Exhibit
      4.2

     

    


     

    CERTIFICATE
      OF DESIGNATIONS, PREFERENCES

    AND
      RIGHTS OF SERIES H CONVERTIBLE PREFERRED STOCK

    OF

    MSGI
      SECURITY SOLUTIONS, INC.

     

    MSGI
      Security Solutions, Inc., (the "Company"),
      a
      corporation organized and existing under the Private Corporations Law of the
      State of Nevada (the "NPCL"),
      and
pursuant
      to Section 78.1955 of the Nevada Revised Statutes (the “NRS”),
      does
      hereby certify that, pursuant to authority conferred upon the Board of Directors
      of the Company (the "Board")
      by the
      Articles of Incorporation of the Company, as amended, the Board of Directors
      of
      the Company adopted resolutions (i) designating a series of the Company's
      previously authorized preferred stock, par value $.01 per share, and (ii)
      providing for the designations, preferences and relative, participating,
      optional or other rights, and the qualifications, limitations or restrictions
      thereof, of Five Million (5,000,000) shares of Series H Convertible Preferred
      Stock of the Company, as follows:

     

    RESOLVED,
      that the Company is authorized to issue 5,000,000 shares of Series H Convertible
      Preferred Stock (the "Preferred
      Shares"),
      par
      value $.01 per share, which shall have the following powers, designations,
      preferences and other special rights:

     

    (1) Dividends.
      Other
      than as specifically set forth herein, the holders of Preferred Shares (each,
      a
      "Holder"
      and
      collectively, the "Holders")
      shall
      not be entitled to receive any dividends. 

     

    (2) Conversion
      of Preferred Shares.
      Preferred Shares shall be convertible into shares of Common Stock, par value
      $.01 per share (the "Common
      Stock"),
      of
      the Company on the terms and conditions set forth in this Section
      2.

     

    (a) Certain
      Defined Terms.
      For
      purposes of this Certificate of Designations, the following terms shall have
      the
      following meanings:

     

    (i)
       "Approved
      Stock Plan"
      means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company's securities may be issued to any
      employee, officer or director for services provided to the Company as employee
      incentive and not for any other purpose, including, without limitation, for
      capital raising purposes for the Company.

     

    (ii)
       "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    (iii)
       "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iv)
       "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or the last trade
      price, respectively, of such security prior to 4:00:00 p.m., New York time,
      as
      reported by Bloomberg, or, if the Principal Market is not the principal
      securities exchange or trading market for such security, the last closing bid
      price or last trade price, respectively, of such security on the principal
      securities exchange or trading market where such security is listed or traded
      as
      reported by Bloomberg, or if the foregoing do not apply, the last closing bid
      price or last trade price, respectively, of such security in the
      over-the-counter market on the electronic bulletin board for such security
      as
      reported by Bloomberg, or, if no closing bid price or last trade price,
      respectively, is reported for such security by Bloomberg, the average of the
      bid
      prices, or the ask prices, respectively, of any market makers for such security
      as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
      cannot be calculated for a security on a particular date on any of the foregoing
      bases, the Closing Bid Price or the Closing Sale Price, as the case may be,
      of
      such security on such date shall be the fair market value as mutually determined
      by the Company and the Holder. If the Company and the Required Holders are
      unable to agree upon the fair market value of such security, then such dispute
      shall be resolved pursuant to Section 2(d)(iii). All such determinations to
      be
      appropriately adjusted for any stock dividend, stock split, stock combination
      or
      other similar transaction during the applicable calculation period.

     

    (v)
       "Conversion
      Price"
      means
      $1.00, subject to adjustment as provided herein.

     

    (vi)
       "Convertible
      Securities"
      means
      any stock or securities (other than Options) of the Company directly or
      indirectly convertible into or exercisable or exchangeable for Common
      Stock.

     

    (vii)
       "Exchange
      Act"
      means
      The Securities Exchange Act of 1934, as amended.

     

    (viii)
       "Excluded
      Securities"
      means
      any Common Stock issued or issuable: (i) in connection with any Approved Stock
      Plan; (ii) upon the exercise of the Warrants; (iii) upon exercise of any Options
      or Convertible Securities which are outstanding on the day immediately preceding
      the date hereof, provided that the terms of such Options or Convertible
      Securities are not amended, modified or changed on or after the date hereof;
      and
      (iv) in connection with mergers, acquisitions, strategic business partnerships
      or equipment financing, manufacturing or supply contracts, the
      purpose of which is not to raise equity capital.

     

    
      
         

      

      
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    (ix)
       "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the 50% of the outstanding shares of Common Stock (not including any shares
      of
      Common Stock held by the Person or Persons making or party to, or associated
      or
      affiliated with the Persons making or party to, such purchase, tender or
      exchange offer), or (iv) consummate a stock purchase agreement or other business
      combination (including, without limitation, a reorganization, recapitalization,
      spin-off or scheme of arrangement) with another Person whereby such other Person
      acquires more than the 50% of the outstanding shares of Common Stock (not
      including any shares of Common Stock held by the other Person or other Persons
      making or party to, or associated or affiliated with the other Persons making
      or
      party to, such stock purchase agreement or other business combination), (v)
      reorganize, recapitalize or reclassify its Common Stock, or (vi) any "person"
      or
      "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of
      the
      Exchange Act) is or shall become the "beneficial owner" (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
      ordinary voting power represented by issued and outstanding Common
      Stock.

     

    (x)
       "Initial
      Issuance Date"
      means
      January 10, 2008.

     

    (xi)
       "Liquidation
      Event"
      means
      the voluntary or involuntary liquidation, dissolution or winding up of the
      Company or such Subsidiaries the assets of which constitute all or substantially
      all the assets of the business of the Company and its Subsidiaries taken as
      a
      whole, in a single transaction or series of transactions.

     

    (xii)
       "Options"
      means
      any rights, warrants or options to subscribe for or purchase Common Stock or
      Convertible Securities.

     

    (xiii)
       "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (xiv)
       "Principal
      Market"
      means
      the OTC Bulletin Board.

     

    
      
         

      

      
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    (xv)
       "Required
      Holders"
      means
      the Holders of Preferred Shares representing at least a majority of the
      aggregate Preferred Shares then outstanding.

     

    (xvi)
       "SEC"
      means
      the Securities and Exchange Commission.

     

    (xvii)
       "Securities
      Purchase Agreement"
      means
      that certain amended and restated securities purchase agreement by and among
      the
      Company and the initial Holders, dated as of the Initial Issuance Date, as
      such
      agreement further may be amended from time to time as provided in such
      agreement.

     

    (xviii)
       "Stated
      Value"
      means
      $1.00.

     

    (xix)
       "Trading
      Day"
      means
      any day on which the Common Stock is traded on the Principal Market, or, if
      the
      Principal Market is not the principal trading market for the Common Stock,
      then
      on the principal securities exchange or securities market on which the shares
      of
      Common Stock are then traded; provided that "Trading Day" shall not include
      any
      day on which the shares of Common Stock are scheduled to trade on such exchange
      or market for less than 4.5 hours or any day that the shares of Common Stock
      are
      suspended from trading during the final hour of trading on such exchange or
      market (or if such exchange or market does not designate in advance the closing
      time of trading on such exchange or market, then during the hour ending at
      4:00:00 p.m., New York Time).

     

    (xx)
       "Warrants"
      shall
      have the meaning as set forth in the Securities Purchase Agreement.

     

    (b) Holder's
      Conversion Right.
      Subject
      to Section 6 hereof, at any time or times on or after the Initial Issuance
      Date,
      any Holder shall be entitled to convert any whole number of Preferred Shares
      into fully paid and nonassessable shares of Common Stock in accordance with
      Section 2(d) at the Conversion Rate (as defined below).

     

    (c) Conversion.
      The
      number of shares of Common Stock issuable upon conversion of each Preferred
      Share pursuant to Section 2(b) shall be determined according to the following
      formula (the "Conversion
      Rate"):

     

    Stated
      Value

    Conversion
      Price

     

    
      
         

      

      
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    (d) Mechanics
      of Conversion.
      The
      conversion of Preferred Shares shall be conducted in the following
      manner:

     

    (i)
       Holder's
      Delivery Requirements.
      To
      convert Preferred Shares into shares of Common Stock on any date (the
      "Conversion
      Date"),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or
      prior to 11:59 p.m., New York City Time, on such date, a copy of a properly
      completed notice of conversion executed by the registered Holder of the
      Preferred Shares subject to such conversion in the form attached hereto as
      Exhibit
      I
      (the
      "Conversion
      Notice")
      to the
      Company and the Company's designated transfer agent (the "Transfer
      Agent")
      and
      (B) if required by Section 2(d)(viii), deliver to the Company as soon as
      practicable following such date the original certificates representing the
      Preferred Shares being converted (or comply with the procedures set forth in
      Section 11) (the "Preferred
      Stock Certificates").

     

    (ii)
       Company's
      Response.
      Upon
      receipt by the Company of a copy of a Conversion Notice, and if so required
      by
      Section 2(d)(viii), the Preferred Stock Certificates, the Company shall (I)
      as
      soon as practicable, but in any event within one (1) Trading Day, send, via
      facsimile, a confirmation of receipt of such Conversion Notice to such Holder
      and the Transfer Agent, which confirmation shall constitute an instruction
      to
      the Transfer Agent to process such Conversion Notice in accordance with the
      terms hereof and (II) on or before the third (3rd)
      Trading
      Day following the date of receipt by the Company of such Conversion Notice,
      (A)
      provided the Transfer Agent is participating in the DTC Fast Automated
      Securities Transfer Program, credit such aggregate number of shares of Common
      Stock 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,
      or (B) if the Transfer Agent is not participating in the DTC Fast Automated
      Securities Transfer Program, 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 shares of Common Stock to which the Holder
      shall
      be entitled. If the number of Preferred Shares represented by the Preferred
      Stock Certificate(s) submitted for conversion, as may be required pursuant
      to
      Section 2(d)(viii), is greater than the number of Preferred Shares being
      converted, then the Company shall, as soon as practicable and in no event later
      than three (3) Trading Days after receipt of the Preferred Stock Certificate(s)
      and at its own expense, issue and deliver to the Holder a new Preferred Stock
      Certificate representing the number of Preferred Shares not converted.


     

    (iii)
       Dispute
      Resolution.
      In the
      case of a dispute as to the determination of the Closing Bid Price or Closing
      Sale Price or the arithmetic calculation of the Conversion Rate, the Company
      shall instruct the Transfer Agent to issue to the Holder the number of shares
      of
      Common Stock that is not disputed and shall transmit an explanation of the
      disputed determinations or arithmetic calculations to the Holder via facsimile
      within (a) one (1) Business Day in the case of a dispute as to the arithmetic
      calculation of the Conversion Rate and (b) three (3) Business Days in the case
      of a dispute as to the determination of the Closing Bid Price or Closing Sale
      Price of receipt of such Holder's Conversion Notice or other date of
      determination. If such Holder and the Company are unable to agree upon the
      determination of the Closing Bid Price or Closing Sale Price or the arithmetic
      calculation of the Conversion Rate within three (3) Business Days of such
      disputed determination or arithmetic calculation being transmitted to the
      Holder, then the Company shall within three (3) Business Days with respect
      to
      the determination of the Closing Bid Price or Closing Sale Price and within
      one
      (1) Business Day with respect to the arithmetic calculation of the Conversion
      Rate, in each case after the end of such three (3) Business Day period, submit
      via facsimile (A) the disputed determination of the Closing Bid Price or Closing
      Sale Price to an independent, reputable investment bank selected by the Company
      and approved by the Required Holders or (B) the disputed arithmetic calculation
      of the Conversion Rate to the Company's independent, outside accountant. The
      Company shall cause, at the Company's expense, the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holders of the results no later than ten (10)
      Business Days with respect to the determination of the Closing Bid Price or
      Closing Sale Price and no later than five (5) Business Days with respect to
      the
      calculation of the Conversion Rate, in each case from the time it receives
      the
      disputed determinations or calculations. Such investment bank's or accountant's
      determination or calculation, as the case may be, shall be binding upon all
      parties absent manifest error.

     

    
      
         

      

      
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    (iv)
       Record
      Holder.
      The
      Person or Persons entitled to receive the shares of Common Stock issuable upon
      a
      conversion of Preferred Shares shall be treated for all purposes as the record
      holder or holders of such shares of Common Stock on the Conversion
      Date.

     

    (v)
       Company's
      Failure to Timely Convert.
      If the
      Company shall fail for any reason or for no reason to issue to the Holder within
      three (3) Trading Days of receipt of after the Company's receipt of the
      facsimile copy of a Conversion Notice, and if required by Section 2(d)(viii),
      the Preferred Stock Certificates, a certificate for the number of shares of
      Common Stock to which the Holder is entitled and register such shares of Common
      Stock on the Company's share register or to credit the Holder's balance account
      with DTC for such number of shares of Common Stock to which the Holder is
      entitled upon the Holder's conversion of Preferred Shares, then, in addition
      to
      all other remedies available to the Holder, the Company shall pay in cash to
      the
      Holder on each day after such third (3rd) Trading
      Day that the issuance of such shares of Common Stock is not timely effected
      an
      amount equal to 1.5% of the product of (A) the sum of the number of shares
      of
      Common Stock not issued to the Holder on a timely basis and to which the Holder
      is entitled and (B) the Closing Sale Price of the shares of Common Stock on
      the
      Trading Day immediately preceding the last possible date which the Company
      could
      have issued such shares of Common Stock to the Holder without violating Section
      2(d)(ii). In addition to the foregoing, if within three (3) Trading Days after
      the Company's receipt of the facsimile copy of a Conversion Notice, and if
      required by Section 2(d)(viii), the Preferred Stock Certificates, the Company
      shall fail to issue and deliver a certificate to a Holder or credit such
      Holder's balance account with DTC for the number of shares of Common Stock
      to
      which there is no dispute, such Holder is entitled upon such Holder's conversion
      of Preferred Shares, and if on or after such third (3rd)
      Trading
      Day the Holder purchases (in an open market transaction or otherwise) shares
      of
      Common Stock to deliver in satisfaction of a sale by the Holder of the shares
      of
      Common Stock issuable upon such conversion that the Holder anticipated receiving
      from the Company, then the Company shall, within three (3) Trading Days after
      the Holder's request and in the Holder's discretion, either (1) pay cash to
      the
      Holder in an amount equal to the Holder's total purchase price (including
      brokerage commissions, if any) for the shares of Common Stock so purchased
      (the
"Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (2) promptly honor its obligation to
      deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (x) such number of shares of Common Stock,
      times (y) the Closing Bid Price on the Conversion Date.

     

    
      
         

      

      
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    (vi)
       Pro
      Rata Conversion.
      In the
      event the Company receives a Conversion Notice from more than one Holder for
      the
      same Conversion Date and the Company can convert some, but not all, of such
      Preferred Shares, the Company shall convert from each Holder electing to have
      Preferred Shares converted at such time a pro rata amount of such Holder's
      Preferred Shares submitted for conversion based on the number of Preferred
      Shares submitted for conversion on such date by such Holder relative to the
      number of Preferred Shares submitted for conversion on such date.

     

    (vii)
       No
      Redemption.
      The
      Preferred Shares may not be redeemed at the option of the Company at any time,
      in whole or in part, without the prior written consent of, and on terms and
      conditions satisfactory to, the Required Holders.

     

    (viii)
       Book-Entry.
      Notwithstanding anything to the contrary set forth herein, upon conversion
      of
      Preferred Shares in accordance with the terms hereof, the Holder thereof shall
      not be required to physically surrender the certificate representing the
      Preferred Shares to the Company unless (A) the full or remaining number of
      Preferred Shares represented by the certificate are being converted or (B)
      a
      Holder has provided the Company with prior written notice (which notice may
      be
      included in a Conversion Notice) requesting reissuance of Preferred Shares
      upon
      physical surrender of any Preferred Shares. The Holder and the Company shall
      maintain records showing the number of Preferred Shares so converted and the
      dates of such conversions or shall use such other method, reasonably
      satisfactory to the Holder and the Company, so as not to require physical
      surrender of the certificate representing the Preferred Shares upon each such
      conversion. In the event of any dispute or discrepancy, such records of the
      Company establishing the number of Preferred Shares to which the record holder
      is entitled shall be controlling and determinative in the absence of manifest
      error. Notwithstanding the foregoing, if Preferred Shares represented by a
      certificate are converted as aforesaid, the Holder may not transfer the
      certificate representing the Preferred Shares unless the Holder first physically
      surrenders the certificate representing the Preferred Shares to the Company,
      whereupon the Company will forthwith issue and deliver upon the order of the
      Holder a new certificate of like tenor, registered as the Holder may request,
      representing in the aggregate the remaining number of Preferred Shares
      represented by such certificate. The Holder and any assignee, by acceptance
      of a
      certificate, acknowledge and agree that, by reason of the provisions of this
      paragraph, following conversion of any Preferred Shares, the number of Preferred
      Shares represented by such certificate may be less than the number of Preferred
      Shares stated on the face thereof. Each certificate for Preferred Shares shall
      bear the following legend: 

     

    
      
         

      

      
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    ANY
      TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE
      COMPANY'S CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED SHARES
      REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 2(d)(viii) THEREOF. THE
      NUMBER OF PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN
      THE
      NUMBER OF PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT TO SECTION
      2(d)(viii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED SHARES
      REPRESENTED BY THIS CERTIFICATE. 

     

    (e)  Taxes.
      The
      Company shall pay any and all documentary, stamp, transfer (but only in respect
      of the registered holder thereof) and other similar taxes that may be payable
      with respect to the issuance and delivery of Common Stock upon the conversion
      of
      Preferred Shares.

     

    (f) Adjustment
      of Conversion Price.

     

    (i)
      Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Initial Issuance Date, the Company issues or sells,
      or
      in accordance with this Section 2(f)(i) is deemed to have issued or sold, any
      shares of Common Stock (including the issuance or sale of shares of Common
      Stock
      owned or held by or for the account of the Company, but excluding shares of
      Common Stock deemed to have been issued by the Company in connection with any
      Excluded Securities for a consideration per share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Conversion Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Conversion Price then in effect
      shall be reduced to an amount equal to the New Issuance Price. For purposes
      of
      determining the adjusted Conversion Price under this Section 2(f)(i), the
      following shall be applicable:

     

    
      
         

      

      
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    (A)  Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the granting or sale of such Option
      for
      such price per share. For purposes of this Section 2(f)(i)(A), the "lowest
      price
      per share for which one share of Common Stock is issuable upon exercise of
      such
      Options or upon conversion, exercise or exchange of such Convertible Securities
      issuable upon exercise of any such Option" shall be equal to the sum of the
      lowest amounts of consideration (if any) received or receivable by the Company
      with respect to any one share of Common Stock upon the granting or sale of
      the
      Option, upon exercise of the Option and upon conversion, exercise or exchange
      of
      any Convertible Security issuable upon exercise of such Option. No further
      adjustment of the Conversion Price shall be made upon the actual issuance of
      such shares of Common Stock or of such Convertible Securities upon the exercise
      of such Options or upon the actual issuance of such shares of Common Stock
      upon
      conversion, exercise or exchange of such Convertible Securities. 

     

    (B)  Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 2(f)(i)(B), the "lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange thereof" shall
      be
      equal to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to one share of Common Stock upon the
      issuance or sale of the Convertible Security and upon conversion, exercise
      or
      exchange of such Convertible Security. No further adjustment of the Conversion
      Price shall be made upon the actual issuance of such shares of Common Stock
      upon
      conversion, exercise or exchange of such Convertible Securities, and if any
      such
      issue or sale of such Convertible Securities is made upon exercise of any
      Options for which adjustment has been or is to be made pursuant to other
      provisions of this Section 2(a), no further adjustment of the Conversion Price
      shall be made by reason of such issue or sale.

     

    
      
         

      

      
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    (C)  Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Conversion Price in effect at the time of such increase or
      decrease shall be adjusted to the Conversion Price which would have been in
      effect at such time had such Options or Convertible Securities provided for
      such
      increased or decreased purchase price, additional consideration or increased
      or
      decreased conversion rate, as the case may be, at the time initially granted,
      issued or sold. For purposes of this Section 2(f)(i)(C), if the terms of any
      Option or Convertible Security that was outstanding as of the Initial Issuance
      Date are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 2(f)(i)(C) shall be made if such adjustment
      would result in an increase of the Conversion Price then in effect.

     

    (D)  Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction, (x) the Options
      will be deemed to have been issued for the fair market value of such Options
      and
      (y) the other securities issued or sold in such integrated transaction shall
      be
      deemed to have been issued for the difference of (I) the aggregate consideration
      received by the Company, less (II) the fair market value of such Options. If
      any
      shares of Common Stock, Options or Convertible Securities are issued or sold
      or
      deemed to have been issued or sold for cash, the consideration received therefor
      will be deemed to be the net amount received by the Company therefor. If any
      shares of Common Stock, Options or Convertible Securities are issued or sold
      for
      a consideration other than cash, the amount of such consideration received
      by
      the Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Closing Sale Price of such security on
      the
      date of receipt. For purposes of determining the consideration received by
      the
      Company hereunder for any shares of Common Stock, Options or Convertible
      Securities hereunder any cash payments by the Company in connection with such
      Common Stock, Options or Convertible Securities shall be deducted from any
      amounts actually received by the Company. If any shares of Common Stock, Options
      or Convertible Securities are issued to the owners of the non-surviving entity
      in connection with any merger in which the Company is the surviving entity,
      the
      amount of consideration therefor will be deemed to be the fair value of such
      portion of the net assets and business of the non-surviving entity as is
      attributable to such shares of Common Stock, Options or Convertible Securities,
      as the case may be. The fair value of any consideration other than cash or
      securities will be determined jointly by the Company and the Required Holders.
      If such parties are unable to reach agreement within ten (10) days after the
      occurrence of an event requiring valuation (the "Valuation
      Event"),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (E)  Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable
      in shares of Common Stock, Options or in Convertible Securities or (B) to
      subscribe for or purchase shares of Common Stock, Options or Convertible
      Securities, then such record date will be deemed to be the date of the issue
      or
      sale of the shares of Common Stock 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 right of subscription or purchase, as the case
      may
      be.

     

    (ii)
      Adjustment
      of Conversion Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time subdivides (by any stock split, stock dividend,
      recapitalization or otherwise) its outstanding shares of Common Stock into
      a
      greater number of shares, the Conversion Price in effect immediately prior
      to
      such subdivision will be proportionately reduced. If the Company at any time
      combines (by combination, reverse stock split or otherwise) its outstanding
      shares of Common Stock into a smaller number of shares, the Conversion Price
      in
      effect immediately prior to such combination will be proportionately
      increased.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (g) Notices.

     

    (i)
      As
      promptly as practicable after any adjustment of the Conversion Price pursuant
      to
      Section 2(f), the Company will give written notice thereof to each Holder,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment. In the case of a dispute as to the determination of such adjustment,
      then such dispute shall be resolved in accordance with the procedures set forth
      in Section 2(d)(iii).

     

    (ii)
      The
      Company will give written notice to each Holder at least ten (10) Business
      Days
      prior to the date on which the Company closes its books or takes a record for
      determining rights to vote with respect to any Fundamental Transaction or
      Liquidation Event, provided that such information shall have been made known
      to
      the public prior to or in conjunction with such notice being provided to such
      Holder.

     

    (iii)
      The
      Company will also give written notice to each Holder at least ten (10) Business
      Days prior to the date on which any Fundamental Transaction or Liquidation
      Event
      will take place, provided that such information shall have been made known
      to
      the public prior to or in conjunction with such notice being provided to such
      Holder.

     

    (3) 
      Purchase Rights.
      If at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro-rata
      to
      the record holders of any class of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete conversion of the Preferred Shares (without taking into account
      any limitations or restrictions on the convertibility of the Preferred Shares)
      immediately before the date on which a record is taken for the grant, issuance
      or sale of such Purchase Rights, or, if no such record is taken, the date as
      of
      which the record holders of Common Stock are to be determined for the grant,
      issue or sale of such Purchase Rights.

     

    (4) Reservation
      of Shares.

     

    (a) The
      Company shall, so long as any of the Preferred 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 conversions
      of
      the Preferred Shares, such number of shares of Common Stock as shall from time
      to time be sufficient to effect the conversion of all of the Preferred Shares
      then outstanding; provided that the number of shares of Common Stock so reserved
      shall at no time be less than 120% of the number of shares of Common Stock
      for
      which the Preferred Shares are at any time convertible (without regard to any
      limitations on conversions, the "Required
      Reserve Amount").
      The
      initial number of shares of Common Stock reserved for conversions of the
      Preferred Shares and each increase in the number of shares so reserved shall
      be
      allocated pro rata among the Holders based on the number of Preferred Shares
      held by each Holder at the time of issuance of the Preferred Shares or increase
      in the number of reserved shares, as the case may be (the "Authorized
      Share Allocation").
      In
      the event a Holder shall sell or otherwise transfer any of such Holder's
      Preferred Shares, each transferee shall be allocated a pro rata portion of
      such
      Holder's Authorized Share Allocation. Any shares of Common Stock reserved and
      allocated to any Person which ceases to hold any Preferred Shares (other than
      pursuant to a transfer of Preferred Shares in accordance with the immediately
      preceding sentence) shall be allocated to the remaining Holders of Preferred
      Shares, pro rata based on the number of Preferred Shares then held by such
      Holders.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    (b) Insufficient
      Authorized Shares.
      If at
      any time while any of the Preferred Shares remain outstanding the Company does
      not have a sufficient number of authorized and unreserved shares of Common
      Stock
      to satisfy its obligation to reserve for issuance upon conversion of the
      Preferred Shares at least a number of shares of Common Stock equal to the
      Required Reserve Amount (an "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action necessary to increase the
      Company's authorized shares of Common Stock to an amount sufficient to allow
      the
      Company to reserve the Required Reserve Amount for the Preferred Shares then
      outstanding. Without limiting the generality of the foregoing sentence, as
      soon
      as practicable after the date of the occurrence of an Authorized Share Failure,
      but in no event later than sixty (60) days after the occurrence of such
      Authorized Share Failure, the Company shall hold a meeting of its stockholders
      for the approval of an increase in the number of authorized shares of Common
      Stock. In connection with such meeting, the Company shall provide each
      stockholder with a proxy statement and shall use its reasonable best efforts
      to
      solicit its stockholders' approval of such increase in authorized shares of
      Common Stock and to cause its board of directors to recommend to the
      stockholders that they approve such proposal.

     

    (5) Voting
      Rights.
      Subject
      to Sections 6 and 8, each Holder shall be entitled to the whole number of votes
      equal to the number of shares of Common Stock into which such Holder's Preferred
      Shares would be convertible on the record date for the vote or consent of
      stockholders, and shall otherwise have voting rights and powers equal to the
      voting rights and powers of the Common Stock. Each Holder shall be entitled
      to
      receive the same prior notice of any stockholders' meeting as is provided to
      the
      holders of Common Stock in accordance with the bylaws of the Company, as well
      as
      prior notice of all stockholder actions to be taken by legally available means
      in lieu of a meeting, and shall vote with holders of the Common Stock as if
      they
      were a single class of securities upon any matter submitted to a vote of
      stockholders, except those matters required by law or by the terms hereof to
      be
      submitted to a class vote of the Holders of Preferred Shares, in which case
      the
      Holders of Preferred Shares only shall vote as a separate class.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (6) Limitation
      on Beneficial Ownership.
      Other
      than in connection with a Fundamental Transaction, the Company shall not effect
      any conversion of Preferred Shares, and no Holder shall have the right to
      convert any Preferred Shares, to the extent that after giving effect to such
      conversion, a Holder (together with such Holder's affiliates) would beneficially
      own in excess of 4.99% ("Maximum
      Percentage")
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion. The Company shall not give effect to any voting rights of
      the
      Preferred Shares, and any Holder shall not have the right to exercise voting
      rights with respect to any Preferred Shares pursuant hereto, to the extent
      that
      giving effect to such voting rights would result in such Holder (together with
      its affiliates) being deemed to beneficially own in excess of the Maximum
      Percentage of the number of shares of Common Stock outstanding immediately after
      giving effect to such exercise, assuming such exercise as being equivalent
      to
      conversion. For purposes of the foregoing sentences, the number of shares of
      Common Stock beneficially owned by a Holder and its affiliates shall include
      the
      number of shares of Common Stock issuable upon conversion of the Preferred
      Shares with respect to which the determination of such sentences is being made,
      but shall exclude the number of shares of Common Stock which would be issuable
      upon (A) conversion of the remaining, nonconverted Preferred Shares beneficially
      owned by such Holder or any of its affiliates and (B) exercise or conversion
      of
      the unexercised or unconverted portion of any other securities of the Company
      (including, without limitation, any notes or warrants) subject to a limitation
      on conversion or exercise analogous to the limitation contained in this Section
      beneficially owned by such Holder or any of its affiliates. Except as set forth
      in the preceding sentence, for purposes of this Section 6, beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange Act. For
      purposes of this Section 6, in determining the number of outstanding shares
      of
      Common Stock, a Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q or
      Form
      8-K, as the case may be, (2) a more recent public announcement by the Company,
      or (3) any other notice by the Company or the Transfer Agent setting forth
      the
      number of shares of Common Stock outstanding. For any reason at any time, upon
      the written or oral request of any Holder, the Company shall within one (1)
      Business Day following the receipt of such notice, confirm orally and in writing
      to any such Holder the number of shares of Common Stock then outstanding. In
      any
      case, the number of outstanding shares of Common Stock shall be determined
      after
      giving effect to the conversion or exercise of securities of the Company,
      including the Preferred Shares, by such Holder and its affiliates since the
      date
      as of which such number of outstanding shares of Common Stock was reported.
      By
      written notice to the Company, the Holder may from time to time increase or
      decrease the Maximum Percentage to any other percentage specified in such notice
      not in excess of 9.99%; provided that (i) any such increase will not be
      effective until the sixty-first (61st) day after such notice is delivered to
      the
      Company, and (ii) any such increase or decrease will apply only to the Holder
      providing such written notice and not to any other Holder.

     

    (7) Ranking;
      Liquidation Events.
      

     

    (a) The
      Preferred Shares shall be junior to all other classes or series of preferred
      stock of the Company outstanding as of the Initial Issuance Date or issued
      thereafter.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    (b) In
      the
      event of a Liquidation Event, the Holders shall be entitled, on a pari
      passu
      basis
      with the holders of Common Stock and treating for the purpose thereof all of
      the
      Preferred Shares as having been converted into Common Stock pursuant to Section
      2 (without regard to any limitations in conversion set forth herein or
      elsewhere), to participate in the distribution of any assets of the Company
      to
      the holders of the outstanding Common Stock. To the extent necessary, the
      Company shall cause such actions to be taken by any of its Subsidiaries so
      as to
      enable, to the maximum extent permitted by law, the proceeds of a Liquidation
      Event to be distributed to the Holders in accordance with this Section. The
      purchase or redemption by the Company of stock of any class, in any manner
      permitted by law, shall not, for the purposes hereof, be regarded as a
      Liquidation Event.

     

    (8) Limitation
      on Number of Conversion Shares.
      The
      Company shall not be obligated to issue any shares of Common Stock upon
      conversion of the Preferred Shares, and no Holder shall have the right to
      receive upon conversion of Preferred Shares any shares of Common Stock, if
      the
      issuance of such shares of Common Stock would exceed the aggregate number of
      shares of Common Stock which the Company may issue upon conversion of the
      Preferred Shares without breaching the Company's obligations under the rules
      or
      regulations of the Principal Market and the market or exchange where the Common
      Stock is then traded (the "Exchange
      Cap"),
      except that such limitation shall not apply in the event that the Company (a)
      obtains the approval of its stockholders as required by the applicable rules
      of
      the Principal Market (or any successor rule or regulation) for issuances of
      Common Stock in excess of such amount, or (b) obtains a written opinion from
      outside counsel to the Company that such approval is not required, which opinion
      shall be reasonably satisfactory to the Required Holders. The Company shall
      not
      give effect to any voting rights of the Preferred Shares to the extent that
      giving effect to such voting rights would result in the Holder having such
      voting rights in excess of the Exchange Cap. Until such approval or written
      opinion is obtained, the investor in Preferred Shares pursuant to the Exchange
      Agreement (the "Investor")
      shall
      not be issued, in the aggregate, upon conversion of Preferred Shares, shares
      of
      Common Stock in an amount greater than the Exchange Cap amount (the
      "Exchange
      Cap Allocation").
      In
      the event that the Investor shall sell or otherwise transfer any of its
      Preferred Shares, the transferee shall be allocated a pro rata portion of the
      Investor's Exchange Cap Allocation and the restrictions of the prior sentence
      shall apply to such transferee with respect to the Exchange Cap Allocation
      allocated to such transferee. In the event that any Holder shall convert all
      of
      such Holder's Preferred Shares into a number of shares of Common Stock which,
      in
      the aggregate, is less than such Holder's Exchange Cap Allocation, then the
      difference between such Holder's Exchange Cap Allocation and the number of
      shares of Common Stock actually issued to such Holder shall be allocated to
      the
      respective Exchange Cap Allocations of the remaining Holders on a pro-rata
      basis
      in proportion to the number of Preferred Shares then held by each such
      Holder.

     

    (9) Participation.
      Subject
      to the rights of the holders, if any, of shares of other classes or series
      that
      are of equal rank with the Preferred Shares as to liquidation preference, the
      Holders shall, as holders of Preferred Stock, be entitled to such dividends
      paid
      and distributions made to the holders of Common Stock to the same extent as
      if
      such Holders had converted the Preferred 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.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    (10) Vote
      to Change the Terms of the Preferred Shares.
      Except
      where the vote or written consent of the holders of a greater number of shares
      is required by law or by another provision of the Certificate of Incorporation,
      the affirmative vote at a meeting duly called for such purpose or the written
      consent without a meeting of the Required Holders, voting together as a single
      class, shall be required before the Company may: (a) amend or repeal any
      provision of, or add any provision to, the Certificate of Incorporation, or
      file
      any certificate of designations, preferences, limitations and relative rights
      of
      any series of preferred stock, if such action would adversely alter or change
      the preferences, rights privileges or powers of, or restrictions provided for
      the benefit of the Preferred Shares, regardless of whether any such action
      shall
      be by means of amendment to the Certificate of Incorporation or by merger,
      consolidation or otherwise; (b) increase or decrease (other than by conversion)
      the authorized number of Preferred Shares; or (c) whether or not prohibited
      by
      the terms of the Preferred Shares, circumvent a right of the Preferred
      Shares.

     

    (11) 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 Preferred Stock Certificates
      representing the Preferred Shares, and, in the case of loss, theft or
      destruction, of an indemnification undertaking by the Holder to the Company
      in
      customary form and, in the case of mutilation, upon surrender and cancellation
      of the Preferred Stock Certificate(s), the Company shall execute and deliver
      new
      Preferred Stock Certificate(s) of like tenor and date; provided,
      however,
      the
      Company shall not be obligated to re-issue Preferred Stock Certificates if
      the
      Holder contemporaneously requests the Company to convert such Preferred Shares
      into Common Stock.

     

    (12) Remedies,
      Characterizations, Other Obligations, Breaches and Injunctive
      Relief.
      The
      remedies provided in this Certificate of Designations shall be cumulative and
      in
      addition to all other remedies available under this Certificate of Designations,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief). No remedy contained herein shall be deemed a waiver of
      compliance with the provisions giving rise to such remedy. Nothing herein shall
      limit a Holder's right to pursue actual damages for any failure by the Company
      to comply with the terms of this Certificate of Designations. The Company
      covenants to each Holder that there shall be no characterization concerning
      this
      instrument other than as expressly provided herein. Amounts set forth or
      provided for herein with respect to payments, conversion and the like (and
      the
      computation thereof) shall be the amounts to be received by the Holder thereof
      and shall not, except as expressly provided herein, be subject to any other
      obligation of the Company (or the performance thereof). 

     

    (13) Construction.
      This
      Certificate of Designations shall be deemed to be jointly drafted by the Company
      and the Investors and shall not be construed against any person as the drafter
      hereof.

     

    (14) Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of a Holder 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-

        
          

        

      

      
         

      

    

    (15) Notice.
      Whenever notice or other communication is required to be given under this
      Certificate of Designations, unless otherwise provided herein, such notice
      shall
      be given in accordance with Section 9(f) of the Securities Purchase Agreement
      (provided that if the Preferred Shares are not held by any such investor then
      to
      the Holder at such address as shall have been provided to the Company in
      writing).

     

    (16) Transfer
      of Preferred Shares.
      A
      Holder may assign some or all of the Preferred Shares and the accompanying
      rights hereunder held by such Holder without the consent of the Company;
provided
      that
      such assignment is in compliance with applicable securities laws.

     

    (17) Preferred
      Share Register.
      The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the Holders), a
      register for the Preferred Shares, in which the Company shall record the name
      and address of the persons in whose name the Preferred Shares have been issued,
      as well as the name and address of each transferee. The Company may treat the
      person in whose name any Preferred Share is registered on the register as the
      owner and holder thereof for all purposes, notwithstanding any notice to the
      contrary, but in all events recognizing any properly made
      transfers.

     

    (18) Stockholder
      Matters.
      Any
      stockholder action, approval or consent required, desired or otherwise sought
      by
      the Company pursuant to the rules and regulations of the Principal Market,
      the
      NPCL, this Certificate of Designations or otherwise with respect to the issuance
      of the Preferred Shares or the Common Stock issuable upon conversion thereof
      may
      be effected by written consent of the Company's stockholders or at a duly called
      meeting of the Company's stockholders to the extent permitted by and all in
      accordance with the applicable rules and regulations of the Principal Market
      and
      the NPCL. This provision is intended to comply with the applicable sections
      of
      the NPCL permitting stockholder action, approval and consent affected by written
      consent in lieu of a meeting.

     

    *
      * * *
      *

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Certificate of Designations to
      be
      signed by Jeremy Barbera, its Chief Executive Officer, as of the 10th
      day of
      January, 2008.

     

    
      	 	 	 
	 	MSGI
              SECURITY SOLUTIONS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Jeremy
              Barbera
	 	
              
Name: Jeremy
              Barbera
	 	Title: Chief
              Executive Officer


    

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    EXHIBIT
      I

     

    MSGI
      SECURITY SOLUTIONS, INC. CONVERSION NOTICE

     

    Reference
      is made to the Certificate of Designations, Preferences and Rights of Series
      H
      Convertible Preferred Stock of MSGI Security Solutions, Inc. (the "Certificate
      of Designations").
      In
      accordance with and pursuant to the Certificate of Designations, the undersigned
      hereby elects to convert the number of shares of Series H Convertible Preferred
      Stock, par value $.01 per share (the "Preferred
      Shares"),
      of
      MSGI Security Solutions, Inc., a Nevada corporation (the "Company"),
      indicated below into shares of Common Stock, par value $.01 per share (the
      "Common
      Stock"),
      of
      the Company, as of the date specified below.

     

    Date
      of
      Conversion: _________________________________________

     

    Number
      of
      Preferred Shares to be converted:
      _________________________________________

     

    Stock
      certificate no(s). of Preferred Shares to be converted:
      _________________________________________

     

    Tax
      ID
      Number (If
      applicable): _________________________________________

     

    Please
      confirm the following information:

     

    Conversion
      Price: _________________________________________

     

    Number
      of
      shares of Common Stock to be issued:
      _________________________________________

     

    Please
      issue the Common Stock into which the Preferred Shares are being converted
      in
      the following name and to the following address:

     

    Issue
      to:
      _________________________________________

     

    Address:
      _________________________________________

     

    Telephone
      Number: _________________________________________

     

    Facsimile
      Number: _________________________________________

     

    Authorization:
      _________________________________________

     

    By:
      _________________________________________

    Title:
      _________________________________________

     

    Dated:

     

    Account
      Number (if electronic book entry transfer):
      _________________________________________

     

    Transaction
      Code Number (if electronic book entry transfer):
      _________________________________________

     

    [NOTE
      TO
      HOLDER -- THIS FORM MUST BE SENT CONCURRENTLY TO TRANSFER AGENT]

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT

     

    The
      Company hereby acknowledges this Conversion Notice and hereby directs
      Continental Stock Transfer & Trust Co. to issue the above indicated number
      of shares of Common Stock in accordance with the Irrevocable Transfer Agent
      Instructions dated January __, 2008 from the Company and acknowledged and agreed
      to by Continental Stock Transfer & Trust Co.

     

    
      	 	 	 
	 	MSGI
              SECURITY
              SOLUTIONS, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:


    

     

    
      
         

      

        -20-