Viscount Systems Inc.: Exhibit 4.1 - Filed by newsfilecorp.com





CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF THE
SERIES A 
CONVERTIBLE REDEEMABLE PREFERRED STOCK OF

VISCOUNT SYSTEMS, INC.

_______________________________________________________________

       I, Stephen
Pineau, hereby certify that I am the President, Chief Executive Officer and
Chief Financial Officer of Viscount Systems Inc., a corporation organized and
existing under the laws of the State of Nevada (the “Company”),
and further,

       DO HEREBY
CERTIFY that pursuant to the authority conferred upon the Board of
Directors of the Company (the “Board”) by the Company’s Articles of
Incorporation, as amended to date (collectively, the “Articles of
Incorporation”), the Board on May 29, 2012 adopted the following
resolutions creating three thousand (3,000) shares of preferred stock designated
as “Series A Convertible Redeemable Preferred Stock,” none of which shares have
been issued; and it is 

       RESOLVED,
that the Company is authorized to issue one thousand (1,000) shares of Series A
Convertible Redeemable Preferred Stock, par value $0.001 per share (the “A
Shares”), in connection with the Company’s offering of the A Shares (the
“Offering”) in accordance with and subject to the terms and
conditions of the Company’s Securities Purchase Agreement dated June 5, 2012 (as
amended and/or supplemented, the “Purchase Agreement”). The A
Shares shall have the powers, designations, preferences and relative
participating, voting and/or other rights, and the qualifications, limitations
and/or restrictions set forth in the resolutions below. 

       1. VOTING
RIGHTS.

              (a)
Voting Rights. Subject to the limitations provided elsewhere in this
Section 1(a), Holders of A Shares (a “Holder,” and,
collectively, the “Holders”), shall be entitled to vote on any
matter submitted to shareholders of the Company and shall be entitled to the
number of votes for each A Share owned at the record date for the determination
of shareholders entitled to vote on such matter or, if no such record date is
established, the date such vote is taken or any written consent of shareholders
is solicited, equal to the number of shares of common stock, par value $0.001
per share, of the Company (the “Common Stock”) such number of A
Shares are convertible into at such time; provided, however, that
notwithstanding anything to the contrary provided herein or elsewhere, the
voting rights of each Holder of A Shares shall be limited to the right to vote
such number of shares of Common Stock as, when aggregated with all other shares
of Common Stock beneficially owned by such Holder at such time, would result in
such Holder beneficially owning (as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the “1934
Act”)), no more than 4.99% of all shares of Common Stock then
outstanding. Except as otherwise provided by law and subject to the limitations
set forth in the Articles of Incorporation, the Company’s bylaws (the
“By-Laws”) and this Certificate of Designation, Preferences and
Rights of the A Shares (this “Certificate”), the A Shares shall
vote together with the Common Stock on all matters submitted to holders of Common Stock and not as a
separate class. Holders of A Shares shall also be entitled to vote as a single
class as and to the extent required by law, the Articles of Incorporation, the
By-Laws or as otherwise provided in this Certificate on all matters submitted to
Holders of A Shares. 




              (b)
Limitations on Company Actions. 

                     (1)
Notwithstanding anything to the contrary provided herein or elsewhere, as long
as A Shares having an aggregate Stated Value (as defined in this Certificate) of
$1 are issued and outstanding, the Company shall not, and shall not permit any
current or future, direct or indirect, wholly-owned or partially owned
subsidiary (a “Subsidiary,” and collectively, the
“Subsidiaries”) to, without the express written consent of
Holders, directly and/or indirectly, owning no less than 67% of the aggregate
Stated Value of all A Shares then outstanding:

                            (i)
amend, alter, change, waive or repeal any provision of this Certificate, the
Articles of Incorporation or By-Laws (and/or those of any of its Subsidiaries),
in any manner that could, directly and/or indirectly, adversely affect the
rights of the Holders of the A Shares;

                            (ii)
alter, waive, repeal, amend, and/or change adversely the preferences, rights,
privileges, or restrictions of the A Shares; 

                            (iii)
effect any voluntary dissolution or winding up of the Company and/or any of its
Subsidiaries and/or any of their respective affairs;

                            (iv)
authorize or create any class or series of stock having any rights, preferences
or privileges senior to or pari passu with those of the A Shares or increase the
number of authorized A Shares; 

                            (v)
incur any Indebtedness (other than that outstanding and in such principal amount
outstanding as of the date of the Purchase Agreement) which if any such amount
is permitted to be paid down, in whole or in part, pursuant to this Certificate
and is paid down, in whole or in part, cannot be borrowed again except (A) if
such Indebtedness constitutes Permitted Debt (as defined in this Certificate),
and (B) any such reborrowed Permitted Debt is counted on a dollar for dollar
basis against the Permitted Debt Cap (as defined in this Certificate);
provided, however, that subject to the limitations provided in
this subparagraph, the Company and/or its Subsidiaries may borrow together in
the aggregate up to $1,000,000 principal amount of Permitted Debt (the
“Permitted Debt Cap”). For the purposes hereof, the term
“Permitted Debt” shall mean (A)
non-convertible, non-equity linked bank debt from a federal or state-chartered
bank on commercially reasonable terms, which borrowed funds shall be used by the
Company and/or its Subsidiaries in their respective historical and ordinary
course of business; and (B) no equity of the Company and/or any of its
Subsidiaries (including, but not limited to, warrants, stock options and/or
other securities) is issued directly and/or indirectly in connection with any
borrowings of such Permitted Debt. For purposes hereof,
“Indebtedness” of any Person (as defined in this Certificate)
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation,
“capital leases” in accordance with United States generally accepted accounting
principles (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G). For purposes of this Certificate,
“Contingent Obligations” shall mean, as to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to
any indebtedness, lease, dividend and/or other obligation of another Person if a
purpose or intent of the Person incurring such liability, or the direct and/or
indirect effect thereof, is to provide assurance (whether in writing, orally,
and/or by any other means, which shall include, but not be limited to, any
direct and/or indirect guaranty) to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto. 

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                            (vi)
pay and/or make dividends, distributions and/or any other payment (whether in
cash, securities or property) on any securities of the Company and/or any
Subsidiary other than to the Holders of A Shares; 

                            (vii)
enter into any transaction with any Affiliate (as defined under the Securities
Act of 1933, as amended, the “1933 Act”), which would be required
to be disclosed in any public filing with the Securities and Exchange Commission
(the “SEC”) pursuant to SEC laws, rules and/or regulations, other
than any transaction pursuant to which an Affiliate of the Company and/or
Subsidiary is employed pursuant to a written agreement by the Company and/or any
Subsidiary which is negotiated on an arms-length basis, is approved by the
independent directors of the Board of Directors and does not exceed industry
standards, based upon the Company’s industry, the revenues and income of the
Company and the work that such Affiliate will perform pursuant to such
arrangement; 

                            (viii)
redeem, repurchase and/or otherwise enter into or effectuate a similar
transaction for any securities of the Company and/or any Subsidiary other than
the A Shares;

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                            (ix)
(1) issue any A Shares other than in the Offering and as PIK Shares provided and
to the extent set forth in this Certificate, (2) issue any securities that upon
exercise, conversion and/or exchange of any such security, A Shares are to be
issued, and/or (3) agree (whether in writing, orally or otherwise) to do any of
the actions set forth in (1) and/or (2) of this subparagraph; 

                            (x)
repay any Indebtedness and/or other obligation other than (1) any bank debt
outstanding as of the date of the Purchase Agreement, but only in accordance
with and to the extent of the terms and conditions of such bank debt as of the
date of the Purchase Agreement; provided, however, that
notwithstanding anything to the contrary provided herein or elsewhere, no bank
debt and/or any other Indebtedness may be pre-paid, (2) any accounts payable
incurred in the normal course of the Company’s historical and ordinary business,
(3) $45,000 aggregate principal amount loan advanced on March 26, 2012 plus
accrued, but unpaid simple interest of 8% per annum to a shareholder of the
Company (the “Lender”), provided that simultaneously with
and as a condition to the repayment (including, but not limited to, accrued, but
unpaid interest) to the Lender of such loan, the Lender provides to the Company
(A) written evidence signed by the Lender that no other amounts are owed by the
Company to the Lender pursuant to such loan, and (B) a full written release
signed by the Lender of any and all claims by the Lender against the Company
and/or its Subsidiaries in respect of such loan (“Release
Documents”), (4) up to $60,000 of outstanding principal on loans due to
shareholders and related parties as disclosed on the Company’s latest balance
sheet filed with the SEC prior to the date of this Certificate, provided
that in each case, Release Documents are obtained, and (5) any Permitted Debt in
accordance with the terms and conditions in this Certificate;

                            (xi)
effect or enter into an agreement to effect any sale and/or issuance of Common
Stock or Common Stock Equivalents (as defined in this Certificate) directly
and/or indirectly involving a Variable Rate Transaction. For purposes of this
Certificate, the term “Variable Rate Transaction” means a
transaction in which the Company and/or its Subsidiaries (a) issues or sells any
debt or equity securities that are convertible into, exchangeable or exercisable
for, or include the right to receive, additional shares of Common Stock either
(1) at a conversion price, exercise price or exchange rate or other price that
is based upon, and/or varies with, the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities or (2) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock; (b) enters into any agreement, including, but not limited to,
an equity line of credit, whereby the Company may sell securities at a future
determined price, or (c) enters into any type of equity line of credit or
similar agreement and/or transaction. For purposes of this Certificate, the term
“Common Stock Equivalents” means any securities of the Company
and/or its Subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock; or 

4




                            (xii)
enter into any agreement or understanding (whether in writing, orally or
otherwise) to do any of the above. 

                     (2)
Notwithstanding anything to the contrary provided herein or elsewhere, as long
as any Holder owns any issued and outstanding A Shares having an aggregate
Stated Value (as defined in this Certificate) of $300,000 or more, the Company
shall not, and shall not permit any Subsidiaries to, without the express written
consent of Holders owning no less than 67% of the aggregate Stated Value of all
A Shares then outstanding: 

                            (i)
effect any merger, acquisition, sale, consolidation, reorganization and/or
similar transaction or a Change of Control (as defined in this Certificate),
(each, an “Event”) except any Event which upon the date of the
occurrence or closing of any Event, as the case may be, (i) each Holder of A
Shares then outstanding receives in exchange for each of their respective A
Shares, cash in an amount not less than two (2) times the then aggregate Stated
Value of each A Share outstanding immediately prior to the occurrence or closing
of such Event, plus all accrued, but unpaid interest and other payments owed to
the Holder by the Company and/or its Subsidiaries, or (ii) if an Event is
structured whereby each Holder of A Shares receives securities of a
non-affiliated, third-party entity, the common stock of such entity is listed on
a National Securities Exchange (as defined in the 1933 Act) and such common
stock for the twenty (20) consecutive Trading Days (as defined in this
Certificate) with the last Trading Day being the Trading Day prior to the
occurrence or closing of such Event has a daily market capitalization of no less
than $100 million; 

                            (ii)
decrease or increase the authorized size of the Company’s (and/or any of its
Subsidiaries’), Board of Directors (the “Board,” or the
“Board of Directors”), other than as expressly provided herein; or


                            (iii)
adopt, amend and/or supplement any stock option plan or similar plan (the
“SOP Plans”), except where the maximum number of shares of Common
Stock that may be acquired directly and/or indirectly upon exercise of stock
options issued under the SOP Plans, when aggregated with the maximum number of
shares of Common Stock that may be acquired directly and/or indirectly under all
other stock option plans outstanding as of the date of the Purchase Agreement
(including, but not limited to, stock options issued prior to the date hereof
under any SOP Plans, regardless of whether any such SOP Plans have terminated
and/or expired) does not exceed in the aggregate 20% of the issued and
outstanding Common Stock as of the date of this Certificate, until and including
the date three (3) years from the date of this Certificate. 

       2. STATED
VALUE. Each A Share shall have a stated value (the “Stated
Value”), equal to $1,000 (subject to adjustment as provided in this
Certificate). 

       3.
DIVIDENDS. 

              (a)
Accrual and Payment. Dividends on each A Share (the “A
Share Dividends”) shall be cumulative and accrue
daily from the date of issuance of each A Share (the “Original Issuance
Date”), whether or not earned or declared and whether or not there are
any profits, surplus, or other funds legally available for the payment of
dividends. Until paid, the right to receive A Share Dividends shall be payable in arrears
and shall be payable in any combination (except as limited by Section 3(c) hereof) of cash and/or A Shares on March 31, June 30,
September 30 and December 31 of each year (each, a “Dividend Payment
Date” and each period between and including two consecutive Dividend
Payment Dates, a “Dividend Period”),
commencing on June 30, 2012 (the “Initial Dividend Payment Date”),
except that if such Dividend Payment Date is not a Business Day (as defined
below), then the Dividend Payment Date will be the immediately following
Business Day. Each such dividend declared by the Board shall be paid to the
Holder. A Share Dividends in arrears for any past dividend period may be
declared by the Board and paid on the A Shares on any date fixed by the Board,
whether or not such date is a regular Dividend Payment Date, to the Holder. The
record date (the “Record Date”), shall be fixed in advance by the
Board or, to the extent not fixed, shall be the Business Day immediately
preceding the date such dividend is payable to the Holder. For purposes hereof,
a “Business Day” is any day that is not a Saturday, Sunday or a
day on which banks are required or permitted to be closed in the State of New
York. All accrued and unpaid dividends, if any, shall be mandatorily paid in
cash immediately prior to the earlier to occur of (i) a Liquidation (as defined
in this Certificate), (ii) a Mandatory Conversion (as defined in this
Certificate), or (iii) a Mandatory Redemption (as defined in this
Certificate).

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              (b)
Dividend Rate. The initial dividend rate on each A Share shall be eight
(8%) percent per A Share per annum on the Stated Value of each A Share for both
the period from the Original Issuance Date until the Initial Dividend Payment
Date, and, for each Dividend Period thereafter (the “Dividend
Rate”). The amount of dividends per A Share payable for each Dividend
Period or part thereof (the “Dividend Value”), shall equal the
product of (i) the Dividend Rate for such Dividend Period being determined
multiplied by (ii) a fraction of which (1) the numerator shall be the number of
days in the Dividend Period or part thereof (calculated by counting the first
day and last day thereof), on which such A Share was outstanding, and (2) the
denominator of which shall be 360, and, (iii) multiplying the result by the
Stated Value for an A Share. 

              (c)
PIK Dividend Payments. If all or any part of any A Share Dividend is
paid, at the election of the Company, in A Shares (“PIK Shares”),
the value of each share of PIK Share shall equal eighty-five (85%) percent of
the VWAP (as defined in this Certificate) for the ten (10) consecutive Trading
Days (as defined in this Certificate) with the last Trading Day being the
Trading Day immediately preceding the Trading Day representing the Dividend
Payment Date on which such PIK Shares are being issued as all or partial payment
of such A Share Dividend. Notwithstanding anything to the contrary provided
herein or elsewhere, unless all of the Equity Conditions (as defined in this
Certificate) are met by the Company immediately prior to the time such A Share
Dividends are paid, no A Share Dividends may be paid in PIK Shares (as defined
in this Certificate) without the express written consent of Holders owning no
less than 67% of the aggregate Stated Value of all A Shares then outstanding.
For purposes of this Certificate, the term "Equity Conditions"
means during the period in question, (i) the Company shall have honored all
Conversions (as defined in this Certificate) on or prior to the dates so
requested, if any, (ii) the Company shall have paid all liquidated damages,
interest and/or other amounts owing to each Holder in respect of the A Shares,
(iii) except for a six (6) month period commencing on the initial date of
issuance of any A Shares, all of the Conversion Shares (including, but not
limited to, those issuable upon conversion of PIK Shares) issuable pursuant to
the Transaction Documents (as defined in the Purchase Agreement), may be resold
pursuant to Rule 144 without any restrictions, including, but not limited
to, volume or manner-of-sale restrictions or current public information
requirements (except the limitation on current public information requirements
shall not apply for a twelve (12) month period commencing on the initial date of
issuance of any A Shares), as determined by counsel to the Company and set forth
in a written opinion letter to such effect, addressed and reasonably acceptable
to the affected Holders, (iv) the Common Stock is trading on a trading market
and/or quoted on any other trading medium and all of the Conversion Shares (as
defined in this Certificate) issuable pursuant to the Transaction Documents are
listed or quoted for trading on such market (and the Company believes, in good
faith, that trading of the Common Stock on such market will continue
uninterrupted for the foreseeable future), (v) there is a sufficient number of
authorized, but unissued and otherwise unreserved, shares of Common Stock for
the issuance of all of the shares then issuable pursuant to the Transaction
Documents, and (vi) no Liquidation (as defined in this Certificate) or
Redemption Event has occurred and/or may reasonably be expected to occur in the
foreseeable future. 

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              (d)
Other Dividends. In addition to the A Share Dividends, Holders of the A
Shares shall, as Holders of A Shares, be entitled to such dividends paid and
distributions made to the holders of Common Stock to the same extent as if each
Holder of A Shares then outstanding had converted the A Shares into Common Stock
(without regard to any limitations on conversion herein or elsewhere) and had
held such shares of Common Stock on the record date for such dividends and
distributions. Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock. Nothing in
this Section 3(d), however, shall be construed as
permitting the Company to pay any dividends and/or distributions otherwise
prohibited from being paid. 

       4. CONVERSION
OF A SHARES. The A Shares shall be convertible into shares of Common
Stock (“Conversion Shares”), on the terms and subject to the
conditions set forth in this Section 4. 

              (a)
Optional Conversion. Subject to any express limitations set forth
elsewhere in this Certificate, at any time or times on or after the Original
Issuance Date, any Holder of A Shares shall be entitled to convert all or a
portion of such Holder’s A Shares into validly issued, fully paid and
non-assessable shares of Common Stock, in accordance with this Section
4. All Conversion Shares issuable upon the conversion of A Shares shall
be aggregated for purposes of determining whether the conversion would result in
the issuance of a fractional share of Common Stock. If, after the aforementioned
aggregation, the issuance would result in the issuance of a fractional share of
Common Stock, the Company shall, in lieu of issuing such fractional share, pay
to the Holder the Fair Market Value (as defined in this Certificate) thereof in
cash. The Company shall pay any and all taxes that may be payable with respect
to the issuance and delivery of the Conversion Shares upon conversion of A
Shares. The mechanics for conversion pursuant to this Section 4(a)
shall be as provided in Section 4(c) below. 

              (b)
Determination as to Number of Conversion Shares. Each A Share shall be
convertible into such number of Conversion Shares equal to the quotient obtained
by dividing (i) the Stated Value of such A Share being converted by (ii) the
then Conversion Price. For the purposes of this provision, the initial
Conversion Price of each A Share shall be the lower of (i) $0.05, (ii)
eighty-five (85%) percent of the VWAP for the twenty (20) consecutive Trading
Days with the last Trading Day being the Trading Day immediately
prior to the date that such A Share was sold in the Offering, and (iii)
eighty-five (85%) percent of the VWAP for the ten (10) consecutive Trading Days
with the last Trading Day being the Trading Day immediately prior to the date
that such A Share was sold in the Offering. Because the A Shares issued in the
Offering may be issued at more than one closing of the Offering (each a
“Closing,” and, collectively, the “Closings”), the
Conversion Price of all A Shares may not necessarily be the same, as the initial
Conversion Price is determined at each Closing at which A Shares are issued.
Such initial Conversion Prices shall be subject to the adjustments described in Section 5 hereafter. 

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       For the purposes of
this Certificate, “VWAP” means the volume weighted average of the
VWADP (defined hereafter) of the Common Stock for the applicable number of
consecutive Trading Days as provided elsewhere herein (the “Trading
Period”), determined as follows: 

                     (1)
The percentage of the total trading volume for the entire Trading Period being
so calculated for each Trading Day, during the applicable Trading Period, by
dividing the number of shares traded on each such Trading Day by the total
trading volume for the entire Trading Period (the “Trading
Day Volume Percentage”); 

                     (2)
Next the Trading Day Volume Percentage for each Trading Day is multiplied by the
applicable VWADP for each such Trading Day resulting in the Trading Day Weighted
Daily Price (the “TDWDP”); and 

                     (3)
The VWAP is then computed by obtaining the sum of the TDWDP for all of the
Trading Days during the Trading Period, provided that if the Trading Day Volume
Percentage for any Trading Day in the Trading Period is zero, then the VWAP will
instead be equal to the average VWADP over the Trading Period. 

                            (A)“VWADP”
shall mean the price determined by the first of the following clauses which
applies: (i) the daily volume weighted average of the Common Stock for such date
on the OTC Market on which the Common Stock is then listed or quoted for trading
as reported by Bloomberg (based on a Trading Day) from 9:30 a.m. (New York City
time) to 4:00 p.m. (New York City time); (ii) the average of the highest bid
price and the lowest ask price of any market makers for such security as
reported in the OTC Market on which the Common Stock is then listed or quoted
for trading as reported by Bloomberg (based on a Trading Day) from 9:30 a.m.
(New York City time) to 4:00 p.m. (New York City time); or (iii) the value of
such security as mutually agreed upon in good faith by Holders owning no less
than 67% of the aggregate Stated Value of all A Shares then outstanding and the
Company, provided that if such agreement cannot be made no later than
five (5) Trading Days following the date such VWADP must be determined as
provided herein, the VWADP shall be determined in good faith by Holders owning
no less than 67% of the aggregate Stated Value of all A Shares then outstanding.
For purposes of determining VWADP, the Company shall rely on the information
provided by the Holders, which absent manifest error shall be binding. Any claim
of manifest error by the Company must be made no later than five (5) Trading
Days after VWADP is determined by the Holders and provided to the Company. 

                            (B)
“Trading Day” means a day on which the Common Stock is eligible
for quotation on the OTC Market, or, if the Common Stock is not then eligible
for quotation on the OTC Market then any day that the Common Stock
is traded or eligible for quotation on any other United States commonly
acceptable trading medium or market place where the Common Stock is then traded
or eligible for quotation. 

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              (c)
Mechanics of Conversion. 

                     (1)
Optional Conversion. To convert A Shares into Conversion Shares (a
“Conversion”) pursuant to Section 4(a), the Holder
thereof shall transmit by hand, facsimile or email (or otherwise deliver), for
receipt on or prior to 11:59 p.m., New York time on such date, a copy of a fully
and accurately completed executed notice of conversion in the form attached
hereto as Exhibit A (the “Conversion Notice”) to the
Company. The date the A Shares shall be deemed converted shall be the date a
notice is deemed given pursuant to Section 18(a) of this
Certificate (the “Conversion Date”). If, but only if, all A Shares
then owned by a Holder are being converted into Conversion Shares, a Holder
shall deliver to the Company certificates representing the A Shares to be
converted (the “A Share Certificates”), but in no event shall A
Share Certificates be required to be delivered to the Company to effectuate a
Conversion, provided that all certificates representing A Shares shall
bear a legend stating that terms of the A Shares shall be governed by the
Certificate of Designation, Preferences and Rights of the Series A Convertible
Redeemable Preferred Stock of Viscount Systems, Inc. The calculations and
entries set forth on a Conversion Notice shall control in the absence of
manifest or mathematical error. On or before the third (3rd) Trading
Day following the Conversion Date (the “Share
Delivery Date”), the Company shall (x) issue and deliver to
the address as specified in the Conversion Notice, a certificate, registered in
the name of the Holder or its designee, for the number of Conversion Shares to
which the holder shall be entitled, or (y) provided that the Company’s transfer
agent (the “Transfer Agent”) is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of Conversion
Shares to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission system.
If a Holder elects to deliver an A Share Certificate, and the number of A Shares
represented by the A Share Certificate(s) submitted, if submitted, for
conversion is greater than the number of A Shares being converted, then the
Company shall, as soon as practicable after receipt of the A Share
Certificate(s) (but in no event later than five (5) Trading Days), cause to be
issued and delivered to the Holder a new A Share Certificate representing the
number of A Shares not converted. The person or persons entitled to receive the
Conversion Shares issuable upon a Conversion shall be treated for all purposes
as the record holder or holders of such Conversion Shares on the date such
Conversion Shares are issued. Each A Share shall be converted into such number
of Conversion Shares, as provided in Section 4(b) hereof. 

              (d)
Failure to Deliver Certificates. If, in the case of any Conversion
Notice, the required Common Stock certificate or certificates are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the
Holder shall be entitled to elect by written notice to the Company at any time,
to rescind such conversion, in which event the Company shall promptly return to
the Holder any original A Share certificate delivered to the Company and the
Holder shall promptly return to the Company any Common Stock certificates issued
to such Holder pursuant to the rescinding Conversion Notice. 

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              (e)
Obligation Absolute; Partial Liquidated Damages. The Company’s
obligations to issue and delivery the Conversion Shares upon conversion of A
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by a Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by such Holder or any other Person of any obligation to the Corporation
or any violation or alleged violation of law by such Holder or any other person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to such Holder in connection with the issuance of such
Conversion Shares. In the event a Holder shall elect to convert any or all of
the Stated Value of such Holder’s A Shares, the Company may not refuse
conversion based on any claim that such Holder or anyone associated or
affiliated with such Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder,
expressly restraining and/or enjoining conversion of all or part of the A Shares
of such Holder shall have been sought and obtained by the Company, and the
Company posts a surety bond for the benefit of such Holder in the amount of 200%
of the Stated Value of A Shares which are subject to the injunction, which bond
shall remain in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to such Holder to
the extend it obtains judgment. In the absence of such injunction, the Company
shall issue Conversion Shares and, if applicable, cash, by the Share Delivery
Date. If the Company fails to deliver to a Holder such certificate or
certificates by the Share Delivery Date applicable to such conversion, or in the
event of a dispute, fails to post the surety bond in accordance with this
paragraph, the Company shall pay to such Holder, in cash, as liquidated damages
and not as a penalty, for each $10,000 of Stated Value being converted, $200 per
Trading Day commencing the day after the Share Delivery Date (increasing to $400
per Trading Day on the fifth (5th) Trading Day after such damages
begin to accrue) for each Trading Day after such Share Delivery Date until the
earlier of the date such certificates are delivered or Holder rescinds such
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages
or declare a Redemption Event for the Company’s failure to deliver the required
amount of Conversion Shares and such Holder shall have the right to pursue all
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief without
the need by any Holder to post any bond which the Company hereby waives such
requirement. The exercise of any such rights shall not prohibit a Holder from
seeking to enforce damages pursuant to any other Section hereof or under
applicable law. 

              (f)
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if
the Company fails for any reason or no reason to deliver to a Holder the
applicable certificate or certificates by the Share Delivery Date and if after
such Share Delivery Date such Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by such Holder (or a deemed sale) of the Conversion Shares which such
Holder was entitled to receive upon the conversion relating to such Share
Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash
to such Holder (in addition to any other remedies available to or elected by
such Holder) the amount, if any, by which (x) such Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitle
to receive from the conversion at issue multiplied by (2) the actual sale price
at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of such Holder,
either reissue (if surrendered) A Shares in Stated Amount equal to the Stated
Value of A Shares submitted for conversion (in which case, such conversion shall
be deemed rescinded) or deliver to such Holder the number of shares of Common
Stock that would have been issued if the Company delivered the requires amount
of Conversion Shares by the Share Delivery Date. For example, if a Holder
purchases shares of Common Stock having total purchase price of $11,000 to cover
a Buy-In with respect to an attempted conversion of A Shares with respect to
which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) above, the Company shall be required to pay such Holder $1,000.
The Holder shall provide the Company written notice indicating the amounts
payable to such Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely delivery
certificates representing shares of Common Stock upon conversion of the A Shares
as required pursuant to the terms hereof. 

10




              (g)
Status of Converted A Shares. In the event any A Shares shall be
converted pursuant to this Certificate, the A Shares so converted shall be
canceled and shall not be reissued as A Shares. 

              (h)
Mandatory Conversion. The Company shall have no direct and/or indirect
right to force and/or require a conversion of any A Shares, other than as
expressly provided in this subsection (h). Notwithstanding the first sentence of
this subsection (h), as long as any A Shares are issued and outstanding, if (A)
no Liquidation and/or Redemption Event has occurred and/or may reasonably be
expected to occur in the foreseeable future, (B) the VWAP for the thirty (30)
consecutive Trading Days with the last Trading Day being the Trading Day
immediately prior to the Trading Day that the Notice of Mandatory Conversion (as
defined in this Certificate), is actually sent to Holders, exceeds the product
of (1) the then Conversion Price, multiplied by three (3) times; (C) the daily
trading volume for each Trading Day in such thirty (30) consecutive Trading Day
period is not less than 500,000 shares of Common Stock (with each purchase and
sale of a share of Common Stock counted as one (1) share of Common Stock traded)
on the OTC Market (as defined in this Certificate) or other applicable principal
trading market for such security as reported by Bloomberg, and (D) a
registration statement covering the resale of all Conversion Shares (including,
but not limited to, those issuable upon conversion of PIK Shares) is effective
under the 1933 Act (and the Company has no reason to believe it will not stay
effective without interruption for the foreseeable future), or such Conversion
Shares are eligible for sale under Rule 144 without any limitations and/or
restrictions, including, but not limited to, volume or manner-of-sale
restrictions or current public information requirements, as demonstrated by a
legal opinion of Company counsel addressed to the affected Holders and the
Company’s transfer agent and such transfer agent accepts such legal opinion (and
the Company has no reason to believe sales of Conversion Shares under Rule 144
without any limitations and/or restrictions will not continue to be permitted
without interruption for the foreseeable future), then the Company shall have
the right to convert (a “Mandatory Conversion”) all then
outstanding A Shares into Conversion Shares by providing each Holder of A Shares
with twenty (20) Trading Days prior written notice (“Notice
of Mandatory Conversion”) of such Mandatory
Conversion pursuant to this subsection (h), provided, however,
that notwithstanding anything to the contrary provided herein or elsewhere, if,
at any time prior to the Trading Day that the Mandatory Conversion is to occur
(a “Mandatory Conversion Date”), as set forth in the Notice of
Mandatory Conversion sent to Holders relating such particular Mandatory
Conversion, any event set forth in (A) of this subsection (h) has occurred or
any of conditions (B), (C) or (D) of this subsection (h) are not met for each
Trading Day during the thirty (30) consecutive Trading Day period with the last
Trading Day being the Trading Day immediately prior to such Mandatory Conversion
Date, then the Notice of Mandatory Conversion shall be null and void, ab initio,
and no Mandatory Conversion shall occur. 

11




       5.
ANTI-DILUTION PROVISIONS. The Conversion Price in effect at
any time and the number and kind of securities issuable upon conversion of the A
Shares shall be subject to adjustment from time to time upon the happening of
the events as follows: 

              (a)
Adjustment for Dividends in Other Stock and Property Reclassifications.
In case at any time, or from time to time, the holders of the Common Stock (or
any shares of stock or other securities at the time receivable upon any
conversion of the A Shares) shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, 

                     (i)
other or additional stock or other securities or property (other than cash) by
way of dividend, 

                     (ii)
any cash or other property paid or payable out of any source other than retained
earnings (determined in accordance with generally accepted accounting
principles), or 

                     (iii)
other or additional stock or other securities or property (including cash) by
way of stock-split, spin-off, reclassification, combination of shares or similar
corporate rearrangement (other than (x) additional shares of Common Stock or any
other stock or securities into which such Common Stock shall have been changed,
(y) any other stock or securities convertible into or exchangeable for such
Common Stock or such other stock or securities or (z) any stock purchase rights,
issued as a stock dividend or stock-split, adjustments in respect of which shall
be covered by the terms of Section 5(c) or
Section 5(d), then and in each such case, a Holder, upon any
conversion of A Shares, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
clauses (i) and (ii) above) which such Holder would have been entitled to
receive had such Holder been the holder of record, on the date of any such
issuances described in clauses (i), (ii) or this clause (iii), of the number of
shares of Common Stock into which the A Shares are being converted, giving
effect to all adjustments called for during such period by Section
5(a) and Section 5(b). 

              (b)
Adjustment for Reorganization, Consolidation and Merger. In case of any
reorganization of the Company (or any other corporation the stock or other
securities of which are at the time receivable on the conversion of the A
Shares) after the Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into
another corporation or entity or convey all or substantially all its assets to
another corporation or entity (any such reorganization or other event
hereafter being referred to as a “Reorganization”), then and in
each such case the A Shares, upon conversion, as and at any time after the
consummation of such Reorganization, shall be converted into, in lieu of the
stock or other securities and property into which the A Shares would have been
convertible prior to such Reorganization, such stock or other securities or
property to which the A Shares would have converted if they had been converted
immediately prior to any such Reorganization, subject to further adjustment as
provided in Sections 5(a), Section 5(c), and Section 5(d), in each such case. 

12




              (c)
Adjustment for Certain Dividends and Distributions. If the Company at any
time, or from time to time, makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event, the
Conversion Price then in effect shall be decreased as of the time of such
issuance or, in the event such record date is fixed, as of the close of business
on such record date, by multiplying the Conversion Price then in effect by a
fraction (A) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date, and (B) the denominator of which
shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date as the case may be, plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
Conversion Price shall be recomputed accordingly as of the close of business on
such record date, and thereafter the Conversion Price shall be adjusted pursuant
to this Section 5(c) as of the time of actual payment of such
dividends or distributions. 

              (d)
Stock Split and Reverse Stock Split. If the Company at any time, or from
time to time, effects a stock split or subdivision of the outstanding Common
Stock, the Conversion Price then in effect immediately before that stock split
or subdivision shall be proportionately reduced. If the Company at any time, or
from time to time, effects a reverse stock split or combines the outstanding
shares of Common Stock into a smaller number of shares, the Conversion Price
then in effect immediately before that reverse stock split or combination shall
be proportionately increased. Each adjustment under this Section
5(d) shall become effective at the close of business on the date the
stock split, subdivision, reverse stock split or combination becomes effective.


              (e)
Sale and/or Issuance of Convertible Securities and/or Additional Shares
of Common Stock below Conversion Price. 

       Subject to the
exceptions set forth in Section 5(e)(iv), commencing on the date
of the initial Closing of the Offering and terminating on the date three (3)
years from the date of the Final Closing if the Company at any time, and from
time to time, issues or sells, or is deemed by the provisions of this
Section 5(e) to have issued or sold, Additional Shares of Common
Stock (as defined in this Certificate), for an Effective Price (as defined in
this Certificate) less than the then existing Conversion Price, then and in each
such case, the then existing Conversion Price shall be reduced, as of the
opening of the Trading Day of each such issue or sale, and/or deemed issue or sale, concurrently with such issuance and/or deemed
issuance of Additional Shares of Common Stock (a “Diluting
Issuance”), to a price equal to the Effective Price.

13




                     (i)
For the purpose of making any adjustment required under this Section
5(e), the consideration received by the Company for any issue or sale of
securities shall (i) to the extent it consists of cash be computed at the amount
of cash received by the Company, (ii) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board, (iii) if Additional Shares of Common Stock, Convertible
Securities (as defined in this Certificate) or rights or options to purchase
either Additional Shares of Common Stock or Convertible Securities are issued or
sold together with other stock or securities or other assets of the Company for
a consideration which covers both, be computed as the portion of the
consideration so received that may be reasonably determined in good faith by the
Board to be allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options, and (iv) be computed after reduction for all
expenses payable by the Company in connection with such issue or sale. 

                     (ii)
For the purpose of the adjustment required under this Section
5(e), if the Company issues or sells (or is deemed to have done so), any
rights, warrants or options for the purchase of the securities convertible,
exercisable or exchangeable for, Additional Shares of Common Stock (all such
convertible, exercisable or exchangeable stock or securities being hereinafter
referred to as “Convertible Securities”) and if the Effective
Price of such Additional Shares of Common Stock is less than the Conversion
Price then in effect, then the Company shall be deemed to have issued at the
time of the issuance (or deemed issuance), of such rights, warrants, options
and/or other Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise, conversion or exchange thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Company for the
issuance (or deemed issuance) of such rights, warrants, options and/or
Convertible Securities, plus, in the case of such rights, warrants or options,
the minimum amounts of consideration, if any, payable to the Company upon the
exercise of such rights, warrants and/or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion, exercise or exchange
thereof.

                     (iii)
For the purpose of the adjustment required under this Section
5(e), if the Company issues or sells (or is deemed to have issued or
sold) any rights, warrants and/or options for the purchase of Convertible
Securities and if the Effective Price of the Additional Shares of Common Stock
underlying such Convertible Securities is less than the Conversion Price then in
effect, then in each such case the Company shall be deemed to have issued at the
time of the issuance of such rights, warrants, options and/or other convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
conversion, exercise or exchange of the total amount of Convertible Securities
covered by such rights, warrants and/or options and to have received as
consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by the Company for
the issuance of such rights, warrants, options, and/or other Convertible
Securities plus the minimum amounts of consideration, if any, payable to the
Company upon the exercise of such rights, warrants, options and/or Convertible
Securities and plus the minimum amount of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion, exercise or exchange of such Convertible
Securities.

14




                     (iv)
For purposes of this Certificate, the term “Additional Shares
of Common Stock” means all securities issued (or
deemed issued) by the Company at any time, and from time to time, on or after
the Original Issuance Date, whether or not subsequently reacquired or retired by
the Company other than (A) shares of Common Stock issuable upon exercise of any
warrants issued by the Company to purchasers of the A Shares in the Offering,
(B) shares of Common Stock issuable upon conversion of the A Shares, (C) shares
of Common Stock issuable as dividends on and/or upon conversion of the A Shares,
(D) shares of Common Stock issuable upon exercise of warrants and/or options
outstanding prior to the Original Issuance Date, (E) shares of Common Stock
issued pursuant to any Employee Stock Option Plan approved by the Board and the
shareholders of the Company and (F) shares of Common Stock issued as
consideration for a strategic merger or acquisition or as part of a traditional
reorganization, provided all of such transactions are with non-affiliated third
parties and are approved by the Board.

                     (v)
For purposes of this Certificate, the term “Effective Price” of
Additional Shares of Common Stock means the quotient determined by dividing the
total number of Additional Shares of Common Stock issued or sold, or deemed to
have been issued or sold by the Company under this Section 5(e),
into the aggregate consideration received, or deemed to have been received, by
the Company for such issue under this Section 5(e), for such
Additional Shares of Common Stock.

                     (vi)
Reductions in Price of Outstanding Securities. Other than a reduction
pursuant to its applicable anti-dilution provisions, any reduction in the
conversion price of any Convertible Security, whether outstanding on the
Original Issuance Date or thereafter, or the subscription price of any option,
warrant or right to purchase Common Stock or any Convertible Security (whether
such option, warrant or right or other Convertible Security is outstanding on
the Original Issuance Date or thereafter), to an Effective Price less than the
Fair Market Value (as defined below) or the then Conversion Price, shall be
deemed to be an issuance of such Convertible Security and the issuance of all
such options, warrants, rights and/or other Convertible Securities or
subscription rights, and the provisions of Sections 5(e) shall
apply thereto mutatis mutandis. 

                     (vii)
For purposes of this Certificate, the term “Fair Market Value”
means, as of any date: (i) if shares of the Common Stock are listed on a
national securities exchange, the average of the closing prices as reported for
composite transactions during the ten (10) consecutive Trading Days preceding
the Trading Day immediately prior to such date or, if no sale occurred on a
Trading Day, then the average between the highest closing bid and lowest closing
ask prices on such exchange on such Trading Day; (ii) if shares of the Common
Stock are not so listed but are traded on the Nasdaq Capital Market
(“NCM”), the average of the closing prices as reported on the NCM
during the ten (10) consecutive Trading Days preceding the Trading Day
immediately prior to such date or, if no sale occurred on a Trading Day, then
the mean between the highest bid and lowest ask prices as of the close of
business on such Trading Day, as reported on the NCM; or if applicable, the
Nasdaq Global Market (“NGM”), or if not then included for quotation on the NGM or NCM, the average of
the highest reported bid and lowest reported ask prices as reported by the
OTCBB, the OTC Markets Group, or any successor thereto as the case may be (the
“OTC Market”); or (iii) if the shares of the Common Stock are not
then publicly traded, the fair market price of the Common Stock as determined in
good faith by the Holders owning no less than 50.01% of the Stated Value of the
then issued and outstanding A Shares. 

15




                     (viii)
Certain Other Anti-Dilution Provisions. In case any shares of stock or
other securities of the Company, other than Common Stock, shall at the time
and/or from time to time, be receivable upon conversion of the A Shares, and in
case any additional shares of such stock or any additional such securities (or
any stock or other securities convertible and/or exercisable into or
exchangeable for any such stock or securities) shall be issued or sold for a
consideration per share such as to dilute the conversion rights of the A Shares,
then and in each such case, the Conversion Price shall forthwith be adjusted,
substantially in the manner provided for above in this Section
5(e), so as to protect the Holders of the A Shares against the effect of
such dilution. 

                     (ix)
Certain Record Dates. In case the Company shall take a record of the
holders of shares of its stock of any class for the purpose of entitling them
(a) to receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the Additional Shares of Common Stock issued
or sold or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the granting
of such rights of subscription, purchase or other acquisition, as the case may
be. 

                     (x)
No Adjustment in Certain Circumstances. No adjustment in the Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least $.005 in such price; provided, however, that
any adjustments which by reason of this Section 5 are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. 

                     (xi)
No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company but will at all times in good
faith assist in the carrying out of all the provisions of this Section
5 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the A
Shares against impairment. 

                     (xii)
Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Section 5,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Holder of A
Shares a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of any Holder of A Shares,
furnish or cause to be furnished to such Holder a like
certificate setting forth (a) such adjustments and readjustments, (b) Conversion
Price at the time in effect, and (c) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of the A Shares. 

16




                     (xiii)
Stock Purchase Rights. If at any time or from time to time, the Company
grants or issues to all the record holders of the Common Stock any options,
warrants or rights (collectively, “Stock Purchase Rights”)
entitling any holder of Common Stock to purchase Common Stock or any security
convertible into or exchangeable for Common Stock or to purchase any other stock
or securities of the Company, the holders of A Shares shall be entitled to
acquire, upon the terms applicable to such Stock Purchase Rights, the aggregate
Stock Purchase Rights which such holders of A Shares could have acquired if they
had been the record holder of the maximum number of shares of Common Stock
issuable upon conversion of their A Shares on both (x) the record date for such
grant or issuance of such Stock Purchase Rights, and (y) the date of the grant
or issuance of such Stock Purchase Rights. 

              (f)
Fundamental Transaction.

       If, at any time while
any A Shares are outstanding, (A) the Company effects any merger, means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind,
consolidation or similar transaction of the Company with or into another Person,
(B) the Company effects any sale of all or substantially all of its assets in
one or a series of transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Corporation effects any
reclassification of the Common Stock or any share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other securities,
cash or property (each a “Fundamental Transaction”), then, upon
any subsequent conversion of the A Share, the Holder shall have the right to
receive, for each share of Common Stock that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction,
the number of shares of Common Stock of the successor or acquiring Person or of
the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a
result of such merger, consolidation, or disposition of assets or other similar
transaction by a holder of the number of shares of Common Stock for which the A
Shares are convertible immediately prior to such event. For purposes of any such
conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion Conversion Price among
the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of the A Shares
following such Fundamental Transaction. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving Person to comply with the provisions of this
Section 5(f) and insuring that the A Shares (or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. 

17




       6. RESERVATION
OF AUTHORIZED SHARES. The Company shall, so long as any of the A Shares
are outstanding, take all action necessary to reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the A Shares, such number of shares of Common Stock as shall
equal at all times 200% of the number of Conversion Shares the A Shares are at
any such time convertible into. 

       7. LIQUIDATION,
DISSOLUTION, WINDING-UP.

              In
the event of any Liquidation (as defined below) of the Company and/or any of its
Subsidiaries, Holders of A Shares, (other than any Holder that at any time prior
to completion of the Liquidation has delivered an Initial Redemption Request
and/or Subsequent Redemption Request in accordance with Section 11
of this Certificate and has not prior to the date the full amount of the
Liquidation Preference (as defined in this Certificate) is paid to such Holder
withdrawn such Initial Redemption Request and/or Subsequent Redemption Request),
shall be entitled to receive out of the assets of the Company legally available
for distribution therefrom (the “Liquidation Funds”), before any
amount shall be paid to the holders of any of the capital stock of the Company
of any class junior and/or pari passu in rank to the A Shares in respect of the
preferences as to the distributions and payments on the liquidation, dissolution
and winding up of the Company, an amount in respect of each A Share held by them
equal to the product of (i) 125%, multiplied by (ii) the sum of (a) the then
Stated Value of the A Share, plus (b) all dividends, if any, which have accrued
and/or are payable pursuant hereto in respect of the A Share, but have not been
paid and received by the Holder of the particular A Share, plus (c) all other
payments of any kind and for any reason owed to the Holder of the particular A
Share pursuant to this Certificate, up to and including the date full payment is
tendered to the Holder of such A Shares with respect to such Liquidation
(collectively, the “Liquidation Preference”); provided
that, if the Liquidation Funds are insufficient to pay, issue or deliver the
full amount of the Liquidation Preference to all of the Holders of A Shares,
then each Holder of A Shares shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such Holder as a
liquidation preference, as a percentage of the full amount of Liquidation Funds
payable to all Holders of A Shares. No Holder of A Shares shall be entitled to
receive any amounts with respect thereto upon any Liquidation other than the
amounts provided for in this Certificate; provided that each Holder of A
Shares shall be entitled to all amounts previously accrued and/or unpaid with
respect to amounts owed under this Certificate and/or the Transaction Documents.
The form of consideration in which the Liquidation Preference is to be paid to
Holders of A Shares as provided in this Section 7 shall be (i) in
immediately available funds to the maximum extent the Company is legally
permitted to pay such immediately available funds, and (ii) the balance owed, if
any, in the form of consideration received by the Company or the other holders
of the Company’s capital stock, as the case may be. Notwithstanding anything to
the contrary provided herein or elsewhere, at any time prior to the date a
Holder receives its full Liquidation Preference, a Holder shall be entitled to
convert such Holder’s A Shares. 

18




       “Liquidation”
means any (i) any liquidation (whether it’s a Cash-Out Liquidation, or a
Like-Kind Liquidation), dissolution or winding up of the Company, whether
voluntary or involuntary or (ii) any Equity Merger. 

       “Cash-Out
Liquidation” means (i) a change in the voting control of the Company
such that any one person, entity or “group” (as contemplated by Rule 13d-5(b)(1)
under the 1934 Act) acquires from the Company in one or more, including a series
of, transactions the right to cast greater than 50% of votes eligible to be cast
by all holders of capital stock of the Company in the election of directors of
the Company, provided that such transaction is approved by the Board of
Directors of the Company or (ii) any merger or consolidation of the Company with
or into another entity or any sale of all or substantially all of the assets of
the Company provided that such merger, consolidation or sale is not an Equity
Merger. 

       “Equity
Merger” shall mean any merger or consolidation of the Company with or
into another entity and/or the sale of all or substantially all of the assets of
the Company, provided that the consideration received by the Company or its
shareholders in such transaction consists solely of equity securities
(disregarding any payments for fractional shares). 

       “Like-Kind
Liquidation” shall include any merger or consolidation of the Company
with or into another entity and the sale of all or substantially all of the
assets of the Company, provided that such transaction is approved by the Board
of Directors of the Company.

       8. RANKING OF A
SHARES. All shares of Common Stock shall be of junior rank to all A
Shares in all respects. The rights of the shares of Common Stock shall be
subject to the terms, preferences and relative rights of the A Shares. The
Company shall not (directly and/or indirectly) create, authorize and/or issue
any securities or any other class or series of capital stock or securities
ranking pari passu and/or senior in any respect to the A Shares, or issue any
indebtedness convertible into, exchangeable or redeemable for, any security
ranking senior or pari passu in any respect to the A Shares (or agree and/or
contract to do same), without the express written consent of holders owning no
less than 67% of the aggregate Stated Value of all of the then issued and
outstanding A Shares. 

       9. LOST OR
STOLEN CERTIFICATES. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
A Share Certificate representing the A Shares, and, in the case of loss, theft
or destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and
cancellation of the A Share Certificate, the Company shall execute and deliver a
new A Share Certificate of like tenor and date.

       10. TRANSFER OF
A SHARES, ETC. Subject to compliance with this Certificate, and all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company), the A Shares and all rights therein (including any registration
rights for the resale of the Conversion Shares), may be transferred or assigned
in whole or in part, provided, however, that if a transfer of any
A Shares is to a direct competitor of the Company, the Company must consent in
writing to such transfer, which consent shall not be unreasonably withheld. 

19




       11. HOLDERS’
RIGHT TO REQUIRE REDEMPTION. 

              (a)
If at any time and from time to time after the Original Issuance Date (as
defined in this Certificate), (i) the Company and/or any of its Subsidiaries are
in default, or would be in default with the passage of time, on any material
contract, securities, indebtedness, this Certificate, their respective Articles
of Incorporation and/or By-laws and/or other documents; (ii) the Common Stock is
no longer eligible for quotation on the OTC Market, (iii) the Company is late
filing with the SEC (A) any annual or quarterly report on Form 10-K or Form 10-Q
(collectively, “Annual and Quarterly Reports”) required by it to
be filed with the SEC (which shall not be deemed late if filed within any
extended filing period permitted under Rule 12b-25), or (B) any reports,
including Annual and Quarterly Reports, required by it to be filed with the SEC
at least three (3) times during any two (2) year period; (iv) a certificate
representing Conversion Shares is delivered either (A) after a Share Delivery
Date and before or on the date that is eight (8) Trading Days from such Share
Delivery Date on at least three (3) occasions, or (B) after eight (8) Trading
Days from any Share Delivery Date; (v) any payment due to a Holder by the
Company is not made; (vi) there is any material breach in any Transaction
Document; and/or (vii) a Change of Control occurs that does not constitute a
Liquidation; (each, a “Redemption Event”), and after such
Redemption Event, the Company receives no later than sixty (60) days after the
facts giving rise to the Redemption Event first become actually known to Holders
of A Shares owning not less than ten (10%) percent of the aggregate Stated Value
of all A Shares then outstanding, a written notice of the Redemption Event from
Holders of A Shares owning not less than ten (10%) percent of the aggregate
Stated Value of all A Shares then outstanding (the “Initial Redemption
Request”), then the Company shall no later than ten (10) days after the
date of the Initial Redemption Request redeem (a “Mandatory
Redemption”) all of the A Shares requested to be redeemed in the Initial
Redemption Request by paying each such Holder of A Shares in immediately
available funds, such amount of funds for each A Share being redeemed as shall
equal (the “Redemption Price”) the product of, (i) 150%,
multiplied by (ii) the sum of (A) the then Stated Value of the A Shares being
redeemed, plus (B) all dividends and/or other payments due by the Company to a
Holder, if any, which have accrued or are payable pursuant to this Certificate,
but have not been paid through and including the date the Redemption Price is
actually received by the Holder. If the Redemption Price is not received in
immediately available funds by a Holder of A Shares, then in addition to any
other rights, remedies, and/or actions Holders of A Shares requesting Mandatory
Redemption may have in law, equity and/or pursuant to any Transaction Document,
the Redemption Price shall automatically be increased by the lesser of (i) two
(2%) percent for each thirty (30) day period during which a Holder has not
received the Redemption Price in immediately available funds (pro-rata for any
partial thirty (30) day period), and (ii) the maximum rate permitted by
applicable law. 

              (b)
As soon as reasonably possible, but in no event later than ten (10) days after
receipt by the Company of the Initial Redemption Request, the Company shall
mail, first class mail, postage prepaid, written notice (the “Notice of
Redemption”) to each Holder of record (at the close of business on the
Trading Day preceding the day on which notice is given) of A Shares at the
address last shown on the records of the Company for such Holder or given by the
Holder to the Company, for the purpose of notifying such Holder of the Mandatory
Redemption effected or to be effected, whether or not such Holder has requested
Mandatory Redemption of any A Shares owned by such Holder in the Initial
Redemption Request, which Notice of Redemption shall specify the Redemption
Price, clearly disclose how such Redemption Price paid or to be paid to such Holder (including a
Holder that requested Mandatory Redemption in the Initial Redemption Request)
was calculated, a date (the “Redemption Date”) no later than sixty
(60) days after the mailing of the Notice of Redemption on which any Holder of A
Shares can have its A Shares redeemed, and the place at which the Redemption
Price may be obtained, which shall be the principal offices of the Company or
such other place as shall be mutually agreeable to the Company and any such
Holder. The Notice of Redemption shall call upon each Holder of A Shares whose A
Shares such Holder(s) has requested the Company to redeem, to surrender to the
Company, in the manner and at the place designated, such Holder’s certificate or
certificates representing the A Shares to be redeemed, but the failure to so
deliver any such certificate shall not affect any of the Company’s obligations
pursuant to this Section 11. Each Holder of A Shares shall have
the right upon written notice (a “Subsequent Redemption Request”)
to the Company to require the Company to effect a Mandatory Redemption of any A
Shares then held by such Holder that such Holder has not requested to be
redeemed in the Initial Redemption Request, provided that if, for any
reason, a Holder does not actually receive the Notice of Redemption fifteen (15)
days prior to the Redemption Date, then upon timely submission of a Subsequent
Redemption Request to the Company after the Redemption Date, the Company shall
effect a Mandatory Redemption of the A Shares requested to be redeemed in such
Subsequent Redemption Request within ten (10) days from the date of such
Subsequent Redemption Request. 

20




              (c)
On each Redemption Date, the Company shall pay the Redemption Price to each
Holder requesting redemption in immediately available funds to the order of the
person whose name appears on the certificate or certificates of the A Shares to
be redeemed, and thereupon each surrendered certificate shall be cancelled, and
the Holder will cease to have any rights as a holder of the A Shares so
redeemed.

              (d)
Notwithstanding anything to the contrary provided herein or elsewhere, the
Company shall have no direct and/or indirect right to redeem the A Shares. 

              (e)
For purposes of this Certificate, the term “Change of Control”
means the occurrence after the date hereof of any of (i) an acquisition after
the date hereof by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) promulgated under the 1934 Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 50% of the voting securities of the
Company (other than by means of conversion of A Shares and/or exercise of any
warrants issued in the Offering (the “Warrants”), (ii) the Company
merges into or consolidates with any other Person (as defined), or any Person
merges into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to such
transaction own less than 50% of the aggregate voting power of the Corporation
or the successor entity of such transaction, (iii) the Company sells or
transfers all or substantially all of its assets to another Person and the
stockholders of the Corporation immediately prior to such transaction own less
than 50% of the aggregate voting power of the acquiring entity immediately after
the transaction, (iv) a replacement at one time or within a six (6) month period
of more than one-half of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the Board of
Directors on the initial date of issuance of any A Shares (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date of initial
issuance of any A Shares), or (v) the execution by the Company and/or any of its
shareholders of an agreement to which the Company is a party or by which either
is bound, providing for any of the events set forth in clauses (a) through (d)
above. For purposes of this Certificate, the term “Person” means
an individual, a corporation, a partnership, an association, a joint-stock
company, a Trust, any unincorporated organization, or government or political
sub-division thereof. As used in this Section 11(e), the term
“Trust” shall include only a trust where the interest or interests
of the beneficiary or beneficiaries are evidenced by a security. 

21




              (f)
A Holder, after such Holder’s A Shares have been redeemed and the Redemption
Price has been paid in full, shall have no further rights as a Holder of such A
Shares actually redeemed. 

       12. VOTE TO
ISSUE, OR CHANGE THE TERMS OF A SHARES. 

              The
affirmative vote of the holders of not less than 67% of the aggregate Stated
Value of all the then outstanding A Shares at a meeting duly called for such
purpose or the written consent without a meeting of the holders of not less than
67% of the aggregate Stated Value of all the then outstanding A Shares shall be
required for any amendment to this Certificate, the Articles of Incorporation or
By-Laws which could directly and/or indirectly amend, alter, change, repeal or
otherwise adversely affect any of the powers, designations, preferences and
rights of the A Shares. 

       13. LIMITATION
ON NUMBER OF SHARES ISSUABLE TO A HOLDER OF A
SHARES. 

              (a)
Other than as provided elsewhere in this Section 13(a) of this
Certificate, at no time may a Holder of A Shares convert any A Shares if the
number of shares of Common Stock to be issued pursuant to such conversion would
exceed, when aggregated with all other shares of Common Stock owned by such
Holder at such time, the number of shares of Common Stock which would result in
such holder beneficially owning (as determined in accordance with Section 13(d)
of the 1934 Act), more than 4.99% of all of the Common Stock outstanding at such
time; provided, however, that upon a Holder of A Shares providing
the Company with sixty-one (61) days notice (the “4.99% Waiver
Notice”) that such holder would like to waive this
Section 13(a) with regard to any or all
shares of Common Stock issuable upon conversion of A Shares, this Section
13(a) shall be of no force or effect with regard to those A Shares
referenced in the Waiver Notice.

              (b)
Other than as provided elsewhere in this Section 13(b), at
no time may a Holder of A Shares convert A Shares if the number of shares of
Common Stock to be issued pursuant to such conversion would exceed, when
aggregated with all other shares of Common Stock owned by such Holder at such
time, the number of shares of Common Stock which would result in such holder
beneficially owning (as determined in accordance with Section 13(d) of the 1934
Act) in excess of 9.99% of all of the Common Stock outstanding at such time;
provided, however, that upon a Holder of A Shares providing the
Company with sixty-one (61) days notice (the “9.99%
Waiver Notice”) that such Holder would like to waive this
Section 13(b) with regard to any or all shares of Common Stock issuable upon conversion of A
Shares, this Section 13(b) shall be of no force or effect with
regard to those A Shares referenced in the Waiver Notice. 

22




       14. GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL, ETC. All questions concerning
the construction, validity, enforcement and interpretation of this Certificate
shall be governed solely and exclusively by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflict of laws thereof. The Company expressly and
irrevocably agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by this Certificate
shall be commenced exclusively in the state and/or federal courts sitting in the
State, City, and County of New York (the “New York Courts”). The
Company expressly and irrevocably submits to the exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably and expressly waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are improper or
inconvenient venue for such proceeding. The Company hereby expressly and
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by applicable
law. In any action brought by the Company concerning and/or arising directly
and/or indirectly out of this Certificate, the prevailing party shall be
entitled to recover all of its legal fees and expenses incurred by it with
respect to any such legal action. THE COMPANY EXPRESSLY AND IRREVOCABLY
WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS CERTIFICATE. 

       15. FAILURE OR
INDULGENCE NOT WAIVER. No failure or delay on the part of a holder of A
Shares in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. 

       16. INFORMATION
RIGHTS. Unless otherwise publicly available in electronic format on the
website of the Company or filed with the SEC, the Company shall furnish to each
Holder of A Shares within one hundred and five (105) days after the end of each
fiscal year, audited financial statements of the Company and its consolidated
subsidiaries and, within sixty (60) days after the end of each of the quarters
of each fiscal year, unaudited financial statements of the Company.

       17. BOARD
OBSERVER/DIRECTOR. At any time and from time to time that any A Shares
are outstanding, the Holder shall have the right to appoint an observer to the
Board of Directors of the Company (the “Observer”). The Observer
shall be chosen (or replaced), by the written consent of the Holders owning no
less than 67% of the aggregate Stated Value of all the A Shares then
outstanding. The Company shall (i) provide any such Observer with written
notification of all Board Meetings (whether an in person or telephonic Board
meeting); and (ii) all information given to any Board member, all in the same
manner and at the same time as a Board member gets or is entitled to receive any
such notification and/or information. In addition to the right to appoint an
Observer, at any time any A Shares are outstanding, and the Company fails to
meet either of its revenue or EBITDA thresholds set forth in Schedule 2 to the
Purchase Agreement for the years ending December 31, 2012 and/or December 31,
2013 by twenty (20%) percent or more, as determined based upon the Company’s
audited financial statements included in the Company’s Annual Report on Form
10-K for the years ending December 31, 2012 and December 31, 2013, then Holders
owning no less than 67% of the aggregate Stated Value of all the then
outstanding A Shares shall be entitled to appoint a director of such Holders’
choice (the “A Director”) to the Board of Directors, which A
Director shall remain a Director on the Board until such time as A Shares with
an aggregate Stated Value of less than $300,000 are outstanding (the “A
Director”). The A Director shall be entitled to receive from the Company
the highest compensation that any other Director of the Company receives and
shall be entitled to all costs and expenses (including, but not limited to, air
fare, other travel costs, meals and lodging), to attend a Board of Directors
meeting. At any time and from time to time, Holders owning no less than 67% of
the aggregate Stated Value of all A Shares then outstanding can replace by
written notice the A Director. 

23




       18.
MISCELLANEOUS 

              (a)
Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile (to
facsimile number 1-604-327-3859) and email (to both pineau@viscount.com and
les_fong@viscount.com), or sent by a nationally recognized overnight courier
service, addressed to the Company, at the following address 4585 Tillicum
Street, Burnaby, British Columbia, Canada V5J 5K9, Attention: Stephen Pineau,
President, and Les Fong, Controller or such other facsimile number, or address,
or email as the Company may specify for such purposes by notice to the Holders
delivered in accordance with this Section 18. Any and all notices
or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, email or sent by a
nationally recognized overnight courier service addressed to each Holder at the
facsimile number, email or address of such Holder appearing on the books of the
Company, or if no such facsimile number, email or address appears on the books
of the Company at the principal place of business of such Holder, as set forth
in the Purchase Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile or
email at the facsimile number or email address (as the case may be), set forth
in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile or email at the facsimile number or email address (as
the case may be), set forth in this Section on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the
second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. 

              (b)
Non-Affiliate Representation. For the purposes of Sections
3(c) and Section 4(h) of this Certificate, each Holder
will, within 2 Trading Days of receiving written notice of a request by the Company, provide a written certification to the
Company stating whether as of the date of such certification, and for the period
of three (3) months immediately prior thereto, the Holder meets or met the
definition of an affiliate, as such term is defined in the rules and regulations
promulgated under the 1933 Act. 

24




              (c)
Absolute Obligation. Except as expressly provided herein, no provision of
this Certificate shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay liquidated damages, accrued dividends and
accrued interest, as applicable, and/or other payments on the A Shares at the
time, place, and rate, and in the coin or currency, herein prescribed. 

              (d)
Lost or Mutilated A Share Certificate. If a Holder's A Share Stock
certificate shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated certificate, or in lieu of or in substitution for a lost, stolen or
destroyed certificate, a new certificate for the Shares so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership hereof reasonably
satisfactory to the Company. 

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

              (f)
Severability. If any provision of this Certificate is invalid, illegal or
unenforceable, the balance of this Certificate shall remain in effect, and if
any provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate of interest
permitted under applicable law. 

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

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

              (i)
Regulatory Compliance. If any shares of Common Stock to be reserved for
the purpose of conversion of A Shares Stock require registration or listing with
or approval of any governmental authority, stock exchange, self-regulatory
organization or other regulatory body under any federal or state law or
regulation or otherwise before such shares may be validly issued or delivered
upon conversion, the Company shall, at its sole cost and expense, in good faith
and as expeditiously as possible, endeavor to secure such registration, listing
or approval, as the case may be. 

25




       19. FAILURE TO
PAY. Notwithstanding anything to the contrary provided herein or
elsewhere, if any payment hereunder or elsewhere is due to a Holder, and such
payment is not made (even if a payment is not permitted to be paid because
insufficient capital is available under applicable law to make such payment),
interest on such payment (in addition to any other interest and/or penalties
that become due), shall accrue at the rate of the lesser of (i) 18% per annum,
and (ii) the maximum amount permitted by applicable law, and all interest shall
accumulate daily until all payments are made, including interest and penalties.
Nothing in this Section 19 shall be deemed to constitute a waiver
and/or election of remedies by a Holder, all of which other remedies a Holder
reserves its rights to pursue, whether in law or equity. 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 

26




 

27






EXHIBIT A 

VISCOUNT SYSTEMS, INC. 

FORM OF CONVERSION NOTICE 

(To be executed by the registered Holder in order to convert A
Shares) 

       The undersigned
hereby elects to convert the number of shares of Series A Convertible Redeemable
Preferred Stock (the “A Shares”) indicated below into shares of
common stock, $0.001 par value per share (the “Common Stock”), of
Viscount Systems, Inc., a Nevada corporation (the “Company”),
according to the Certificate of the A Shares and the conditions hereof, as of
the date written below. The undersigned hereby requests that certificates for
the shares of Common Stock to be issued to the undersigned pursuant to this
Conversion Notice be issued in the name of and delivered to the undersigned or
its designee as indicated below. 

	Effective Date of Conversion: 	 
	 	 
	Number of shares of A Shares owned
      prior to Conversion: 	 
	 	 
	Number of A Shares to be Converted:
	 
	 	 
	Stated Value of A Shares to be
      Converted: 	 
	 	 
	Number of shares of Common Stock to be
      issued: 	 
	 	 
	Applicable Conversion Price: 	 
	 	 
	Number of A Shares owned subsequent to
      Conversion: 	 






Conversion Information: 

	Name of Holder: 	 
	  	 
	By: 	 
	             
           Name: 	 
	                   Title:
    	 
	 	 
	Address of Holder: 	 
	  	 
	  	 
	 	 
	Tax ID of Holder: 	 
	 	 


or 

DWAC Instruction 
BrokerNo.:________________
Account
No.:______________

Issue Common Stock to (if different than above): 

	Name: 	 
	 	 
	Address: 	 
	 	 
	Tax ID of above Named: 	 
	 	 


[NAME OF HOLDER] 

By:___________________________
Name:_________________________
Title:__________________________

2