Document:

Exhibit
      4.1

    

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
      (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
      FORM,
      THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
      TO
      RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

    

    [FORM
      OF WARRANT]

    

    MSGI
      SECURITY SOLUTIONS, INC.

    

      WARRANT
        TO PURCHASE COMMON STOCK

    

    

    Warrant
      No.: ____________

    Number
      of
      Shares of Common Stock: ____________

    Date
      of
      Issuance: January 10, 2008 ("Issuance
      Date")

    

    MSGI
      Security Solutions, Inc, a Nevada corporation (the "Company"),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [HUDSON BAY FUND, LP] [HUDSON
      BAY
      OVERSEAS FUND, LTD.] [OTHER BUYERS] the registered holder hereof or its
      permitted assigns (the "Holder"),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the "Warrant"),
      at
      any time or times on or after the date hereof (the "Initial
      Exercise Eligibility Date"),
      but
      not after 11:59 p.m., New York time, on the Expiration Date (as defined below),
      ______________ (       )1 
      fully
      paid, nonassessable shares of Common Stock (as defined below) (the
      "Warrant
      Shares").
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of the Warrants to
      purchase Common Stock (the "SPA
      Warrants")
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      January 10, 2008 (the "Subscription
      Date"),
      by
      and among the Company and the investors (the "Buyers")
      referred to therein (the "Securities
      Purchase Agreement").

     

     

      
        

      

    

    1
      Insert
      such Holders pro rata portion of 5,000,000 shares. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1. EXERCISE
      OF WARRANT.

     

    (a) Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including, without limitation, the
      limitations set forth in Section 1(f)), this Warrant may be exercised by the
      Holder on any day on or after the Initial Exercise Eligibility Date, in whole
      or
      in part, by (i) delivery of a written notice, in the form attached hereto
      as Exhibit
      A
      (the
      "Exercise
      Notice"),
      of
      the Holder's election to exercise this Warrant and (ii) (A) payment to the
      Company of an amount equal to the applicable Exercise Price multiplied by the
      number of Warrant Shares as to which this Warrant is being exercised (the
      "Aggregate
      Exercise Price")
      in
      cash or by wire transfer of immediately available funds or (B) by notifying
      the
      Company that this Warrant is being exercised pursuant to a Cashless Exercise
      (as
      defined in Section 1(d)). The Holder shall not be required to deliver the
      original Warrant in order to effect an exercise hereunder. Execution and
      delivery of the Exercise Notice with respect to less than all of the Warrant
      Shares shall have the same effect as cancellation of the original Warrant and
      issuance of a new Warrant evidencing the right to purchase the remaining number
      of Warrant Shares. On or before the first (1st)
      Business Day following the date on which the Company has received each of the
      Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
      Exercise) (the "Exercise
      Delivery Documents"),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company's transfer
      agent (the "Transfer
      Agent").
      On or
      before the third (3rd)
      Trading
      Day following the date on which the Company has received all of the Exercise
      Delivery Documents (the "Share
      Delivery Date"),
      the
      Company shall (X) provided that 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 Warrant Shares to which the Holder is entitled pursuant
      to such exercise to the Holder's or its designee's balance account with DTC
      through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer
      Agent is not participating in the DTC Fast Automated Securities Transfer
      Program, issue and dispatch by overnight courier to the address as specified
      in
      the Exercise Notice, a certificate, registered in the Company's share register
      in the name of the Holder or its designee, for the number of shares of Common
      Stock to which the Holder is entitled pursuant to such exercise. Upon delivery
      of the Exercise Delivery Documents, the Holder shall be deemed for all corporate
      purposes to have become the holder of record of the Warrant Shares with respect
      to which this Warrant has been exercised, irrespective of the date such Warrant
      Shares are credited to the Holder's DTC account or the date of delivery of
      the
      certificates evidencing such Warrant Shares, as the case may be. If this Warrant
      is submitted in connection with any exercise pursuant to this Section 1(a)
      and
      the number of Warrant Shares represented by this Warrant submitted for exercise
      is greater than the number of Warrant Shares being acquired upon an exercise,
      then the Company shall as soon as practicable and in no event later than three
      Business Days after any exercise and at its own expense, issue a new Warrant
      (in
      accordance with Section 7(d)) representing the right to purchase the number
      of
      Warrant Shares purchasable immediately prior to such exercise under this
      Warrant, less the number of Warrant Shares with respect to which this Warrant
      is
      exercised. No fractional shares of Common Stock are to be issued upon the
      exercise of this Warrant, but rather the number of shares of Common Stock to
      be
      issued shall be rounded up to the nearest whole number. The Company shall pay
      any and all taxes which may be payable with respect to the issuance and delivery
      of Warrant Shares upon exercise of this Warrant. 

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (b) Exercise
      Price.
      For
      purposes of this Warrant, "Exercise
      Price"
      means
      $2.50, subject to adjustment as provided herein.

     

    (c) Company's
      Failure to Timely Deliver Securities.
      If the
      Company shall fail for any reason or for no reason to issue to the Holder within
      three (3) Business Days of receipt of the Exercise Delivery Documents, 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
      exercise of this Warrant, 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 Business
      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
      1(a). In addition to the foregoing, if within three (3) Trading Days after
      the
      Company's receipt of the facsimile copy of a Exercise Notice the Company shall
      fail to issue and deliver a certificate to the Holder and register such shares
      of Common Stock on the Company's share register or credit the Holder's balance
      account with DTC for the number of shares of Common Stock to which the Holder
      is
      entitled upon the Holder's exercise hereunder, and if on or after such 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 shares of
      Common Stock issuable upon such exercise that the Holder anticipated receiving
      from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the Holder's request
      and
      in the Holder's discretion, either (i) 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 Warrant Shares) shall terminate, or (ii) promptly honor its obligation
      to
      deliver to the Holder a certificate or certificates representing such Warrant
      Shares and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the Closing Bid Price on the date of exercise.

     

    (d) Cashless
      Exercise.
       Notwithstanding
      anything contained herein to the contrary, if a registration statement covering
      the resale of the Warrant Shares that are the subject of the Exercise Notice
      by
      the Holder pursuant to the 1933 Act (the "Unavailable
      Warrant Shares")
      is not
      available for the resale of such Unavailable Warrant Shares, the Holder may,
      in
      its sole discretion, exercise this Warrant in whole or in part and, in lieu
      of
      making the cash payment otherwise contemplated to be made to the Company upon
      such exercise in payment of the Aggregate Exercise Price, elect instead to
      receive upon such exercise the "Net Number" of shares of Common Stock determined
      according to the following formula (a "Cashless
      Exercise"):

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	Net
              Number	 	
              =

            	 	
              (A
                x B) - (A x C)

            
	 	 	 	 	
              B

            

    

     

    For
      purposes of the foregoing formula:

     

    
      	A
              =	
              the
                total number of shares with respect to which this Warrant is then
                being
                exercised.

            

    

     

    
      	B
              =	
              the
                Weighted Average Price of the shares of Common Stock (as reported
                by
                Bloomberg) for the five (5) consecutive Trading Days ending on the
                date
                immediately preceding the date of the Exercise
                Notice.

            

    

     

    
      	C
              =	
              the
                Exercise Price then in effect for the applicable Warrant Shares at
                the
                time of such exercise.

            

    

     

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 12.

     

    (f) Limitations
      on Exercises.

     

    (i)
      Beneficial
      Ownership.
      The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person's affiliates) would
      beneficially own in excess of 4.99% (the "Maximum
      Percentage")
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise. For purposes of the foregoing sentence, the aggregate number of shares
      of Common Stock beneficially owned by such Person and its affiliates shall
      include the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which the determination of such sentence is being made,
      but shall exclude shares of Common Stock which would be issuable upon (x)
      exercise of the remaining, unexercised portion of this Warrant beneficially
      owned by such Person and its affiliates and (y) exercise or conversion of the
      unexercised or unconverted portion of any other securities of the Company
      beneficially owned by such Person and its affiliates (including, without
      limitation, any convertible notes or convertible preferred stock or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein. Except as set forth in the preceding sentence, for purposes
      of
      this paragraph, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes
      of this Warrant, in determining the number of outstanding shares of Common
      Stock, the 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, Current
      Report on Form 8-K or other public filing with the Securities and Exchange
      Commission, 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 the Holder, the Company shall within
      one Business Day confirm orally and in writing to the 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 SPA Securities and
      the
      SPA Warrants, by the 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 not in excess of 9.99% specified in such
      notice; provided that (x) any such increase will not be effective until the
      sixty-first (61st)
      day
      after such notice is delivered to the Company, and (y) any such increase or
      decrease will apply only to the Holder and not to any other holder of SPA
      Warrants.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (ii)
      Principal
      Market Regulation.
      The
      Company shall not be obligated to issue any shares of Common Stock upon exercise
      of this Warrant or conversion of the SPA Securities and the Holder shall not
      have the right to receive upon exercise of this Warrant any shares of Common
      Stock if the issuance of such shares of Common Stock would exceed that number
      of
      shares of Common Stock which the Company may issue upon exercise or conversion,
      as applicable, of the SPA Warrants and SPA Securities or otherwise without
      breaching the Company's obligations under any applicable rules or regulations
      of
      any applicable Eligible Market (the "Exchange
      Cap"),
      except that such limitation shall not apply in the event that the Company (x)
      obtains the approval of its stockholders as required by the applicable rules
      of
      the Eligible Market for issuances of shares of Common Stock in excess of such
      amount or (y) 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. Until such approval or written opinion is obtained, no
      Holder shall be issued in the aggregate, upon exercise or conversion, as
      applicable, of any SPA Warrants or SPA Securities, shares of Common Stock in
      an
      amount greater than the product of the Exchange Cap multiplied by a fraction,
      the numerator of which is the total number of shares of Common Stock underlying
      the SPA Warrants issued to such Holder pursuant to the Securities Purchase
      Agreement on the Issuance Date and the denominator of which is the aggregate
      number of shares of Common Stock underlying the SPA Warrants issued to the
      Buyers pursuant to the Securities Purchase Agreement on the Issuance Date (with
      respect to each Holder, the "Exchange
      Cap Allocation").
      In
      the event that any Holder shall sell or otherwise transfer any of such Holder's
      SPA Warrants, the transferee shall be allocated a pro rata portion of such
      Holder's Exchange Cap Allocation, and the restrictions of the prior sentence
      shall apply to such transferee with respect to the portion of the Exchange
      Cap
      Allocation allocated to such transferee. In the event that any holder of SPA
      Warrants shall exercise all of such holder's SPA Warrants 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 of SPA Warrants on a pro rata basis in proportion to the
      shares of Common Stock underlying the SPA Warrants then held by each such
      holder. In the event that the Company is prohibited from issuing any Warrant
      Shares for which an Exercise Notice has been received as a result of the
      operation of this Section 1(f)(ii), the Company shall pay cash in exchange
      for
      cancellation of such Warrant Shares, at a price per Warrant Share equal to
      the
      difference between the Weighted Average Price and the Exercise Price as of
      the
      date of the attempted exercise.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (g) Insufficient
      Authorized Shares.
      If at
      any time while any of the Warrants 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 exercise of the Warrants
      at
      least a number of shares of Common Stock equal to 120% (the "Required
      Reserve Amount")
      of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of all of the Warrants then outstanding (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 Warrants 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 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.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a) Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Subscription Date, the Company issues or sells, or
      in
      accordance with this Section 2 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 (as defined in the Securities Purchase Agreement) for a consideration
      per share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise 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 Exercise Price then in effect
      shall be reduced to an amount equal to the New Issuance Price. Upon each such
      adjustment of the Exercise Price hereunder, the number of Warrant Shares shall
      be adjusted to the number of shares of Common Stock determined by multiplying
      the Exercise Price in effect immediately prior to such adjustment by the number
      of Warrant Shares acquirable upon exercise of this Warrant immediately prior
      to
      such adjustment and dividing the product thereof by the Exercise Price resulting
      from such adjustment. For purposes of determining the adjusted Exercise Price
      under this Section 2(a), the following shall be applicable:

     

    (i) 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(a)(i), 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 Exercise Price or number of Warrant Shares 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. 

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (ii) 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(a)(ii), 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 Exercise
      Price or number of Warrant Shares 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 of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 2(a), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale.

     

    (iii) 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 Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares 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(a)(iii), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant 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(a) shall be made if such adjustment would
      result in an increase of the Exercise Price then in effect or a decrease in
      the
      number of Warrant Shares.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (iv) 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.

    

    (v) 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.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (b) Adjustment
      upon Subdivision or Combination of Common Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of Warrant Shares will be proportionately increased.
      If
      the Company at any time on or after the Subscription Date combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination will be proportionately
      increased and the number of Warrant Shares will be proportionately decreased.
      Any adjustment under this Section 2(b) shall become effective at the close
      of
      business on the date the subdivision or combination becomes
      effective.

     

    (c)  Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    (d) Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 2 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company's Board of Directors will make an
      appropriate adjustment in the Exercise Price and the number of Warrant Shares
      so
      as to protect the rights of the Holder; provided that no such adjustment
      pursuant to this Section 2(c) will increase the Exercise Price or decrease
      the
      number of Warrant Shares as otherwise determined pursuant to this Section
      2.

     

    3. RIGHTS
      UPON DISTRIBUTION OF ASSETS.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of cash, stock or other securities, property or options by way
      of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a "Distribution"),
      at
      any time after the issuance of this Warrant, then, in each such
      case:

     

    (a) any
      Exercise Price in effect immediately prior to the close of business on the
      record date fixed for the determination of holders of shares of Common Stock
      entitled to receive the Distribution shall be reduced, effective as of the
      close
      of business on such record date, to a price determined by multiplying such
      Exercise Price by a fraction of which (i) the numerator shall be the Closing
      Bid
      Price of the shares of Common Stock on the Trading Day immediately preceding
      such record date minus the value of the Distribution (as determined in good
      faith by the Company's Board of Directors) applicable to one share of Common
      Stock, and (ii) the denominator shall be the Closing Bid Price of the shares
      of
      Common Stock on the Trading Day immediately preceding such record date;
      and

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (b) the
      number of Warrant Shares shall be increased to a number of shares equal to
      the
      number of shares of Common Stock obtainable immediately prior to the close
      of
      business on the record date fixed for the determination of holders of shares
      of
      Common Stock entitled to receive the Distribution multiplied by the reciprocal
      of the fraction set forth in the immediately preceding paragraph (a); provided
      that in the event that the Distribution is of shares of Common Stock (or common
      stock) ("Other
      Shares of Common Stock")
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of an increase in
      the
      number of Warrant Shares, the terms of which shall be identical to those of
      this
      Warrant, except that such warrant shall be exercisable into the number of shares
      of Other Shares of Common Stock that would have been payable to the Holder
      pursuant to the Distribution had the Holder exercised this Warrant immediately
      prior to such record date and with an aggregate exercise price equal to the
      product of the amount by which the exercise price of this Warrant was decreased
      with respect to the Distribution pursuant to the terms of the immediately
      preceding paragraph (a) and the number of Warrant Shares calculated in
      accordance with the first part of this paragraph (b).

     

    4. PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a) Purchase
      Rights.
      In
      addition to any adjustments pursuant to Section 2 above, 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 shares 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 exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) 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 shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase
      Rights.

     

    (b) Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Warrant and the other Transaction Documents in accordance
      with the provisions of this Section (4)(b) pursuant to written agreements in
      form and substance satisfactory to the Required Holders and approved by the
      Required Holders prior to such Fundamental Transaction, including agreements
      to
      deliver to each holder of Warrants in exchange for such Warrants a security
      of
      the Successor Entity evidenced by a written instrument substantially similar
      in
      form and substance to this Warrant, including, without limitation, an adjusted
      exercise price equal to the value for the shares of Common Stock reflected
      by
      the terms of such Fundamental Transaction, and exercisable for a corresponding
      number of shares of capital stock equivalent to the shares of Common Stock
      acquirable and receivable upon exercise of this Warrant (without regard to
      any
      limitations on the exercise of this Warrant) prior to such Fundamental
      Transaction, and satisfactory to the Required Holders and (ii) the
      Successor Entity (including its Parent Entity) is a publicly traded corporation
      whose common stock is quoted on or listed for trading on an Eligible Market.
      Upon the occurrence of any Fundamental Transaction, the Successor Entity shall
      succeed to, and be substituted for (so that from and after the date of such
      Fundamental Transaction, the provisions of this Warrant referring to the
      "Company" shall refer instead to the Successor Entity), and may exercise every
      right and power of the Company and shall assume all of the obligations of the
      Company under this Warrant with the same effect as if such Successor Entity
      had
      been named as the Company herein. Upon consummation of the Fundamental
      Transaction, the Successor Entity shall deliver to the Holder confirmation
      that
      there shall be issued upon exercise of this Warrant at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Common Stock (or
      other
      securities, cash, assets or other property) issuable
      upon the exercise of the Warrant
      prior
      to
      such Fundamental Transaction,
      such
      shares of the publicly traded Common Stock (or its equivalent) of the Successor
      Entity (including its Parent Entity) which the Holder would have been entitled
      to receive upon the happening of such Fundamental Transaction had this Warrant
      been converted immediately prior to such Fundamental Transaction, as adjusted
      in
      accordance with the provisions of this Warrant.
      In
      addition to and not in substitution for any other rights hereunder, prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of shares
      of Common Stock are entitled to receive securities or other assets with respect
      to or in exchange for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant
at
      any
      time after the consummation of the Fundamental Transaction but
      prior
      to the Expiration Date,
      in lieu
      of the shares of the Common Stock (or
      other
      securities, cash, assets or other property) issuable
      upon the exercise of this Warrant prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had this Warrant been exercised immediately prior to such
      Fundamental Transaction. Provision
      made pursuant to the preceding sentence shall be in a form and substance
      reasonably satisfactory to the Required Holders. The provisions of this Section
      shall apply similarly and equally to successive Fundamental Transactions and
      Corporate Events and shall be applied without regard to any limitations on
      the
      exercise of this Warrant. 

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (c) Notwithstanding
      the foregoing, in the event of a Fundamental Transaction, at the request of
      the
      Holder delivered before the 90th day after such Fundamental Transaction,
the
      Company (or the Successor Entity) shall purchase this Warrant from the Holder
      by
      paying to the Holder, within five Business Days after such request (or, if
      later, on the effective date of the Fundamental Transaction),
      cash in
      an amount equal to the Black Scholes Value of the remaining unexercised portion
      of this Warrant on the date of such Fundamental Transaction. 

     

    5. NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, Bylaws or through any reorganization, transfer
      of
      assets, consolidation, merger, scheme of arrangement, 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 of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions
      as may be necessary or appropriate in order that the Company may validly and
      legally issue fully paid and nonassessable shares of Common Stock upon the
      exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants
      are outstanding, take all action necessary to reserve and keep available out
      of
      its authorized and unissued shares of Common Stock, solely for the purpose
      of
      effecting the exercise of the SPA Warrants, 120% of the number of shares of
      Common Stock as shall from time to time be necessary to effect the exercise
      of
      the SPA Warrants then outstanding (without regard to any limitations on
      exercise).

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    6. WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person's
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 6, the Company shall provide the Holder with copies
      of the same notices and other information given to the stockholders of the
      Company generally, contemporaneously with the giving thereof to the
      stockholders.

     

    7. REISSUANCE
      OF WARRANTS.

     

    (a) Transfer
      of Warrant.
      If this
      Warrant is to be transferred, the Holder shall surrender this Warrant to the
      Company, whereupon the Company will forthwith issue and deliver upon the order
      of the Holder a new Warrant (in accordance with Section 7(d)), registered as
      the
      Holder may request, representing the right to purchase the number of Warrant
      Shares being transferred by the Holder and, if less than the total number of
      Warrant Shares then underlying this Warrant is being transferred, a new Warrant
      (in accordance with Section 7(d)) to the Holder representing the right to
      purchase the number of Warrant Shares not being transferred.

     

    (b) Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, 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 this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 7(d)) representing the right
      to
      purchase the Warrant Shares then underlying this Warrant.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (c) Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 7(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    (d) Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), (iii) shall have an issuance date, as indicated on the face of such
      new Warrant which is the same as the Issuance Date, and (iv) shall have the
      same
      rights and conditions as this Warrant.

     

    8. NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Warrant, including
      in reasonable detail a description of such action and the reason therefore.
      Without limiting the generality of the foregoing, the Company will give written
      notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least fifteen (15) days prior to the date on which the
      Company closes its books or takes a record (A) with respect to any dividend
      or
      distribution upon the shares of Common Stock, (B) with respect to any grants,
      issuances or sales of any Options, Convertible Securities or rights to purchase
      stock, warrants, securities or other property to holders of shares of Common
      Stock or (C) for determining rights to vote with respect to any Fundamental
      Transaction, dissolution or liquidation, provided in each case that such
      information shall be made known to the public prior to or in conjunction with
      such notice being provided to the Holder.

     

    9. AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Required Holders; provided that no such action may
      increase the exercise price of any SPA Warrant or decrease the number of shares
      or class of stock obtainable upon exercise of any SPA Warrant without the
      written consent of the Holder. No such amendment shall be effective to the
      extent that it applies to less than all of the holders of the SPA Warrants
      then
      outstanding.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    10. GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed and enforced in accor-dance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

     

    11. CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
      and shall not be construed against any person as the drafter hereof. The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

     

    12. DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      (2)
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three (3) Business Days of such disputed determination
      or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two (2) Business Days submit via facsimile (a) the disputed determination
      of the Exercise Price to an independent, reputable investment bank selected
      by
      the Company and approved by the Holder or (b) the disputed arithmetic
      calculation of the Warrant Shares to the Company's independent, outside
      accountant. The Company shall cause at its expense the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holder of the results no later than ten Business
      Days 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 demonstrable error.

     

    13. REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
      The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      to
      pursue actual damages for any failure by the Company to comply with the terms
      of
      this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    14. TRANSFER. This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(f)
      of
      the Securities Purchase Agreement.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    15. CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a) "Black
      Scholes Value"
      means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the "OV" function on Bloomberg determined as of the day
      immediately following the public announcement of the applicable Fundamental
      Transaction and reflecting (i) a risk-free interest rate corresponding to the
      U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as
      of such date of request and (ii) an expected volatility equal to the greater
      of
      60% and the 100 day volatility obtained from the HVT function on
      Bloomberg.

     

    (b) "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    (c) "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.

     

    (d) "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 Holder are unable to
      agree
      upon the fair market value of such security, then such dispute shall be resolved
      pursuant to Section 12. All such determinations to be appropriately adjusted
      for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

     

    (e) "Common
      Stock"
      means
      (i) the Company's shares of Common Stock, par value $0.01 per share, and
      (ii) any share capital into which such Common Stock shall have been changed
      or any share capital resulting from a reclassification of such Common
      Stock.

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

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

     

    (g) "Eligible
      Market"
      means
      the Principal Market, The New York Stock Exchange, Inc., The NASDAQ Global
      Market, or The NASDAQ Global Select Market.

     

    (h) "Expiration
      Date"
      means
      the date sixty (60) months after the Initial Exercise Eligibility Date or,
      if
      such date falls on a day other than a Business Day or on which trading does
      not
      take place on the Principal Market (a "Holiday"),
      the
      next date that is not a Holiday.

     

    (i) "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.

     

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

     

    (k) "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

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

     

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

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    (n) "Required
      Holders"
      means
      the holders of the SPA Warrants representing at least a majority of shares
      of
      Common Stock underlying the SPA Warrants then outstanding.

     

    (o) "SPA
      Securities" means the Preferred Shares issued pursuant to the Securities
      Purchase Agreement.

     

    (p) "Successor
      Entity"
      means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    (q) "Trading
      Day"
      means
      any day on which the Common Stock are 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 Common
      Stock are then traded; provided that "Trading Day" shall not include any day
      on
      which the Common Stock are scheduled to trade on such exchange or market for
      less than 4.5 hours or any day that the 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).

     

    (r) "Weighted
      Average Price"
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its "Volume at Price" function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Required Holders. 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 12 with the
      term "Weighted Average Price" being substituted for the term "Exercise Price."
      All such determinations shall be appropriately adjusted for any share dividend,
      share split or other similar transaction during such period.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Common Stock to be duly executed
      as
      of the Issuance Date set out above.

     

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

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

     

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    

    MSGI
      SECURITY SOLUTIONS, INC.

     

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of
      MSGI Security Solutions, Inc., a Nevada corporation (the "Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    

    1.
      Form
      of Exercise Price. The Holder intends that payment of the Exercise Price shall
      be made as:

    

    ____________ a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

    

    ____________ a
      "Cashless
      Exercise"
      with
      respect to _______________ Warrant Shares.

    

    2.
      Payment of Exercise Price. In the event that the holder has elected a Cash
      Exercise with respect to some or all of the Warrant Shares to be issued pursuant
      hereto, the holder shall pay the Aggregate Exercise Price in the sum of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

    

    3.
      Delivery of Warrant Shares. The Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the Warrant.

    

    Date:
      _______________ __, ______

     

     

    
      	
              
Name
              of Registered Holder	 	 	 
	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	
              
Name:	 	 	
            
	 	Title:	 	 	 

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT

    

    The
      Company hereby acknowledges this Exercise Notice and hereby directs Continental
      Stock Transfer & Trust Co. to issue the above indicated number of shares of
      Common Stock in accordance with the 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: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.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (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

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (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: 

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    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:

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (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-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]