Document:

Dash 8 Purchase Agreement

    
      

      

    

    EXHIBIT 10.1
 

     

    

    _________________________________________________________________

    AIRCRAFT
      PURCHASE AGREEMENT C-GVTA

    

    

    Dated
      as
      of December 22, 2006

    Between

    

    WELLS
      FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

    Not
      in
      its individual capacity but solely as Owner Trustee

    (“Seller”)

    

    And

    

    COMPASS
      CAPITAL CORPORATION

    (“Buyer”)

    

    One
      1989
      DeHavilland DHC-8-301 with m/s/n 190 bearing registration marks C-GVTA and
      Two
      Pratt & Whitney Model 100-123 engines m/s/n PCE 123063 and PCE
      123064

    

    _________________________________________________________________

    

    

    
      
        
        

      

      
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    AIRCRAFT
      PURCHASE AGREEMENT
      C-GVTA

    

    This
      AIRCRAFT PURCHASE AGREEMENT C-GVTA, dated as of December 22, 2006 (this
“Agreement”) is entered into by and between Wells Fargo Bank Northwest, National
      Association (as successor to First Security Bank, National Association), not
      in
      its individual capacity but solely as Owner Trustee (“Seller,” “Lessor” or the
“Owner Trustee”) on behalf of Owner Participant (as defined below) and Compass
      Capital Corporation, a California corporation (“Buyer”).

    

    RECITALS

    

    A. Seller
      is
      the owner of the Aircraft, acting as Owner Trustee on behalf of Owner
      Participant under the Trust Agreement (such term and other capitalized terms
      used without definition having the meanings given to them in Section 1
      below).

    

    B. The
      Aircraft is presently leased to the Lessee under the Lease.

    

    C. Buyer
      wishes to purchase the Aircraft from Seller and to assume Seller’s rights and
      obligations under the Lease, and Seller wishes to sell the Aircraft to Buyer
      and
      to assign to Buyer Seller’s rights and obligations under the Lease, all on the
      terms and conditions hereinafter set forth. 

    

    AGREEMENT

    

    NOW
      THEREFORE, in consideration of the promises and the mutual covenants hereinafter
      contained the parties hereby agree as follows:

    

    1. Definitions. For
      all
      purposes of this Agreement, unless the context requires otherwise, in addition
      to those terms defined elsewhere in this Agreement, each of the following terms
      shall have the meanings indicated below and, in each case, defined terms may
      be
      used in either the singular or the plural, as circumstances may
      warrant:

    

    “Affiliate”
shall
      mean, with respect to any Person, any other Person directly or indirectly
      controlling, controlled by or under common control with such Person, including,
      without limitation, any limited partnership, limited liability company or
      grantor trust of which such Person or any Affiliate of such Person is the
      trustee or sole grantor sole or co-general partner or managing agent and any
      members of any limited liability company and any Affiliate of such Person,
      such
      limited partnership, limited liability company or grantor trust.

    

    “Aircraft”
shall
      mean, collectively, the Airframe and the Engines and including therewith all
      parts, components, instruments, appurtenances, accessories, furnishings and
      other equipment of whatever nature which are incorporated or installed in or
      attached thereon and all Records pertaining thereto.

    

    
      
        
        

      

      
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    “Airframe”
shall
      mean the DeHavilland DHC-8-301 with m/s/n 190 built in 1989 and bearing Canadian
      registration mark C-GVTA.

    

    “Assignment
      Agreement”
shall
      mean the Agreement for Assignment and Assumption of Lease substantially in
      the
      form attached hereto as Exhibit A.

    

    “Aviation
      Authority”
shall
      mean the Canadian Minister of Transport.

    

    “Aviation
      Counsel”
shall
      mean Crowe & Dunlevy, Oklahoma City, Oklahoma.

    

    “Buyer
      Indemnitees”
shall
      mean Buyer and its respective Affiliates and their officers, directors,
      shareholders, agents and employees.

    

    “Casualty
      Occurrence”
shall
      mean any of the following events with respect to the Aircraft: (i) the total
      loss of such Aircraft or the use thereof due to theft, disappearance,
      destruction, damage beyond economic repair or rendition of such Aircraft
      permanently unfit for use for any reason whatsoever, (ii) any damage to the
      Airframe or an Engine which results in an insurance settlement with respect
      to
      such property on the basis of a total loss, or (iii) the condemnation,
      confiscation, appropriation or seizure of, or requisition of title to such
      property or the use of such property by or on the authority of any governmental
      authority or purported governmental authority.

    

    “Chief
      Dispatcher’s Certificate”
shall
      mean the Certificate of the Chief Dispatcher of the Lessee to be delivered
      by
      the Lessee on the Closing Date specifying the date, time and location of the
      Aircraft over international waters.

    

    “Closing”
shall
      mean the consummation of the sale of the Aircraft and the assignment of the
      Lease pursuant to this Agreement.

    

    “Closing
      Date”
shall
      mean the date specified in the Chief Dispatcher’s Certificate or another date
      mutually agreed upon by Buyer and Seller.

    

    “Delivery
      Location”
shall
      mean in a location in international airspace as specified in the Chief
      Dispatcher’s Certificate

    

    “Delivery
      Receipt”
shall
      mean a Delivery Receipt substantially in the form of Exhibit B
      hereto.

    

    “Effective
      Time”
shall
      mean the time of the arrival of the Aircraft at the Delivery Location, as
      specified in the Chief Dispatcher’s Certificate.

     

    “Engines”
shall
      mean the two (2) Pratt & Whitney Model 100-123 engines m/s/n PCE 123063 and
      PCE 123064 (each of which engines has 550 or more rated shaft takeoff horsepower
      or the equivalent of such horsepower).

    

    
      
        
        

      

      
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    “Event
      of Default”
shall
      have the meaning specified therefor in the Lease.

    

    “Event
      of Loss”
shall
      have the meaning specified therefor in the Lease.

    

    “International
      Registry”
shall
      mean the International Registry of Mobile Assets.

    

    “Irrevocable
      Closing Agreement (S/N 190)”
shall
      mean the Irrevocable Closing Agreement (S/N 190) substantially in the form
      attached hereto as Exhibit D.

    

    “Lease”
shall
      mean the Aircraft Lease Agreement dated as of June 26, 1996 between PLM
      Worldwide Leasing Corp. (“Worldwide”) as Lessor and Lessee (as successor to Time
      Air Inc.) as Lessee, as assigned by Worldwide to PLM Transportation Equipment
      Corporation (“TEC”) on June 26, 1996 and re-assigned by TEC to Worldwide on
      September 26, 1996 and as assigned by Worldwide to Lessor by the Assignment
      of
      Lease Agreement dated as of September 26, 1996, as amended by the Aircraft
      Lease
      Amendment dated as of September 26, 1996 between Worldwide, TEC, Lessor and
      Time
      Air Inc., as further amended by the Amended and Restated Payment Deferral
      Agreement dated as of May 6, 1997, between Time Air Inc., Worldwide, TEC and
      the
      Owner Trustee, as further amended by the letter agreement dated as of November
      11, 2003 between Jazz Air Inc. (as successor to Time Air Inc. and a predecessor
      to the Lessee) and the Owner Trustee, as further amended by the letter agreement
      dated as of November 1, 2004 between the Owner Trustee and the Lessee, as
      assigned by Jazz Air Limited Partnership to Jazz Air LP by Notice of Assignment
      to the Owner Trustee dated March 2, 2006 and as further amended by the letter
      agreement dated as of November 1, 2006 between the Owner Trustee and the Lessee,
      together with all exhibits, schedules, riders, and attachments related
      thereto.

    

    “Lender”
shall
      mean Wells Fargo Equipment Finance, Inc., a Delaware corporation.

    

    “Lessee”
shall
      mean Jazz Air Limited Partnership, as successor to Jazz Air Inc., as successor
      to Time Air Inc. 

    

    “Lien”
shall
      mean any mortgage, pledge, lien, encumbrance, lease, and security interest
      or
      claim against title to or right of possession.

    

    “Novation
      Agreement”
shall
      mean an Aircraft Lease Novation and Amendment Agreement 190 by and among Seller,
      Buyer and Lessee, in mutually agreeable form and dated as of the Closing
      Date.

    

    “Owner
      Participant”
shall
      mean PLM Equipment Growth Fund V Liquidating Trust, a liquidating trust formed
      under the laws of the State of Delaware, as successor to PLM Equipment Growth
      Fund V.

    

    “Permitted
      Liens”
shall
      mean (i) the Lease, including the interest of the Lessee arising under the
      Lease
      and (ii) such encumbrances as may be permitted under clauses (a), (d) and (e)
      of
      the definition of “Permitted Lien” as defined in the Lease.

    

    
      
        
        

      

      
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    “Person”
shall
      mean and include any individual person, corporation, partnership, limited
      liability company, limited partnership, limited liability partnership, firm,
      joint stock company, joint venture, trust, estate, unincorporated organization,
      association or governmental entity.

    

    “Purchase
      Price”
shall
      have the meaning specified in Section 2(b) hereof. 

    

    “Records”
shall
      mean all records associated with the Aircraft on the Closing Date, including,
      without limitation, the flight, engineering, and maintenance manuals, drawings,
      documents, equipment lists, operational records, maintenance records and other
      data pertaining to the Aircraft.

    

    “Rent”
shall
      have the meaning specified therefor in the Lease.

    

    “Seller
      Indemnitee”
shall
      mean Seller and Owner Participant and their respective Affiliates and their
      respective officers, directors, shareholders, agents and employees.

    

    “Taxes”
shall
      mean all taxes, fees, levies, imposts, duties, assessments, value-added taxes,
      withholdings, deductions and other charges of any nature whatsoever, or any
      amount payable on account of or as security for any of the foregoing (but not
      including taxes imposed on or payable with respect to the income of Seller
      or
      Owner Participant), payable as a result of the consummation of the transactions
      contemplated by this Agreement at the instance of or imposed as a result by
      any
      statutory, governmental, international, state, federal, local or municipal
      authority, agency, body or department whatsoever, together with any and all
      fines, penalties, additions to tax and/or interest computed by reference
      thereto. 

    

    “Trust
      Agreement”
shall
      mean Trust Agreement dated as of October 16, 1989 between Wells Fargo Bank
      Northwest, National Association (as successor to First Security Bank, National
      Association) as Owner Trustee and Owner Participant (as successor to PLM
      Equipment Growth Fund V as successor to PLM Transportation Equipment
      Corporation) as Owner Participant, as amended by the First Amendment to Trust
      Agreement dated May 11, 1990, the Trust Agreement Amendment dated May 8, 1995,
      the Amendment to Trust Agreement dated as of August 29, 2003 and
      the
      Acknowledgement and Consent Agreement (C-GVTA) dated as of June 30, 2006 by
      and
      among the Owner Trustee, PLM Equipment Growth Fund V, the Owner Participant,
      and
      PLM Financial Services, Inc. individually and as Trustee of the PLM Equipment
      Growth Fund V Liquidating Trust.

    

    “Warranty
      Bill of Sale”
shall
      mean a Warranty Bill of Sale with respect to the Aircraft substantially
      in the form of Exhibit C hereto.

    

    
      
        
        

      

      
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    2. Sale
      of the Aircraft; Purchase Price; Assignment and Assumption;
      Closing.

    

    (a) Subject
      to the terms and conditions specified in this Agreement, on the Closing Date
      and
      at the Effective Time, (i) Buyer hereby agrees to purchase from Seller, and
      Seller hereby agrees to sell to Buyer, the Aircraft and all Records with respect
      thereto and (ii) Seller agrees to assign to Buyer, and Buyer agrees to assume
      from Seller, Seller’s rights and obligations under the Lease. Seller and Buyer
      acknowledge and agree that Lessee has required that the Aircraft arrive at
      the
      Delivery Location on December 22, 2006 or December 23, 2006 at a time specified
      by Lessee and that at such time contemporaneous payment of the Purchase Price
      will be impossible Accordingly, Buyer and Seller hereby that upon satisfaction
      or waiver of all conditions precedent to the Closing (other than arrival of
      the
      Aircraft at the Delivery Location and payment of the Purchase Price), all
      documents to be delivered at the Closing shall be deemed delivered and shall
      be
      released as of the Effective Time and the Closing shall be deemed to have
      occurred as of the Effective Time, subject only to the Irrevocable Closing
      Agreement (S/N 190) becoming effective upon such Closing and the condition
      subsequent of payment of the Purchase Price by Lender pursuant to the
      Irrevocable Closing Agreement (S/N 190). 

    

    (b) Buyer
      shall purchase the Aircraft “as is, where is,” at the Delivery Location and at
      the Effective Time. The purchase price due to Seller (the “Purchase Price”)
      shall be $2,655,993.15, calculated as follows: (i) $2,645,000 plus
      (ii) an
      additional amount calculated by multiplying $2,675,000 times the daily
      equivalent of 6.0% per annum, compounded annually (such daily equivalent being
      $439.73 per day), for the period from and including November 27, 2006 to but
      not
      including the Closing Date minus
      (iii)
      the amount of any payment of Rent paid by the Lessee under the Lease after
      November 27, 2006 and received by the Seller on or prior to the Closing Date.
      Buyer shall be entitled to receive all Rent payable by the Lessee after the
      Closing Date, and Buyer and Seller agree to remit immediately upon receipt
      to
      the other, without interest, any payments received from Lessee under the Lease
      which belong the other party under the terms of this Agreement. Seller agrees
      to
      accept the Irrevocable Closing Agreement (S/N 190) in satisfaction of Buyer’s
      obligation to pay the Purchase Price hereunder.

    

    (c)
       On
      or
      before the Closing Date, Seller shall execute and deliver to its counsel an
      original Warranty Bill of Sale for the Aircraft to be delivered to Buyer, Buyer
      and Seller shall execute and deliver to its respective counsel four signed
      originals of the Assignment Agreement to be delivered to the other party
      thereto, and Buyer and Seller and Lessee shall execute and deliver to their
      respective counsel four signed originals of the Novation Agreement for delivery
      to the other parties thereto, all undated. All documents so executed and
      delivered to counsel shall be held in escrow by counsel until released in
      accordance with Section 2(e) below. 

    

    (d) On
      the
      Closing Date and at a mutually agreeable time, each of Buyer, Seller, Lessee
      and
      Owner Participant (directly or through counsel) shall acknowledge and agree
      that
      the conditions precedent to Closing have been satisfied but for the arrival
      of
      the Aircraft at the Delivery Location and the condition subsequent specified
      in
      2(a) above will take the following actions:

    

    (i)
      Seller will deliver the Bill of Sale and the Assignment Agreement to Buyer
      to be
      dated, released and become effective as of the Effective Time; (ii) Buyer will
      deliver the Assignment Agreement and the Irrevocable Closing Agreement (S/N
      190)
      to Seller to be dated, released and become effective upon the Effective Time,
      (iii) Buyer and Seller will deliver the Novation Agreement to each other and
      to
      Lessee to be dated, released and become effective upon the Effective Time;
      (iv)
      Buyer and Seller will authorize registration of the sale (or confirmation of
      prospective interests previously filed) with the International Registry as
      soon
      as practicable after the Effective Time. 

    

    
      
        
        

      

      
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    All
      such
      documents shall be released and shall become effective at the Effective Time.
      As
      soon as practicable thereafter, Buyer and Seller shall complete a Delivery
      Receipt with respect to the Aircraft, which shall conclusively evidence the
      acceptance of the Aircraft by Buyer on the date thereof for all purposes of
      this
      Agreement.

     

    (e) Title
      and
      risk of loss to the Aircraft shall pass to Buyer at the Effective Time, subject
      to the terms and conditions of Section 2(a) above.

    

    3. Conditions
      to Buyer’s Purchase Obligation.
      Buyer’s
      obligation to purchase the Aircraft from Seller is subject to the following
      conditions precedent:

    

    (a) All
      representations and warranties of Seller contained in Section 5 hereof and
      by Owner Participant in Attachment A hereto shall be true and correct as of
      the
      Closing Date with the same force and effect as though made on and as of the
      Closing Date, and no Casualty Occurrence shall have occurred on or before the
      Closing Date.

    

    (b) Buyer
      shall have received confirmation from counsel to Seller that it holds all
      documentation to be delivered by Seller under Section 2 hereof and from counsel
      to Lessee that it holds the documentation to be delivered by Lessee under
      Section 2 hereof.

    

    (c) Buyer
      shall have received confirmation from Aviation Counsel that upon registration
      of
      the interests with the International Registry referred to in paragraph (b)
      above, Aviation Counsel shall issue an opinion of Aviation Counsel to Buyer
      (and
      any assignee of Buyer) to the effect that the interests of Buyer as owner of
      the
      Aircraft and assignee of the Lease have been duly registered with the
      International Registry and at the time of such registration there were no Liens
      of record against the Aircraft filed with the International
      Registry.

    

    (d) Buyer
      shall have received satisfactory assurances of the enforceability of the Lease
      under the laws of Canada and its applicable provinces.

    

    (e)
       Buyer
      shall have received a certificate of insurance from Lessee revised to reflect
      the interests of Buyer and Lender in the Aircraft and otherwise complying with
      the requirements of the Lease.

    

    4. Conditions
      to Seller’s Sale Obligation.
      Seller’s obligation to sell the Aircraft to Buyer is subject to the following
      conditions precedent:

    

    (a)
       All
      representations and warranties of Buyer contained in Section 6 hereof shall
      be true and correct as of the Closing Date with the same force and effect as
      though made on and as of the Closing Date, and no Casualty Occurrence shall
      have
      occurred as to the Aircraft on or before the Closing Date.

    

    
      
        
        

      

      
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    (b) Seller
      shall have received confirmation from counsel to Buyer that it holds all
      documentation to be delivered by Buyer under Section 2 hereof and from counsel
      to Lessee that it holds the documentation to be delivered by Lessee under
      Section 2 hereof.

    

    (c) Seller
      shall have received confirmation from Aviation Counsel that upon registration
      of
      the interests with the International Registry referred to in paragraph (b)
      above, Aviation Counsel shall issue an opinion of Aviation Counsel to Seller
      to
      the effect that the interests of Buyer as owner of the Aircraft and assignee
      of
      the Lease have been duly registered with the International Registry and at
      the
      time of such registration there were no Liens of record against the Aircraft
      filed with the International Registry.

    

    (d) Seller
      shall have received payment of the Purchase Price in accordance with the terms
      hereof.

    

    (e)
       Seller
      shall have received a certificate of insurance from Lessee satisfying the
      requirements of Section 20 hereof.

    

    5. Representations,
      Warranties and Certain Disclaimers of Seller.

    

    (a) Seller,
      in its individual capacity with respect to clauses (i) and (iv) below only
      and
      otherwise solely as Owner Trustee for Owner Participant, represents, warrants
      and covenants as follows:

    

    (i) Seller
      is
      a national banking association duly organized and validly existing under the
      laws of the United States of America and is the Owner Trustee under the Trust
      Agreement.

    

    (ii) Seller
      has full power and lawful authority to transfer title to the Aircraft and to
      assign the Lease to Buyer in accordance with this Agreement, the Warranty Bill
      of Sale and the Assignment Agreement and has and will transfer to Buyer good
      and
      marketable title to the Aircraft free and clear of Liens or other defects in
      title (other than Permitted Liens) and will assign the Lease to Buyer free
      and
      clear of Liens or other defects in title and will warrant and defend the same
      to
      Buyer.

    

    (iii)
       Neither
      the execution and delivery of this Agreement nor the consummation of the
      transactions contemplated hereby nor compliance by Seller with any of the terms
      and provisions hereof will contravene any law, rule or regulation of the State
      of Utah or any law, rule or regulation of the United States of America governing
      Seller’s banking and trust powers or result in any breach of, or constitute any
      default under, any material indenture, mortgage, chattel mortgage, deed of
      trust, conditional sales contract, bank loan or credit agreement, corporate
      charter, by-law or other agreement or instrument to which Seller is a party
      or
      by which Seller or its properties may be bound or affected.

    

    
      
        
        

      

      
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    (iv) This
      Agreement and the consummation of the transactions contemplated hereby have
      been
      duly authorized, executed and delivered by Seller and constitute the valid,
      enforceable and binding obligation of Seller (subject only to the effect of
      bankruptcy or insolvency laws).

    

    (v) No
      suit
      or action, investigation, inquiry or request for information by any governmental
      authority or administrative agency against Seller, no suit or action by any
      private party against Seller, and no legal or administrative proceeding has
      been
      instituted or threatened against Seller which seeks to delay or prevent the
      transactions contemplated hereby or challenge the terms or provisions of this
      Agreement.

    

    (vi) Other
      than the registration of the sale of title to the Aircraft and the assignment
      of
      the Lease with the International Registry, no consent, approval or authorization
      of, or declaration, filing or registration with or notice to any person, entity
      or governmental authority under the federal or state laws of any of the United
      States governing the banking and trust powers of the Seller is required to
      be
      made or obtained by Seller in connection with the execution and delivery of
      this
      Agreement and the consummation of the transactions contemplated hereby by
      Seller.

    

    (vii) There
      are
      no agreements with the Lessee regarding the Aircraft or the Lease other than
      the
      Lease and the Novation Agreement, and no other amendments to the Lease have
      been
      executed or are under discussion with the Lessee.

    

    (viii) To
      Seller’s knowledge, neither an Event of Default nor an Event of Loss has
      occurred under the Lease, Seller is not in default with respect to any of its
      obligations under the Lease, and no prepayment of Rent due under the Lease
      has
      occurred. Seller has not waived any obligations of Lessee under the
      Lease.

    

    (ix) The
      Lease
      is constituted by those documents specified in the definition thereof in this
      Agreement and the Lease is in full force and effect and has not been terminated
      by the Seller. If any time hereafter Seller shall obtain an original signed
      copy
      of the Lease (or any part thereof), Seller shall promptly deliver the same
      to
      Buyer or as Buyer may direct.

     

    (b) THE
      WARRANTY WITH RESPECT TO TITLE SET FORTH IN SECTION 5(a)(ii) HEREOF IS EXCLUSIVE
      AND IN LIEU OF ALL OTHER WARRANTIES WITH RESPECT TO THE AIRCRAFT OF SELLER
      OR
      ANY OF THE OTHER SELLER INDEMNITEES WHETHER WRITTEN, ORAL OR IMPLIED, AND BUYER
      EXPRESSLY ACKNOWLEDGES THAT THE AIRCRAFT IS BEING SOLD ON AN “AS IS, WHERE IS”
BASIS, AND WITHOUT ANY OTHER REPRESENTATION, GUARANTIES, OR WARRANTY OF SELLER
      OR ANY OF THE OTHER SELLER INDEMNITEES, EXPRESS OR IMPLIED, OF ANY KIND, ARISING
      BY LAW OR OTHERWISE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING SELLER
      FOR
      ITSELF AND ON BEHALF OF THE OTHER SELLER INDEMNITEES SPECIFICALLY DISCLAIMS,
      AND
      EXCLUDES HEREFROM, AND BUYER ACKNOWLEDGES AND AGREES THAT NEITHER SELLER NOR
      ANY
      OTHER SELLER INDEMNITEE SHALL BY VIRTUE OF HAVING SOLD THE AIRCRAFT, BE DEEMED
      TO HAVE MADE (i) ANY WARRANTY AS TO THE AIRWORTHINESS OR CONDITION OF THE
      AIRCRAFT; (ii) ANY EXPRESS 

     

    
      
        
        

      

      
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    OR
      IMPLIED REPRESENTATION
      OR WARRANTY AS TO THE MERCHANTABILITY, FITNESS, DESIGN, OR CONDITION OF, OR
      AS
      TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE AIRCRAFT; (iii) ANY EXPRESS
      OR IMPLIED REPRESENTATION OR WARRANTY OF FREEDOM FROM ANY RIGHTFUL CLAIM BY
      WAY
      OF INFRINGEMENT OR THE LIKE; (iv) ANY IMPLIED REPRESENTATION OR WARRANTY ARISING
      FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; OR (v) ANY
      OTHER REPRESENTATION OR WARRANTY (EXCEPTING THE EXPRESS WARRANTY WITH RESPECT
      TO
      TITLE AND THE ABSENCE OF LIENS SET FORTH IN SECTION 5(a)(ii) ABOVE). NEITHER
      SELLER NOR ANY OTHER SELLER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR
      LIABILITY TO BUYER OR ANY OTHER PERSON, WHETHER ARISING IN CONTRACT OR TORT,
      OUT
      OF ANY NEGLIGENCE OR STRICT LIABILITY OF SELLER OR SUCH SELLER INDEMNITEE OR
      OTHERWISE, FOR (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
      DIRECTLY OR INDIRECTLY BY THE AIRCRAFT, ANY ENGINE OR ANY PART THEREOF OR BY
      ANY
      INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN, INCLUDING WITHOUT
      LIMITATION, ANY FAILURE OF THE AIRCRAFT OR ANY PART THEREOF TO PROCESS
      ACCURATELY DATE AND TIME RECORDS, (ii) THE USE, OPERATION, PERFORMANCE OF
      THE AIRCRAFT OR ANY RISKS RELATING THERETO, OR (iii) THE OPERATION, SERVICING,
      MAINTENANCE, REPAIR, OR IMPROVEMENT OF THE AIRCRAFT.

    

    6. Certain
      Representations, Warranties and Covenants of Buyer.
      Buyer
      represents, warrants and covenants as follows:

    

    (a) Buyer
      is
      a corporation in good standing under the laws of California

    and
      has
      the corporate power and authority to carry on its business as presently
      conducted and to perform its obligations under this Agreement and is a “citizen
      of the United States” within the meaning of the applicable provisions of the
      Federal Aviation Act.

    

    (b) Neither
      the execution and delivery of this Agreement nor the consummation of the
      transactions contemplated hereby nor compliance by Buyer with any of the terms
      and provisions hereof will contravene any law, rule or regulation binding on
      Buyer or result in any breach of, or constitute any default under, any material
      indenture, mortgage, chattel mortgage, deed of trust, conditional sales
      contract, bank loan or credit agreement, corporate charter, by-law or other
      agreement or instrument to which Buyer is a party or by which Buyer or its
      properties may be bound or affected.

    

    (c) This
      Agreement and the consummation of the transactions contemplated hereby have
      been
      duly authorized, executed and delivered by Buyer and constitutes the valid,
      enforceable and binding obligation of Buyer (subject only to the effect of
      bankruptcy or insolvency laws); 

    

    
      
        
        

      

      
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    (d) No
      suit
      or action, investigation, inquiry or request for information by any governmental
      authority or administrative agency against Buyer, no suit or action by any
      private party against Buyer, and no legal or administrative proceeding has
      been
      instituted or threatened against Buyer which seeks to delay or prevent the
      transactions contemplated hereby or challenge the terms or provisions of this
      Agreement.

    

    (e) Other
      than the registration of the sale of title to the Aircraft and the assignment
      of
      the Lease with the International Registry, no consent, approval or authorization
      of, or declaration, filing or registration with or notice to any person, entity
      or governmental authority under the federal or state laws of any of the United
      States governing the Buyer is required to be made or obtained by Buyer in
      connection with the execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby by Buyer.

    

    (f) Buyer
      has
      inspected the Aircraft and BUYER WILL TAKE AND ACCEPT THE AIRCRAFT “AS IS” AND
“WHERE IS”, WITHOUT RECOURSE TO OR WARRANTY BY SELLER EXCEPT AS SPECIFICALLY
      STATED IN SECTION 5(a)(ii) HEREOF.

    

    7. Indemnification.

    

    (a) By
      Buyer.
      Buyer
      agrees to indemnify, defend and hold harmless each Seller Indemnitee from any
      and all liabilities, damages, losses, expenses, demands, claims, suits or
      judgments by, or on behalf of Buyer, or any third party or parties, including
      reasonable attorneys' fees and disbursements, arising from or relating to (i)
      any breach of any representation, warranty or covenant made by Buyer under
      this
      Agreement, (ii)
      any
      obligations of the lessor arising under or related to the Lease on and after
      the
      Effective Time and
      (iii)
      for death of, or bodily injury to, any person, and for the loss of, damage
      to,
      or destruction of any property, in any manner arising out of the Aircraft,
      or
      any defect therein, or the leasing, care, control, ownership, registration,
      maintenance, use or operation of the Aircraft on and after the Effective Time.
      Buyer's obligations to any Seller Indemnitee hereunder shall not apply to any
      death, injury, loss, damage or destruction which was caused by the gross
      negligence or willful misconduct of such Indemnitee. Buyer shall have the
      obligation to control the negotiation and settlement of any claim or defense
      of
      any action or suit brought against any of the parties indemnified pursuant
      to
      this Section 7(a). Each Seller Indemnitee shall reasonably assist Buyer, if
      requested by Buyer, in the defense of any such action or suit, at Buyer's
      expense, without releasing or waiving any obligation, liability or undertaking
      on the part of Buyer under this Section 7(a). 

    

    (b) By
      Seller.
      Seller
      agrees to indemnify, defend and hold harmless each Buyer Indemnitee from any
      and
      all liabilities, damages, losses, expenses, demands, claims, suits or judgments
      by, or on behalf of Seller, or any third party or parties, including reasonable
      attorneys' fees and disbursements, arising from or relating to (i) any breach
      of
      any representation, warranty or covenant made by Seller under this Agreement,
      (ii) any obligations of the lessor arising under or related to the Lease prior
      to the Effective Time and (iii) for death of, or bodily injury to, any person,
      and for the loss of, damage to, or destruction of any property, in any manner
      arising out of the Aircraft, or any defect therein, or the leasing, care,
      control, ownership, registration, maintenance, leasing, use or operation of
      the
      Aircraft before the Effective Time. Seller's obligations to any Buyer Indemnitee
      hereunder shall not apply to any death, injury, loss, damage or destruction
      which was caused by the gross negligence or willful misconduct of such Buyer
      Indemnitee. Seller shall have the obligation to control the negotiation and
      settlement of any claim or defense of any action or suit brought against any
      of
      the parties indemnified pursuant to this Section 7(b). Each Buyer Indemnitee
      shall reasonably assist Seller, if requested by Seller, in the defense of any
      such action or suit, at Seller's expense, without releasing or waiving any
      obligation, liability or undertaking on the part of Seller under this Section
      7(b).

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    8. Commissions
      and Brokers.

    

    Neither
      Seller nor Buyer has engaged the services of a broker or similar representative
      with respect to this transaction, other than the engagement of Sigma Aircraft
      Management, LLC by Seller. Each party agrees to indemnify and hold the other
      harmless from and against any and all other claims, suits, damages, costs and
      expenses (including, but not limited to reasonable attorney’s fees) asserted by
      any agent, broker or other third party for any commission or compensation of
      any
      nature whatsoever based upon the sale of the Aircraft, if such claim, damage,
      cost or expense arises out of any action or alleged action by the indemnifying
      party, its employees or agents.

    

    9. Taxes.

    

    The
      Purchase Price for the Aircraft does not include the amount of any Taxes, and
      Buyer shall be responsible for and shall pay the amount of any applicable Taxes
      arising out of the transfer of title to the Aircraft from Seller to Buyer.
      In
      the event Seller shall have paid or is required to pay any Taxes for which
      Buyer
      is responsible pursuant to this Section 9, Buyer shall indemnify and hold Seller
      (or Owner Participant, as the case may be) harmless on an after tax basis from
      and against such Taxes, and from all attorneys’ fees, costs and expenses
      incurred in connection with such Taxes. If any claim is made against Seller
      (or
      Owner Participant, as the case may be) for Taxes for which Buyer is responsible
      pursuant to this Section 9, Seller shall promptly notify Buyer. Seller (or
      Owner
      Participant, as the case may be) shall solely be liable for, and Buyer shall
      have no obligation in respect of, any Taxes based on the net income of Seller
      (or Owner Participant, as the case may be). Seller and Buyer agree to use
      commercially reasonable efforts (without cost to either party unless otherwise
      agreed) to minimize the risk of imposition of Taxes and if Taxes are imposed
      to
      reduce the effect and amount thereof, including applying for
      refunds.

    

    10. International
      Registry Filings.
      Seller
      and Buyer each agree to appoint Aviation Counsel to act as its professional
      user
      entity in connection with the Closing, subject to satisfaction of the conditions
      specified in Sections 3 and 4 hereof, to initiate all filings of and to file
      all
      interests in aircraft objects relating to this transaction with the
      International Registry under the Convention on International Interests in Mobile
      Equipment and the Protocol to the Convention on Matters Specific to Aircraft
      Equipment (collectively, the “Cape Town Rules”), and each hereby consents to
      such filings. Seller and Buyer each agree that prospective filings can be made
      with respect to the sale of the Aircraft upon satisfaction of the conditions
      precedent to Closing other than the arrival of the Aircraft at the Delivery
      Location. 

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    11. Further
      Assurances.
      Seller
      and Buyer shall, from time to time, do and perform such other and further acts
      and execute and deliver any and all such other and further instruments as may
      be
      required by law or reasonably requested by the other party to establish,
      maintain and protect the respective rights and remedies of the other and to
      carry out and effect the intent and purpose of this Agreement.

    

    12. Successors
      and Assigns.
      This
      Agreement shall be binding upon and shall inure to the benefit of Seller and
      Buyer, and their respective successors and assigns. This Agreement may not
      be
      assigned by either party without the prior written consent of the other.
      Notwithstanding the foregoing, Seller hereby consents to the collateral
      assignment by Buyer of its rights (but not its obligations) hereunder to
      Lender.

    

    13. Entire
      Agreement; Amendments.
      This
      Agreement (including all schedules and attachments hereto) embodies the complete
      and entire agreement and understanding of the parties with respect to the
      subject matter hereof and supersedes all prior oral or written communications
      regarding the subject matter hereof. Any amendment hereto must be in writing,
      be
      signed by all parties and specifically refer to this Agreement. This Agreement
      will be binding upon the successors and assigns of the parties
      hereto.

    

    14. Expenses.
      Each
      party hereto shall bear its own costs and expenses, including costs of legal
      and
      other professional counsel. Seller and Buyer shall each pay one-half of the
      fees, expenses and costs (including legal fees) of Lessee, if any, incurred
      in
      connection with the sale of the Aircraft and the assignment of the Lease. Buyer
      and Seller shall each pay one-half of the fees, expenses and costs of Aviation
      Counsel, including without limitation all filing fees payable pursuant to the
      Cape Town Rules.

    

    15. Applicable
      Law.
      THIS
      AGREEMENT AND ALL OTHER RELATED INSTRUMENTS AND DOCUMENTS AND THE RIGHTS AND
      OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, IN ALL RESPECTS,
      BE
      GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
      OF
      NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE
(OTHER
      THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW)),
      INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. Each
      of
      the parties hereto hereby submits to the nonexclusive jurisdiction of the courts
      of the State of New York and any federal court of the United States of America
      sitting in New York, New York and consents to the service of process out of
      any
      of the foregoing courts by mailing of copies of the summons and proceedings
      thereof to such party at the address below.

    

    16. Notices.
      Any
      notice required or permitted to be given pursuant to this Agreement shall be
      sent by overnight delivery by a U.S. nationally-recognized courier service
      or
      facsimile transmission, receipt acknowledged, to the addresses appearing beneath
      the signatures of the parties hereto or to such other address as the party
      to
      receive the notice from time to time may designate in writing. Any notice so
      delivered will be effective upon the actual receipt thereof by the party to
      whom
      such notice is addressed.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    17. Survival
      of Representations.
      All
      representations, warranties and indemnities contained in this Agreement shall
      survive the Closing Date, and shall continue in effect notwithstanding any
      expiration or termination of this Agreement to the extent required for full
      performance and satisfaction thereof.

    

    18. Counterparts.
      This
      Agreement may be executed by the parties hereto in separate counterparts, each
      of which when so executed and delivered shall be an original, but all such
      counterparts together shall constitute one and the same instrument.

    

    19. Waiver.
      Neither
      this Agreement nor any provision hereof may be changed, waived or discharged
      orally but only by an instrument in writing signed by the party against which
      enforcement of the change, waiver or discharge is sought.

    

    20. Post-Closing
      Insurance.
      Buyer
      shall use commercial reasonably efforts (at no cost to Buyer) so that the Seller
      Indemnitees shall be named as an additional assured party on the Lessee’s third
      party legal liability insurance with respect to the Aircraft for a period of
      two
      years after the Closing Date.

    

    21. The
      Owner Trustee. Wells
      Fargo Bank Northwest, National Association
      is
      executing this Agreement solely in its capacity as Owner Trustee under the
      Trust
      Agreement and not in its individual capacity (except as expressly stated herein)
      and in no case shall Wells
      Fargo Bank Northwest, National Association
      (or any
      entity acting as Owner Trustee under the Trust Agreement) be personally liable
      for or on account of any of the statements, representations, warranties,
      covenants or obligations stated to be those of the Seller hereunder, all such
      liability, if any, being expressly waived by the parties hereto and any Person
      claiming by, through, or under such party.

    

    [signature
      page follows]

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Aircraft Purchase Agreement
      C-GVTA to be executed by their duly authorized representatives effective as
      of
      date first written above.

    

    
      	
              Seller: 

              WELLS
                FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

              Not
                in its individual capacity but solely as Owner Trustee

               

              By:________________________________

               

              Name:______________________________

               

              Title:_______________________________

            	
              Buyer: 

              COMPASS
                CAPITAL CORPORATION

               

               

               

               

              By:________________________________

               

              Name:______________________________

               

              Title:_______________________________

            
	
              Corporate
                Trust Lease Group

              299
                South Main Street, 12th Floor

              MAC:
                U1228-120

              Salt
                Lake City, UT 84111

              Attention:
                Michael Hoggan, Vice President

              T
                   801-246-2755

              F
                801-246-5053

               

              With
                a copy to Owner Participant:

              PLM
                Equipment Growth Fund V Liquidating Trust

              c/o
                PLM Financial Services, Inc., Trustee

              Address:
                1889 Sunset Blvd.

              San
                Diego, CA 92103

              Attention:
                Richard Brock, Chief Financial Officer

              T
                619-299-4133

              F
                619-299-4133

               

            	
              750
                Battery Street, Suite 430

              San
                Francisco, CA 94111

              Attention:
                Ben J. Assaf, E.V.P.

              T
                415-392-4900

              F
                415-392-9142DEBT EXCHANGE/SUBSCRIPTION AGREEMENT

         DEBT EXCHANGE/SUBSCRIPTION AGREEMENT (this "Agreement") made as of the
date on the signature page hereof between MSGI Security Solutions, Inc., a
corporation organized under the laws of the State of Nevada (the "Company"), and
the natural person or entity whose signature is at the end of this Agreement
("Subscriber").

         WHEREAS, the Company is indebted to the Subscriber for goods and/or
services delivered and/or performed prior to the date hereof in an aggregate
amount set forth on the signature page hereof (the "Indebtedness");

         WHEREAS, the Subscriber understands that the Company has limited cash
resources with which to repay the Indebtedness;

         WHEREAS, the Subscriber has agreed to accept in satisfaction of the
Indebtedness shares of the Company's Series G Convertible Preferred Stock (the
"Preferred Stock"), which stock will automatically convert into common stock of
the Company par value $0.01 per share ("Common Stock") at a price per share
equal to the greater of $1.00 and the market price as of the date the
Stockholders of the Company approve an increase in the Company's authorized
shares of Common Stock and the conversion of the Preferred Stock;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:

         I. SUBSCRIPTION FOR SERIES G CONVERTIBLE PREFERRED STOCK AND
            REPRESENTATIONS BY AND COVENANTS OF PURCHASER

         1.1. SUBSCRIPTION FOR CONVERTIBLE PREFERRED. Subject to the terms and
conditions hereinafter set forth, Subscriber hereby subscribes for and agrees to
purchase from the Company and the Company agrees to sell to the Subscriber such
number of shares of the Preferred Stock as set forth on the signature page
hereof in exchange for cancellation of the Indebtedness. A copy of the
Certificate of Designations, Preferences, and Rights of the Preferred Stock is
attached hereto as Exhibit A. The Subscriber acknowledges that it has read it
carefully.

         1.2. SUBJECT TO STOCKHOLDER APPROVAL. Subscriber hereby agrees that the
Company shall not be required to issue, or reserve for issuance at any time
until the Stockholders of the Company have approved an amendment to its Articles
of Incorporation increasing its authorized shares of Common Stock and the
conversion of the Preferred Stock (the "MSGI Stockholder Approval"). The Company
agrees to solicit MSGI Stockholder Approval as soon as practicable and in no
event later than March 31, 2007.

         1.3. RELIANCE ON EXEMPTIONS. Subscriber acknowledges that the issuance
of the Preferred Stock has not been reviewed by the United States Securities and
Exchange Commission (the "SEC") or any state agency because of the Company's
representations that this is intended to be a nonpublic offering exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act") and state securities laws. Subscriber understands that the Company is
relying in part upon the truth and accuracy of, and Subscriber's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of Subscriber

<PAGE>

set forth herein in order to determine the availability of such
exemptions and the eligibility of Subscriber to acquire the Preferred Stock.

         1.4. INVESTMENT PURPOSE. Subscriber represents that the Preferred Stock
is being purchased for its own account, for investment purposes only and not for
distribution or resale to others in contravention of the registration
requirements of the 1933 Act. Subscriber agrees that it will not sell or
otherwise transfer the Preferred Stock or the Common Stock into which it may
convert (except to an affiliate which agrees to comply with all provisions of
this Agreement), unless they are registered under the 1933 Act or unless an
exemption from such registration is available.

         1.5. ACCREDITED INVESTOR. Subscriber represents and warrants that it is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act and that it is able to bear the economic risk of
an investment in the Common Stock and the Warrant. A copy of which is attached
hereto as Exhibit B.

         1.6. RISK OF INVESTMENT. Subscriber recognizes that the purchase of the
Preferred Stock involves a high degree of risk in that: (i) an investment in the
Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Preferred Stock; (ii) transferability of the Preferred Stock and the Common
Stock into which it may convert are limited; and (iii) the Company may require
substantial additional funds to operate its business and there can be no
assurance that adequate funds will be available to the Company, in addition to
all of the other risks set forth in the SEC Documents (as defined in Section 1.7
hereof). Subscriber acknowledges the disclosure relating to the risks affecting
the Company set forth in this Agreement and the SEC Documents.

         1.7. INFORMATION. Subscriber acknowledges that the Company has made
available for its review: (a) the Company's Annual Report on Form 10-K for the
year ended June 30, 2006 (which Report was deficient in that it fails to contain
an opinion from the Company's independent public accounting firm), (b) the
Company's Quarterly Reports, on Form 10-Q for the fiscal quarters ended
September 30, 2005, December 31, 2005 and March 31, 2006 (c) the Company's Proxy
Statements, Definitive Information Statements, and Current Reports on Form 8-k,
as filed with the SEC between December 31, 2005 and the date of this
Subscription Agreement (collectively the "SEC Documents") all of which are
available on the SEC's website www.SEC.gov and hereby represents that: (i)
Subscriber has been furnished by the Company during the course of this
transaction with all information regarding the Company which it has requested;
and (ii) that Subscriber has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers of the Company concerning the
Company and the terms and conditions of this Agreement, and any additional
information which it has requested, if any.

         1.8. NO REPRESENTATIONS. Subscriber hereby represents that, except as
expressly set forth in this Agreement, no representations or warranties have
been made to Subscriber by the Company or any agent, employee or affiliate of
the Company, and in entering into this transaction Subscriber is not relying on
any information other than that contained or referenced herein and the results
of independent investigation by Subscriber.

                                       2

<PAGE>

         1.9. TAX CONSEQUENCES. Subscriber acknowledges that the issuance may
involve tax consequences and that the contents of this Agreement do not contain
tax advice or information. Subscriber acknowledges that it must retain its own
professional advisors to evaluate the tax and other consequences of an
investment in the Preferred Stock and the Common Stock into which it may
convert.

         1.10. TRANSFER OR RESALE. Subscriber understands that Rule 144 (the
"Rule") promulgated under the 1933 Act requires, among other conditions, a
one-year holding period prior to the resale (in limited amounts) of securities
acquired in a non-public offering without having to satisfy the registration
requirements under the 1933 Act. Subscriber understands and hereby acknowledges
that the Company is under no obligation to register the securities comprising
the Preferred Stock or the Common Stock into which it may convert under the 1933
Act. Rule 144 also requires that the Company be current in its 1934 Act reports.
See the Disclosure Schedule attached hereto.

         1.11. LEGENDS. Subscriber understands that the certificates or other
instrument representing the Preferred Stock and the Common Stock issuable upon
conversion of the Preferred Stock (when, and if issued) until such time as they
have been registered under the 1933 Act or, if earlier, until paragraph (k) of
the Rule shall become applicable, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such certificates or other instruments):

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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
               APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF
               COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS
               NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
               LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

         1.12. NO GENERAL SOLICITATION. Subscriber represents that Subscriber
was not induced to invest by any of the following: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over the news or radio; and (ii) any seminar or
meeting whose attendees were invited by any general solicitation or advertising.

         1.13. VALIDITY; ENFORCEMENT. If Subscriber is a corporation,
partnership, trust or other entity, Subscriber represents and warrants that: (a)
it is authorized and otherwise duly qualified to purchase and hold the Preferred
Stock and the Common Stock into which it may convert; and (b) that this
Subscription Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal, binding and enforceable obligation of
Subscriber.

         1.14. ADDRESS. Subscriber hereby represents that the address furnished
by Subscriber at the end of this Subscription Agreement is Subscriber's
principal home or business address.

                                       3

<PAGE>

         1.15. NASD MEMBER. Subscriber acknowledges that if it not a Registered
Representative of a NASD member firm.

         1.16 REINCORPORATION IN DELAWARE. The Company shall have the right,
without any additional consent from the Subscriber, or its assignee, to take all
necessary actions to reincorporate the Company in the State of Delaware,
provided that none of such actions abrogates or diminishes any preference or
right of the Subscriber.

         II. REPRESENTATIONS BY THE COMPANY

         The Company represents and warrants to Subscriber, except as set forth
in the SEC Documents or the disclosure schedules, if any, attached hereto:

         2.1. SECURITIES LAW COMPLIANCE. The offer, offer for sale, and sale of
the Preferred Stock has not been registered under the 1933 Act. The Preferred
Stock are to be offered, offered for sale and sold in reliance upon the
exemptions from the registration requirements of Section 4 of the 1933 Act. The
Company will use its commercially reasonable efforts to conduct the issuance in
compliance with the requirements of Regulation D of the General Rules and
Regulations under the 1933 Act and applicable state "blue sky" laws, and the
Company will file all appropriate notices of offering with the SEC.

         2.2. ORGANIZATION AND QUALIFICATION. The Company is duly organized and
validly existing in good standing under the laws of the State of Nevada, and has
the requisite power and authorization to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in the State of New York and
in every other jurisdiction in which its ownership of property or the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Subscription Agreement, "Material
Adverse Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company, or on the transactions contemplated hereby, or the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under this Agreement.

         2.3. SEC DOCUMENTS; FINANCIAL STATEMENTS. The SEC Documents represent
all reports, schedules, forms, statements and other documents required to be
filed by it since December 31, 2005 with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Company has made available to Subscriber or its representatives copies of the
SEC Documents, which are also available on the SEC's website www.SEC.gov. Except
as noted on the Disclosure Schedule as of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with

                                       4

<PAGE>

respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (a) as may be otherwise indicated in such
financial statements or the notes thereto, or (b) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments that would not be
material).

         2.4. ABSENCE OF CHANGES. Since June 30, 2006, other than as set forth
in the SEC Documents and the Disclosure Schedule to this Subscription Agreement,
the Company has not (i) incurred any debts, obligations or liabilities,
absolute, accrued, contingent or otherwise, whether due or to become due, except
current liabilities incurred in the usual and ordinary course of business and
consistent with past practices, having individually or in the aggregate a
Material Adverse Effect, (ii) made or suffered any changes in its contingent
obligations by way of guaranty, endorsement (other than the endorsement of
checks for deposit in the usual and ordinary course of business), indemnity,
warranty or otherwise, (iii) discharged or satisfied any liens or paid any
obligation or liability other than current liabilities shown on the balance
sheet dated as of June 30, 2006, and current liabilities incurred since the date
of the balance sheet dated as of June 30, 2006, in each case in the usual and
ordinary course of business and consistent with past practices, (iv) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, (v)
sold, transferred or leased any of its assets except in the usual and ordinary
course of business and consistent with past practices, (vi) cancelled or
compromised any debt or claim, or waived or released any right, of material
value, (vii) suffered any physical damage, destruction or loss (whether or not
covered by insurance) adversely affecting the properties, business or prospects
of the Company, (viii) entered into any transaction other than in the usual and
ordinary course of business except for this Subscription Agreement and the other
Offering Documents and the related agreements referred to herein and therein,
(ix) declared or paid any dividends on or made any other distributions with
respect to, or purchased or redeemed, any of its outstanding equity securities,
(x) suffered or experienced any change in, or condition affecting, its condition
(financial or otherwise), properties, assets, liabilities, business operations,
results of operations or prospects other than changes, events or conditions in
the usual and ordinary course of its business and consistent with past
practices, having (either by itself or in conjunction with all such other
changes, events and conditions) a Material Adverse Effect or (xi) made any
change in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted.

         2.5. TITLE. The Company has good and marketable title to all properties
and assets owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are not significant or important in relation to the
Company's business; all of the material leases and subleases under which the
Company is the lessor or sublessor of properties or assets or under which the
Company holds properties or assets as lessee or sublessee are in full force and
effect, and the Company is not in default in any material respect with respect
to any of the terms or provisions of any of such leases or subleases, and no
material claim has been asserted by anyone adverse to rights of the Company as
lessor, sublessor, lessee or sublessee under any of the leases or subleases
mentioned above, or affecting or questioning the right of the Company to
continued possession of the leased or subleased premises or assets under any
such lease or sublease. The

                                       5

<PAGE>

Company owns or leases all such properties as are necessary to its
operations as described in the Offering Documents.

         2.6. PROPRIETARY RIGHTS. The Company owns, or is duly licensed to use
or possess, or possesses exclusive and enforceable rights to use all patents,
patent applications, trademarks, service marks, copyrights, trade secrets,
processes, formulations, technology or know-how used in the conduct of its
business (the "Proprietary Rights"). The Company has not received any notice of
any claims, nor does it have any knowledge of any threatened claims, and knows
of no facts which would form the basis of any claim, asserted by any person to
the effect that the sale or use of any product or process now used or offered by
the Company or proposed to be used or offered by the Company infringes on any
patents or infringes upon the use of any such Proprietary Rights of another
person and, to the best of the Company's knowledge, no others have infringed the
Company's Proprietary Rights.

         2.7. LITIGATION. Except as noted on the Disclosure Schedule there is no
material action, suit, investigation, customer complaint, claim or proceeding at
law or in equity by or before any arbitrator, court, governmental
instrumentality or agency, self-regulatory organization or body or public board
now pending or, to the knowledge of the Company, threatened against the Company
of any of the Company's officers or directors in their capacities as such (or
basis therefore known to the Company), the adverse outcome of which would have a
Material Adverse Effect. The Company is not subject to any judgment, order,
writ, injunction or decree of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign that has a Material Adverse Effect.

         2.8. COMPLIANCE WITH LAWS; LICENSES, ETC. The Company has not received
notice of any violation of or noncompliance with any laws, ordinances,
regulations and orders applicable to its business that would have a Material
Adverse Effect and that has not been cured. The Company has all material
licenses and permits and other governmental certificates, authorizations and
permits and approvals (collectively, "Licenses") required by every government or
regulatory body for the operation of its business as currently conducted and the
use of its properties. The Licenses are in full force and effect and to the
Company's knowledge no violations currently exist in respect of any License and
no proceeding is pending or threatened to revoke or limit any thereof.

         2.9. AUTHORIZATION; ENFORCEMENT; VALIDITY. Subject to MSGI Stockholder
Approval the Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement, to file and perform its
obligations under this Agreement, and to issue the Preferred Stock in accordance
with the terms this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
by this Agreement, including without limitation the issuance of the Preferred
Stock, have been duly authorized by the Company's board of directors. This
Subscription Agreement constitutes the legal, binding and enforceable obligation
of the Company.

         2.10. AUTHORIZATION OF SECURITIES. Subject to MSGI Stockholder
Approval, the issuance, sale and delivery of the Preferred Stock have been duly
authorized by all requisite corporate action of the Company. When so issued,
sold and delivered in accordance with this Agreement for the consideration set
forth therein, the Preferred Stock will be duly executed,

                                       6

<PAGE>

issued and delivered and will constitute valid and legal obligations of
the Company enforceable in accordance with their respective terms and, in each
case, will not be subject to preemptive or any other similar rights of the
stockholders of the Company or others which rights shall not have been waived
prior to the Closing.

         2.11. EXEMPTION FROM REGISTRATION. Assuming the accuracy of the
information provided by Subscriber in this Subscription Agreement, the offer and
sale of the Preferred Stock pursuant to the terms of this Subscription Agreement
are exempt from the registration requirements of the 1933 Act and the rules and
regulations promulgated thereunder.

         2.12. BROKERS. Neither the Company nor any of its officers, directors,
employees or stockholders has employed any broker or finder in connection with
the transactions contemplated by this Agreement.

         2.13. TITLE TO SECURITIES. When the Preferred Stock has been duly
delivered to Subscriber upon cancellation of the Indebtedness pursuant to the
terms of this Agreement, Subscriber shall receive from the Company good and
marketable title to such Preferred Stock free and clear of all liens,
encumbrances and claims whatsoever (with the exception of claims arising through
the acts or omissions of Subscriber and except as arising from applicable
federal and state securities laws), and the Company shall have paid all taxes,
if any, in respect of the original issuance thereof.

         2.14. NO GENERAL SOLICITATION. None of the Company, any of its
affiliates, and, to the Company's knowledge, any person acting on its behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the 1933 Act) in connection with the offer or
sale of the Preferred Stock.

         III. TERMS OF PURCHASE

         3.1. CLOSING DATE. Provided that all conditions to closing have been
satisfied or waived, the closing (the "Closing") shall take place at the offices
of the Company, 575 Madison Avenue, New York, New York 10022, or such other
location as mutually agreed to by the Company and Subscriber.

         3.2. CERTIFICATES. Subscriber hereby authorizes and directs the Company
to deliver the Preferred Stock to be issued to Subscriber at the address
indicated in this Subscription Agreement.

         IV. MISCELLANEOUS

         4.1. NOTICE. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party), or (c) one (1) business day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same with respect to the Company. With respect to the Subscriber
the address and facsimile number, for such communication appears on the
signature page hereof. The addresses and facsimile numbers for such
communications shall be:

                                       7

<PAGE>

                           If to the Company:

                           MSGI Security Solutions, Inc.
                           575 Madison Avenue
                           New York, New York 10022
                           Telephone: (917) 339-7150
                           Facsimile: (917) 339-7166
                           Attention: Jeremy Barbera

                           With a copy to:

                           Greenberg Traurig, LLP
                           MetLife Building
                           200 Park Avenue
                           New York, New York  10166
                           Telephone:  (212) 801-9323
                           Facsimile:  (212) 801-6400
                           Attention:  Alan I. Annex, Esq.

         4.2. ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all other
prior oral or written agreements between Subscriber, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Subscription Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor Subscriber makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Subscription Agreement may be amended or waived other than by an instrument
in writing signed by the Company and Subscriber.

         4.3. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Subscription
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Subscription Agreement in any other jurisdiction.

         4.4. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of Nevada, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Nevada or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of Nevada. Each party hereby
irrevocably submits to the exclusive jurisdiction of the federal courts sitting
in the State of Nevada, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
sending a copy thereof to such party by overnight courier service at the address
for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein

                                       8

<PAGE>

shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party hereby irrevocably waives any right it may
have, and agrees not to request, a jury trial for the adjudication of any
dispute hereunder or in connection with or arising out of this Subscription
Agreement or any transaction contemplated hereby.

         4.5. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

         4.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Common Stock. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least a majority the Securities then outstanding,
except by merger or consolidation. Subscriber may assign some or all of its
rights hereunder without the consent of the Company, provided, however, that any
such assignment shall not release Subscriber from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, which consent shall not be
unreasonably withheld.

         4.7. SURVIVAL. The representations and warranties of the Company and
Subscriber contained in Articles I and II shall survive the Closing for a period
of one year.

         4.8. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Subscription Agreement and the consummation of
the transactions contemplated hereby.

         4.9. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party,
notwithstanding anything herein to the contrary.

         4.10. CONFIDENTIALITY. Each party agrees that it shall keep
confidential and not divulge, furnish or make accessible to anyone, the
confidential information concerning or relating to the business or financial
affairs of the other party, if any, contained in the Offering Documents to which
it becomes privy until such information has been publicly disclosed by such
other party, until such information is no longer confidential, or unless it is
required to be disclosed under applicable law or regulation.

         4.11. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

                                       9

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written below.

SUBSCRIBER:

By:
    -------------------------
    Name:
    Title:

------------------------------
Taxpayer Identification Number of Purchaser
Or Social Security Number
Address:

Amount of Indebtedness:                          Subscription Accepted by MSGI
                                                 Security Solutions, Inc.:

Number of Shares of Preferred                    By:
Stock subscribed for: _________________             ---------------------------
                                                    Name:
                                                    Title:

Dated:

                                       10

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