uniform Commercial Code naming Debtor as
debtor and the Secured Parties as secured parties and describing the Collateral
herein specified. Debtor shall take any action reasonably requested by the
Secured Parties necessary for the Secured Parties to obtain control of
Collateral consisting of deposit accounts, investment property, letter of credit
rights, electronic chattel paper and similar property.
 
Subject to the rights of the holders of the Permitted Liens, the Secured Parties
are hereby granted a non-exclusive, world-wide and royalty-free license to use
or otherwise exploit all trademarks, trade secrets, franchises, copyrights and
patents of the Debtor that the Secured Parties reasonably deems necessary or
appropriate for the disposition of any Collateral.
 
2.     EXPENSES. Debtor upon demand shall pay to and indemnify the Secured
Parties from the amounts of all expenses, including attorneys' fees and legal
expenses, reasonably incurred by Secured Parties in seeking to collect any sums
secured hereunder or to enforce any rights in the Collateral. Such amounts shall
be secured hereby, and if not paid on demand shall bear interest at the highest
rate payable on any of the Obligations.
 
 
5

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Debtor shall defend, protect, indemnify and hold harmless the Secured Parties
and their respective Affiliates and all of their respective officers, directors,
employees, attorneys, consultants and agents from and against any and all
losses, damages, liabilities, obligations, penalties, fines, fees, costs and
expenses (including, without limitation, reasonable attorneys' and paralegals'
fees, costs and expenses, and fees, costs and expenses for investigations and
experts) incurred by such indemnitees, whether prior to or from and after the
date hereof, as a result of or arising from or relating to the Secured Parties'
preservation, administration and enforcement of its rights hereunder and
applicable law, including the reasonable fees and disbursements of counsel for
the Secured Parties in connection therewith, whether suit be brought or not and
whether incurred at trial or on appeal, and all reasonable costs of
repossession, storage, disposition, protection and collection of Collateral,
other than for such loss, damage, liability, obligation, penalty, fee, cost or
expense arising from any of the Secured Parties' or their respective Affiliates'
gross negligence or willful misconduct.
 
3.     COLLECTION AUTHORITY ON ACCOUNTS. Subject to the rights of the holders of
the Permitted Liens, Debtor hereby irrevocably appoints Secured Parties its true
and lawful attorney, with full power of substitution, in the names of the
Secured Parties, Debtor's name or otherwise, for the Secured Parties' sole use
and benefit to exercise, if Secured Parties shall elect if an event of default
has occurred and is continuing (whether or not the Secured Parties then elect to
exercise any other of its rights arising upon default) all or any of the
following powers with respect to all or any accounts which are Collateral:
 
To execute on Debtor's behalf assignments of any or all accounts which are
Collateral to Secured Parties, and to notify account debtors thereunder to make
payments directly to Secured Parties;
 
To demand, sue for, collect, receive and give acquittance for any and all moneys
due or to become due upon or by virtue thereof;
 
To receive, take, endorse, assign and deliver any and all checks, notes, drafts,
documents and other negotiable and non-negotiable instruments and chattel paper
taken or received by Secured Parties in connection therewith;
 
To settle, compromise, compound, prosecute or defend any action or proceeding
with respect thereto;
 
To sell, transfer, assign or otherwise deal in or with the same or the proceeds
thereof or the relative goods, as fully and effectually as if Secured Parties
were the absolute owner thereof; and
 
To extend the time of payment of any or all thereof and to make any allowance
and other adjustments with reference thereto.
 
 
6

--------------------------------------------------------------------------------

 
 
Any funds collected pursuant to such powers shall be applied to the payment of
the Obligations. The exercise by Secured Parties of, or failure to so exercise,
any of the foregoing authority, shall in no manner affect Debtor's liability to
the Secured Parties on any of the Obligations. The Secured Parties shall be
under no obligation or duty to exercise any of the powers hereby conferred upon
them and they shall be without liability for any act or failure to act in
connection with the collection of or the preservation of any rights under any
such accounts.
 
4.     SETOFF. Subject to the rights of the holders of the Permitted Liens, in
the event of default under the Notes, the Secured Parties, at their option at
any time, and without notice to Debtor, may apply against the Obligations any
property of Debtor held by the Secured Parties. As additional security for
payment of the Obligations, Debtor hereby grants to Secured Parties a second
priority security interest in any funds or property of Debtor now or hereafter
in possession of Secured Parties and with respect thereto Secured Parties will
have all rights and remedies herein specified, subject to the rights of the
holders ofthe Permitted Liens.
 
5.     DEFAULT. Debtor will be in default upon the occurrence of any of the
following events which remains uncured after 10 days written notice: (a) an
Event of Default under Notes, (b) failure of the performance of any obligation
or covenant contained or referred to herein which continues for a period of
thirty (30) days after receipt of written notice from Secured Parties, (c) any
warranty, representation or statement made or furnished to Secured Parties by or
on behalfof Debtor proves to have been false in any material respect when made
or furnished and results in a Material Adverse Effect with respect to the Debtor
(as such term is defined in the Note Purchase Agreement), (d) any acceleration
of the maturity of the indebtedness owed to any party with a security interest
in the Collateral senior to that of the Secured Parties, (e) the making ofany
levy, seizure ofattachment ofthe Collateral, or (f) death of, dissolution of,
termination of existence of, insolvency of, business failure of, appointment of
a receiver of any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceeding under any bankruptcy or
insolvency law by or against, Debtor or any guarantor or co-maker of any of the
Obligations.
 
6.     RIGHTS AND REMEDIES ON DEFAULT. During the continuance of any event of
default, the Secured Parties may exercise at any time and from time to time any
rights and remedies available to them under applicable law, including but not
limited to the right to sell, lease or otherwise dispose of the Collateral and
the right to take possession of the Collateral, subject to the rights of the
holders of the Permitted Liens.FOR THAT PURPOSE THE SECURED PARTIES MAY ENTER
UPON ANY PREMISES ON WHICH THE COLLATERAL OR ANY PART THEREOF MAY BE SITUATED
AND REMOVE IT, AND DEBTOR WAIVES ITS RIGHTS TO ASSERT TRESPASS OR SIMILAR CAUSES
OF ACTION FOR SUCH ENTRY. The Secured Parties shall have no obligation to
marshal any assets, but may require Debtor to assemble the Collateral and make
it available at a place to be designated by the Secured Parties which is
reasonably convenient to all parties. If at the time of repossession any of the
Collateral contains other personal property not included in the Collateral,
Secured
 
 
7

--------------------------------------------------------------------------------

 
 
Parties may take such personal property into custody and store it at the risk
and expense of Debtor; provided, however, that Secured Parties shall return such
property promptly upon Debtor's request. Debtor agrees to notify the Secured
Parties within forty-eight (48) hours after repossession of the Collateral of
any such other personal property claimed, and failure to do so will release the
Secured Parties and its representatives from any liability for loss or damage
thereto. Any notice of intended disposition of any of the Collateral required by
law shall be deemed reasonable if such notice is given at least ten (10) days
before the time of such disposition. Any proceeds of any disposition by Secured
Parties of any of the Collateral may be applied by it to the payment of expenses
in connection with the Collateral, including but not limited to repossession
expenses and reasonable attorneys' fees and legal expenses, and any balance of
such proceeds shall be then applied against the Obligations and other amounts
secured hereby in such order of application as Secured Parties may elect.
 
7.     RELATIONSHIP TO NOTES. The rights and remedies of Secured Parties under
this Agreement are subject to the terms and conditions of the Notes and the Note
Purchase Agreement.
 
8.     SUBSQUENT PURCHASERS OF NOTES. Notwithstanding anything to the contrary
contained herein or in the Notes or the Note Purchase Agreement, the Secured
Parties hereby acknowledge, agree and consent to and waive all remedies
hereunder and thereunder with respect to Debtor's grant of a second priority
security interest in the Collateral to purchasers in any subsequent offering
("Subsequent Purchasers") of Debtor's securities consisting of debentures and
warrants on substantially similar terms as the Notes and Warrants (as defined in
the Note Purchase Agreement). The Secured Parties understand and agree that the
second priority security interest to be granted in favor of the Subsequent
Purchasers shall be pari passu in status to the second priority security
interest created hereby. The Secured Parties hereby consent to the filing of any
lien filings, financing or continuation statements or amendments to any existing
lien filings, financing or continuation statements, as the Subsequent Purchasers
may reasonably determine to be necessary or desirable, to perfect and preserve
such security interest.
 
9.     GENERAL
 
During the continuance of an event of default under the Notes, the Secured
Parties may, as their option, pay any tax, assessment, or other Governmental
levy, or insurance premium or any other expense or charge relating to Collateral
which is payable by Debtor (and not timely paid by it), and further may pay any
filing or recording fees. Any amount or amounts so paid, with interest thereon
at the highest rate payable on any of the Obligations (from the date of payment
until repaid) shall be secured hereby and shall be payable upon demand.
 
Secured Parties shall not be deemed to have waived any of their rights hereunder
or under any other agreement, instrument or paper signed by Debtor unless such
waiver is in writing and signed by Secured Parties. No delay or omission on the
part of the Secured Parties in exercising any right shall operate as a waiver of
such right or any other right. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
 
 
8

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Any notice, if mailed, shall be given in accordance with the Note Purchase
Agreement.
 
Covenants, representations, warranties and agreements herein set forth shall be
binding upon Debtor, its legal representatives, successors and assigns. This
Security Agreement may be assigned by Secured Parties and all rights and
privileges of Secured Parties under this Security Agreement shall then inure to
the benefit of its successors and assigns.
 
If any provision of this Security Agreement shall be for any reason held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Security Agreement shall be construed as if
such invalid or unenforceable provision had never been contained herein.
 
Unless otherwise defined or the context otherwise requires, all terms used
herein which are defined in the Uniform Commercial Code shall have the meanings
therein stated. The rights and remedies herein conferred upon Secured Parties
shall be in addition to, and not in substitution or in derogation of, rights and
remedies conferred by the Uniform Commercial Code and other applicable law.
 
All words and phrases used herein shall be construed as in the singular or
plural number, and as masculine, feminine or neuter gender, as the context may
require.
 
Captions are inserted for convenience only and shall not be taken as altering
the text.
 
Debtor and Secured Parties hereby waive any right they may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement and/or the transactions contemplated
hereunder.
 
All issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law or conflict of law rules or provisions that would cause the
application of the laws of any other jurisdiction other than the State of New
York.

[Signature Page on Page 3]
 
 
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EXHIBIT E
UNCONDITIONAL GUARANTY
 
March ___, 2012
 
Cape One Financial Master Fund, Ltd. ("Lender")
505 Park Avenue
New York, New York 10022
 
Whereas, to induce Lender to make or extend financial accommodations to or for
the benefit of Options Media Group Corporation, Inc., a Nevada corporation
("Borrower"), which are and will be to the direct interest and advantage of
Keith St. Clair (the "Guarantor"), and in consideration of financial
accommodations made, or extended to or for the benefit of Borrower, which are
and will be to the direct interest and advantage of the Guarantor, Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to Lender and its
successors, assigns and affiliates the full and timely payment when due of the
payment obligations of Borrower to Lender and its affiliates under the "Loan
Documents", as defined below, however and whenever incurred or evidenced,
whether primary, secondary, direct, indirect, absolute, contingent, due or to
become due, now existing or hereafter contracted or acquired, and all
modifications, extensions and renewals thereof, (collectively, the "Guaranteed
Obligations"); and
 
Whereas, "Loan Documents" shall mean (i) that certain Promissory Note dated as
of the date hereof, between Lender and Borrower in the principal amount of
approximately $150,000 (the "Notes"), (ii) the "Note Purchase Agreement" dated
as of the date hereof between Lender and Borrower, and (iii) the Security
Agreement between Lender and Borrower as of the date hereof ("Security
Agreement"), and (iv) all other documents, agreements, mortgages and
certificates executed in connection with the Loan Agreement; and
 
Whereas, the Guarantor will directly benefit from the extension of credit to the
Borrower represented by the issuance of the Notes.
 
Guarantor further covenants and agrees:
 
GUARANTOR'S LIABILITY.   This Guaranty (this "Guaranty") is a continuing and
unconditional guaranty of payment and performance and not of collection. This
Guaranty does not impose any obligation on Lender to extend or continue to
extend credit or otherwise deal with Borrower at any subsequent time. This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of the Guaranteed Obligations is rescinded, avoided or
for any other reason must be returned by Lender, and the returned payment shall
remain payable as part of the Guaranteed Obligations, all as though such payment
had not been made. Except to the extent the provisions of this Guaranty give
Lender additional rights, this Guaranty shall not be deemed to supersede or
replace any other guaranties given to Lender by Guarantor; and the obligations
guaranteed hereby shall be in addition to any other obligations guaranteed by
Guarantor pursuant to any other agreement of guaranty given to Lender and other
guaranties of the Guaranteed Obligations.
 
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Lender may from
time to time, in its sole discretion pursuant to the Loan Documents, without
affecting, impairing, lessening or releasing the obligations of Guarantor
hereunder: (a) extend or modify the time, manner, place or terms of payment or
performance and/or otherwise change or modify the credit terms of the Guaranteed
Obligations; (b) increase, renew, or enter into a novation of the Guaranteed
Obligations; (c) waive or consent to the departure from terms of the Guaranteed
Obligations; (d) permit any change in the business or other dealings and
relations of Borrower or any other guarantor with Lender; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any manner any
collateral that is or may be held by Lender in connection with the Guaranteed
Obligations or any liabilities or obligations of Guarantor; and (f) proceed
against, settle, release, or compromise with Borrower, any insurance carrier, or
any other person or entity liable as to any part of the Guaranteed Obligations,
and/or subordinate the payment of any part of the Guaranteed Obligations to the
payment of any other obligations, which may at any time be due or owing to
Lender; all in such manner and upon such terms as Lender may deem appropriate,
and without notice to or further consent from Guarantor. No invalidity,
irregularity, discharge or unenforceability of, or action or omission by Lender
relating to any part of the Guaranteed Obligations or any security therefor
shall affect or impair this Guaranty.
 
 
 

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WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to Lender and collection
of the Guaranteed Obligations: (a) promptness and diligence in collection of any
of the Guaranteed Obligations from Borrower or any other person liable thereon,
and in foreclosure of any security interest and sale of any property serving as
collateral for the Guaranteed Obligations; (b) any law or statute that requires
that Lender make demand upon, assert claims against, or collect from Borrower or
other persons or entities, foreclose any security interest, sell collateral,
exhaust any remedies, or take any other action against Borrower or other persons
or entities prior to making demand upon, collecting from or taking action
against Guarantor with respect to the Guaranteed Obligations; (c) any law or
statute that requires that Borrower or any other person be joined in, notified
of or made part of any action against Guarantor; (d) that Lender or its
affiliates preserve, insure or perfect any security interest in collateral or
sell or dispose of collateral in a particular manner or at a particular time,
provided that Lender's obligation to dispose of Collateral in a commercially
reasonable manner is not waived hereby; (e) notice of extensions, modifications,
renewals, or novations of the Guaranteed Obligations, of any new transactions or
other relationships between Lender, Borrower and/or any guarantor, and of
changes in the financial condition of, ownership of, or business structure of
Borrower or any other guarantor; (f) presentment, protest, notice of dishonor,
notice of default, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale, and all other
notices of any kind whatsoever to which Guarantor may be entitled; (g) the right
to assert against Lender or its affiliates any defense (legal or equitable),
set-off, counterclaim, or claim that Guarantor may have at any time against
Borrower or any other party liable to Lender or its affiliates; (h) all defenses
relating to invalidity, insufficiency, unenforceability, enforcement, release or
impairment of Lender or its affiliates' lien on any collateral, of the Loan
Documents, or of any other guaranties held by Lender; (i) any right to which
Guarantor is or may become entitled to be subrogated to Lender or its
affiliates' rights against Borrower or to seek contribution, reimbursement,
indemnification, payment or the like, or participation in any claim, right or
remedy of Lender or its affiliates against Borrower or any security which Lender
or its affiliates now has or hereafter acquires, until such time as the
Guaranteed Obligations have been fully satisfied beyond the expiration of any
applicable preference period; (j) any claim or defense that acceleration of
maturity of the Guaranteed Obligations is stayed against Guarantor because of
the stay of assertion or of acceleration of claims against any other person or
entity for any reason including the bankruptcy or insolvency of that person or
entity; and (k) the right to marshalling of Borrower's assets or the benefit of
any exemption claimed by Guarantor. Guarantor acknowledges and represents that
Guarantor has relied upon Guarantor's own due diligence in making an independent
appraisal of Borrower, Borrower's business affairs and financial condition, and
any collateral; Guarantor will continue to be responsible for making an
independent appraisal of such matters; and Guarantor has not relied upon Lender
or its affiliates for information regarding Borrower or any collateral.
 
 
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FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Lender and
its affiliates that on the date hereof: (a) the fair saleable value of
Guarantor's assets exceeds his liabilities, Guarantor is meeting his current
liabilities as they mature, and Guarantor is and shall remain solvent; (b) all
financial statements of Guarantor furnished to Lender are correct and accurately
reflect the financial condition of Guarantor as of the respective dates thereof;
(c) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of Guarantor; and (d) there
are not now pending any court or administrative proceedings or undischarged
judgments against Guarantor, no federal or state tax liens have been filed or
threatened against Guarantor, and Guarantor is not in default or claimed default
under any agreement.
 
INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Loan Documents, if for any reason the effective interest on
any of the Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum lawful
interest, and any sums of interest which have been collected in excess of such
maximum lawful interest shall be applied as a credit against the unpaid
principal balance of the Guaranteed Obligations. Monies received from any source
by Lender or its affiliates for application toward payment of the Guaranteed
Obligations may be applied to such Guaranteed Obligations in any manner or order
deemed appropriate by Lender and its affiliates.
 
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: ailure of timely payment of the Guaranteed Obligations
beyond the applicable cure periods set forth in the Loan Documents.
 
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, and, Lender and its affiliates may exercise any rights
and remedies as provided in this Guaranty and other Loan Documents, or as
provided at law or equity.

 
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
Lender's and its affiliates' reasonable expenses incurred to enforce or collect
any of the Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any suit, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

 
MISCELLANEOUS.

 
Termination. Upon the indefeasible payment in full of the Guaranteed
Obligations, the terms of and obligations under this Guaranty will terminate in
their entirety and shall be of no further force and effect.
 
Assignment. This Guaranty and other Loan Documents shall inure to the benefit of
and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Lender's interests in and rights under
this Guaranty and other Loan Documents are freely assignable, in whole or in
part, by Lender. Guarantor may not assign any of its rights or obligations under
this Guaranty or any other Loan Document without the prior written consent of
Lender. Any attempted or purported assignment by Guarantor in violation hereof
shall be null and void and shall not release Guarantor from the Guaranteed
Obligations.
 
 
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Organization; Powers. Guarantor (i) is an adult individual and is sui juris,
(ii) has the power and authority to own its properties and assets and to carry
on its business as now being conducted and as now contemplated; and (iii) has
the power and authority to execute, deliver and perform, and by all necessary
action has authorized the execution, delivery and performance of, all of its
obligations under this Guaranty and any other Loan Document to which it is a
party.
 
Applicable Law; Conflict Between Documents. This Guaranty shall be governed by
and construed under the laws of New York without regard to that state's conflict
of laws principles.
 
Jurisdiction. Guarantor irrevocably agrees to non-exclusive personal
jurisdiction in New York.
 
Severability. If any provision of this Guaranty or of the other Loan Documents
shall be prohibited or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty or other Loan Documents.
 
Notices. Any notices to any party shall be sufficiently given if in writing and
mailed or delivered to any party's address shown above or such other address as
provided hereunder. In the event that Guarantor changes Guarantor's address at
any time prior to the date the Guaranteed Obligations are paid in full,
Guarantor agrees to promptly give written notice of said change of address to
Lender by registered or certified mail, return receipt requested, all charges
prepaid, or overnight courier, receipt requested.
 
Plural; Captions. All references in the Loan Documents to borrower, guarantor,
person, document or other nouns of reference mean both the singular and plural
form, as the case may be, and the term "person" shall mean any individual person
or entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents.
 
Binding Contract. Guarantor by execution of and Lender by acceptance of this
Guaranty agree that each party is bound to all terms and provisions of this
Guaranty.
 
Amendments, Waivers and Remedies. No waivers, amendments or modifications of
this Guaranty and other Loan Documents shall be valid unless in writing and
signed by an officer of Lender. No waiver by Lender or its affiliates of any
Default shall operate as a waiver of any other Default or the same Default on a
future occasion. Neither the failure nor any delay on the part of Lender or its
affiliates in exercising any right, power, or privilege granted pursuant to this
Guaranty and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise or the
exercise of any other right, power or privilege. All remedies available to
Lender or its affiliates with respect to this Guaranty and other Loan Documents
and remedies available at law or in equity shall be cumulative and may be
pursued concurrently or successively.
 
FINAL AGREEMENT. This Agreement and the other Loan Documents represent the final
agreement between the parties with respect to the subject matter hereof and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties with respect thereto. There are no unwritten oral
agreements between the parties.
 
 
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WAIVER OF JURY TRIAL.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR BY
EXECUTION HEREOF AND LENDER BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ACCEPT THIS
GUARANTY. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND
REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE
PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT
HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED,
SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS GUARANTY.
 
 
 
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
 

            Keith St. Clair