8-K

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                             Current Report Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                         Date of Report: February 21, 2006

                          MSGI SECURITY SOLUTIONS, INC.

               (Exact name of Registrant as specified in charter)



  Nevada                       0-16730                 88-0085608
- --------------------------------------------------------------------------------
(State or other              (Commission              (I.R.S. Employer
jurisdiction of              File No.)              Identification No.)
incorporation)


                               575 Madison Avenue
                            New York, New York 10022
                    (Address of Principal Executive Offices)

                                  917-339-7134
              (Registrant's telephone number, including area code)



Item 1.01 Entry into a Material Definitive Agreement
Item 2.03 Creation of a Direct Financial Obligation
Item 3.02 Unregistered Sales of Equity Securities

On February 21, 2006, MSGI Security Solutions, Inc. (the "Company") held the
first closing (the "Initial Closing") on a bridge loan transaction, pursuant to
a Bridge Loan Agreement, to be secured with individual promissory notes, with
certain accredited investors. vFinance Investments, Inc. acted as the placement
agent (the "Placement Agent") in the transaction.

The terms of the Bridge Loan Agreement allow for the investors to lend up to a
maximum aggregate total of $820,000 in exchange for promissory notes having a
principal amount of $100,000 for every $82,000 of funds borrowed at the stated
maturity dates, thus creating a maximum potential aggregate principal obligation
by the Company of $1.0 million. As of the date of this filing, the Company has
held the first closing totaling an aggregate obligation of approximately
$280,000. The terms of each note issued pursuant to the Bridge Loan Agreement
call for a maturity date of the earlier of February 21, 2007 (the first
anniversary of the initial closing date), the date on which the Company enters
into any equity transaction that results in funding of at least $1.0 million in
aggregate or the date of any default of the terms of the promissory notes by the
Company. No additional interest above the principal amount accrues on any
individual promissory note until the stated maturity date. After the maturity
date, interest shall accrue at a rate equal to 18% per annum or the highest rate
allowed by law, whichever is lower. Interest, if any, will accrue on a daily
basis and payable in cash, until such time as the outstanding balances are paid.
The holder of any individual promissory note may demand payment of all or any
portion of the note, together with any accrued interest and any other amounts
due, as of the maturity date or any date thereafter. The Company may prepay, in
whole or in part, the outstanding obligation of any of the notes, at any time
prior to the maturity date.

The Company is currently in negotiations with five parties regarding a capital
infusion through the sale of a minority interest in MSGI Italia, Srl, a wholly
owned subsidiary of the Company, to a strategic equity investor. The bridge is
intended to assist the Company in meeting certain obligations during the
aforementioned negotiation period. No assurance can be given that MSGI Italia,
Srl will enter into a future transaction for the sale of a minority interest in
MSGI Italia, Srl.

In addition, per the terms of the Bridge Loan Agreement, warrants to purchase
shares of the Company's common stock in the aggregate of up to a maximum of
600,000 shares have been or will be issued to holders of any notes on the date
of issuance of the notes. Each note holder shall receive a pro rata allocation
of warrants equal to a portion of the aggregate total of up to a maximum of
600,000 shares corresponding to the ratio of the individual notes to the
aggregate promissory notes total of $1.0 million. The warrants shall have an
exercise price of $6.50 and have a term of 5 years. Each of the warrants is
exercisable at the earlier of 65 days after the issuance date or the effective
date of the required registration statement for the common shares underlying the
warrants. The parties have also entered into a registration rights agreement
pursuant to which the Company must file a registration statement covering the
common shares underlying the warrants within 180 days of the Initial Closing of
the promissory notes, and also granted "piggyback" registration rights. The
warrants may be exercised on a cashless basis if a year has passed since the
issuance of the warrants, and there is not an effective registration statement
covering the shares. In addition, the Company will be required to make penalty
payments to the investors if the registration statement is not timely filed or
effective, in accordance with the terms of the registration rights agreement.

Further, per the terms of the Bridge Loan Agreement, a cash fee equal to 7.5% of
the value of the issued promissory notes is being paid to the Placement Agent.
In addition, warrants for the purchase of shares of the Company's common stock,
in the aggregate of 75,000 shares, are being issued to the Placement Agent. upon
closing of the individual promissory notes. The Placement Agent shall receive an
allocation of warrants equal to a portion of the aggregate total of 75,000
shares corresponding to the ratio of the individual notes issued to the
aggregate promissory notes total of $1.0 million. The warrants have piggy back
registration rights for the shares issuable on their exercise and otherwise
generally carry the same terms as those issued to the holders of the promissory
notes as stated above.


The issuance of the notes and warrants constituted a private placement and
therefore was exempt from registration in accordance with Section 4(2) of the
Securities Act of 1933, as amended.

The foregoing summary is qualified in its entirety by the Form of Bridge Loan
Agreement, the Form of Promissory Note, the Form of Warrant and the Form of
Registration Rights Agreement incorporated herein as Exhibits 2.1, 2.2, 2.3 and
2.4 respectively.




Exhibit No.

10.1 Form of Bridge Loan Agreement (certain Annexes are omitted from this filing
but will be filed with the
Commission supplementally upon request).
10.2 Form of Promissory Note
10.3 Form of Warrant
10.4 Form of Registration Rights Agreement








                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                              MSGI SECURITY SOLUTIONS, INC.

Date: February 27, 2006                     By: /s/  Richard J. Mitchell III
                                                ----------------------------
                                            Name:    Richard J. Mitchell III
                                            Title:   Chief Accounting Officer








                                  EXHIBIT INDEX

Exhibit No.                    Description of Exhibit

2.1 Form of Bridge Loan Agreement (certain Annexes are omitted from this filing,
but will be filed with the Commission supplementally upon request).

2.2 Form of Promissory Note

2.3 Form of Warrant

2.4 Form of Registration Rights Agreement


                                       3

EX-10

                              BRIDGE LOAN AGREEMENT


                  THIS BRIDGE LOAN AGREEMENT, dated as of ________, 2006, is
entered into by and between MSGI SECURITY SOLUTIONS, INC., a Nevada corporation
with headquarters located at 575 Madison Avenue, New York, NY 10022 (the
"Company"), and each individual or entity named on an executed counterpart of
the signature page hereto (each such signatory is referred to as a "Buyer")
(each agreement with a Buyer being deemed a separate and independent agreement
between the Company and such Buyer, except that each Buyer acknowledges and
consents to the rights granted to each other Buyer [each, an "Other Buyer"]
under such agreement and the Transaction Agreements, as defined below, referred
to therein).


                              W I T N E S S E T H:

                  WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration for offers and sales to accredited investors
afforded, inter alia, by Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"), and/or Section
4(2) of the 1933 Act; and

                  WHEREAS, each Buyer wishes to lend funds in the amount of the
Purchase Price (as defined below) to the Company, subject to and upon the terms
and conditions of this Agreement and acceptance of this Agreement by the
Company, the repayment of which will be represented by a Promissory Note of the
Company (the "Note"), on the terms and conditions referred to herein; and

                  WHEREAS, in connection with the loan to be made by the Buyer,
the Company has agreed to issue the Note and the Warrant (as defined below) to
the Buyer;

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

                  1. AGREEMENT TO PURCHASE; PURCHASE PRICE.

                  a. Purchase.

                  (i) Subject to the terms and conditions of this Agreement and
the other Transaction Agreements (as defined below), the Buyer hereby agrees to
loan to the Company the principal amount specified on the Buyer's signature page
of this Agreement (the "Purchase Price"), out of the Aggregate Purchase Price
(as defined below).

                  (ii) The actual total Purchase Price of all Buyers (including
Other Buyers), which shall not be less than the Minimum Aggregate Purchase Price
and not more than the Maximum Aggregate Purchase Price (as those terms are
defined below), is referred to as the "Aggregate Purchase Price."

                  (ii) The obligation to repay the loan of the relevant Purchase
Price from the Buyer shall be evidenced by the Company's issuance of one or more
Notes to the Buyer in the principal amount of One Hundred Thousand Dollars
($100,000.00) for each Eighty-two Thousand Dollars ($82,000.00) of the Purchase
Price paid by the Buyer on or in connection with the relevant Closing Date. The
principal amount of each Note, as of any relevant date, is referred to as the
"Note Principal" and the aggregate Note Principal of all Notes, as of any
relevant date, is referred to as the "Aggregate Note Principal." Each Note shall
be payable on the date (the "Stated Maturity Date") which is the first annual
anniversary of the Initial Closing Date or the date on which the New Transaction
Threshold (as defined in the Note) occurs. Each Note shall be in the form of
Annex I annexed hereto.

                  (iii) In consideration of the loan to be made by the Buyer,
the Company will issue to such Buyer the Warrant to purchase the number of
shares of the Company's Common Stock, par value $.01 per share ("Common Stock")
as provided in Section 4 hereof.

                  (iv) The loan to be made by the Buyer and the issuance of the
Note and the Warrant to the Buyer and the other transactions contemplated hereby
are sometimes referred to herein and in the other Transaction Agreements as the
purchase and sale of the Securities (as defined below), and are referred to
collectively as the "Transactions."

                  b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:

                  "Additional Closing Date" means, if there is more than one
Closing Date, the relevant Closing Date after the Initial Closing Date.

                  "Affiliate" means, with respect to a specific Person referred
to in the relevant provision, another Person who or which controls or is
controlled by or is under common control with such specified Person.

                  "Buyer Control Person" means each director, executive officer,
promoter, and such other Persons as may be deemed in control of the Buyer
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

                  "Buyer's Allocable Share" means the fraction, of which the
numerator is the Buyer's Purchase Price and the denominator is the Maximum
Aggregate Purchase Price.

                  "Buyer's Closing Date" means, for each Buyer, the Closing Date
for the Purchased Securities purchased by and sold to such Buyer.

                  "Certificates" means the ink-signed Note and the Warrant, each
duly executed by the Company and issued on the relevant Closing Date in the name
of the Buyer.

                  "Closing Date" means the date of the closing of the
Transactions, as provided herein; provided, however, that, once subscriptions
for at least the Minimum Aggregate Purchase Price have been received and
accepted and the Purchase Price for the Buyers whose subscriptions have been
accepted have been received in escrow as provided herein, there may be an
Initial Closing Date followed by one or more Additional Closing Dates, as
provided in Section 6 hereof; and provided, further, that no Closing Date shall
be later than the Latest Closing Date.

                   "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act
(as defined below).

                  "Disclosure Annex" means Annex VII to this Agreement;
provided, however, that the Disclosure Annex shall be arranged in sections
corresponding to the identified Sections of this Agreement, but the disclosure
in any such section of the Disclosure Annex shall qualify other provisions in
this Agreement to the extent that it would be readily apparent to an informed
reader from a reading of such section of the Disclosure Annex that it is also
relevant to other provisions of this Agreement.

                  "Effective Date" has the meaning ascribed to in the
Registration Rights Agreement.

                  "Escrow Agent" means Krieger & Prager LLP, the escrow agent
identified in the Joint Escrow Instructions attached hereto as Annex II (the
"Joint Escrow Instructions").

                  "Escrow Funds" means the Purchase  Price  delivered to the
Escrow Agent as  contemplated  by Sections 1(c) and (d) hereof.

                  "Escrow Property" means the Escrow Funds and the Certificates
delivered to the Escrow Agent as contemplated by Section 1(c) hereof.

                  "Holder" means the Person holding the relevant Securities at
the relevant time.

                  "Initial Closing Date" means the Closing Date or, if there is
more than one Closing Date for the transactions contemplated by this Agreement,
the Closing Date for the first of such closings (which shall be for at least the
Minimum Aggregate Purchase Price).

                  "Last Audited Date" means June 30, 2005.

                  "Latest Closing Date" means the date which is five Trading
Days after the Initial Closing Date, or February 28, 2006, whichever is earlier.

                  "Majority in Interest of the Holders" means, as of the
relevant date, one or more Holders whose respective outstanding Note Principals,
as of such date, aggregate more than fifty percent (50%) of the Aggregate Note
Principal on that date.

                  "Material Adverse Effect" means an event or combination of
events, which individually or in the aggregate, would reasonably be expected to
(x) adversely affect the legality, validity or enforceability of the Purchased
Securities or any of the Transaction Agreements, (y) have or result in a
material adverse effect on the results of operations, assets, or financial
condition of the Company and its subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to perform fully on a timely basis its
material obligations under any of the Transaction Agreements or the transactions
contemplated thereby.

                  "Maximum Aggregate Purchase Price" means Eight Hundred Twenty
                Thousand Dollars ($820,000.00).

                  "Minimum Aggregate Purchase Price" means Two Hundred Thirty
                Thousand Dollars ($230,000.00).

                  "New Common Stock" means shares of Common Stock and/or
securities convertible into, and/or other rights exercisable for, Common Stock,
which are offered or sold in a New Transaction.

                  "New Investor" means the third party investor, purchaser or
lender (howsoever denominated) in a New Transaction.

                  "New Transaction" means

         (i) the offer or sale of New Common Stock by or on behalf of the
         Company to a New Investor and/or

         (ii) the grant of a security interest in or pledge of (x) any or all of
         the Company's assets by the Company and/or (y) shares of the Company's
         Common Stock or securities convertible into or exercisable for the
         Company's Common Stock by any other party in connection with a
         transaction in which the Company borrows or is otherwise obligated to
         pay funds to a third party,

in a transaction offered or consummated after the date hereof; provided,
however, that it is specifically understood that the term "New Transaction" (1)
includes, but is not limited to, a sale of Common Stock or of a security
convertible into Common Stock or an equity or credit line transaction, but (2)
does not include (a) the issuance of Common Stock upon the exercise or
conversion of options, warrants or convertible securities outstanding on the
date hereof, or in respect of any other financing agreements as in effect on the
date hereof and identified in the Disclosure Annex or the Company SEC Documents
(provided the same is not amended after the date hereof), (b) the issuance of,
or the issuance of Common Stock pursuant to, an Employee Stock Option Plan (an
"ESOP") of the Company, such ESOP having been properly approved by the
shareholders of the Company, (c) the issuance of, or the issuance of Common
Stock pursuant to, a non-employee director or consultants' stock option plan of
the Company, (



d) the issuance of shares to a Strategic Partner, or (e) the consummation of
transactions pursuant to this Agreement and the other Transaction Agreements on
an Additional Closing Date or the issuance of Common Stock pursuant to the terms
thereof.

                  "Person" means any living person or any entity, such as, but
not necessarily limited to, a corporation, partnership or trust.

                  "Placement Agent" means vFinance Investments, Inc.

                  "Principal Trading Market" means the NASDAQ SmallCap Market or
such other market on which the Common Stock is principally traded at the
relevant time, but shall not include the "pink sheets."

                  "Purchased Securities" means the Note and the Warrant.

                  "Registrable Securities" shall have the meaning ascribed to it
in the Registration Rights Agreement.

                  "Registration Rights Agreement" means the Registration Rights
Agreement in the form annexed hereto as Annex V as executed by the Buyer and the
Company simultaneously with the execution of this Agreement.

                  "Registration Statement" means an effective registration
statement covering the Registrable Securities.

                   "Rule 144" means (i) Rule 144 promulgated under the 1933 Act
or (ii) any other similar rule or regulation of the SEC that may at any time
permit Holder to sell securities of the Company to the public without
registration .

                  "Securities" means the Note, the Warrant and the Shares.

                  "Shares" means the shares of Common Stock representing any of
the Warrant Shares and the Payment Shares (as defined in the Registration Rights
Agreement).

                  "State of Incorporation" means Nevada.

                  "Strategic Partner" means a third party, whether or not
currently affiliated with the Company, which party (i) is engaged in a business
which is the business in which the Company is engaged or a similar or related
business, and (ii) either (a) subsequently purchases equity securities of the
Company (or securities convertible into equity securities of the Company), or
(b) enters into an agreement for one or more of the following: the licensing by
the Company of all or any portion of its technology to such third party, the
licensing by such third party of all or any portion of its technology to the
Company, or any other coordination of all or a portion of their respective
business activities or operation



s by the Company and such third party.

                  "Trading Day" means any day during which the Principal Trading
Market shall be open for business.

                  "Transfer Agent" means, at any time, the transfer agent for
the Company's Common Stock.

                  "Transaction Agreements" means this Bridge Loan Agreement, the
Note, the Registration Rights Agreement, the Joint Escrow Instructions, and the
Warrant, and includes all ancillary documents referred to in those agreements.

                  "Warrant" means the warrant issued to the Buyer as
contemplated by Section 4 of this Agreement.

                  "Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrant.

                  c. Form of Payment; Delivery of Certificates.

                  (i) The Buyer shall pay the Purchase Price by delivering
immediately available good funds in United States Dollars to the Escrow Agent no
later than the date prior to the Closing Date.

                  (ii) (A) With respect to Initial Closing Date, the Company
will deliver the relevant Certificates to the Escrow Agent no later than one (1)
Trading Day after the Escrow Agent notifies the Company that the Escrow Agent
has on deposit cleared funds from or on behalf of one or more Buyers an
aggregate amount equal to at least the Minimum Aggregate Purchase Price.

                           (B) If there is more than one Closing Date, then with
respect to each Closing Date after the
Initial Closing Date, the Company will deliver the relevant Certificates to the
Escrow Agent within one (1) Trading Days after the Escrow Agent notifies the
Company that the Escrow Agent has on deposit cleared funds equal to the Purchase
Price for the relevant Other Buyers; provided, however, that the aggregate
Purchase Price of all Buyers on all Closing Dates shall not exceed the Maximum
Aggregate Purchase Price.

                           (C) Such Certificates shall be held in escrow as
provided in the Joint Escrow Instructions.

                  (iii) By signing this Agreement, each of the Buyer and the
Company, subject to acceptance by the Escrow Agent, agrees to all of the terms
and conditions of, and becomes a party to,



 the Joint Escrow Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth in full.

                  d. Method of Payment. Payment into escrow of the Purchase
Price shall be made by wire transfer of funds to:

                           Bank of New York
                           350 Fifth Avenue
                           New York, New York 10001

                           ABA# 021000018
                           For credit to the account of Krieger & Prager LLP
                           Account No.:    [To be provided to the Buyer by
                                        Krieger & Prager LLP]
                           Re:      MSGI 2/06 Bridge Transaction
                           For:     [Name of Buyer]

                  2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.

                  The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:

                  a. Without limiting Buyer's right to sell the Securities
pursuant to an effective registration statement or otherwise in compliance with
the 1933 Act, the Buyer is purchasing the Securities for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.

                  b. The Buyer is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3), (ii) experienced in making investments of the kind
described in this Agreement and the related documents, (iii) able, by reason of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and to evaluate the merits and risks of an investment in
the Securities, and (iv) able to afford the entire loss of its investment in the
Securities.

                  c. All subsequent offers and sales of the Securities by the
Buyer shall be made pursuant to registration of the relevant Securities under
the 1933 Act or pursuant to an exemption from registration.

                  d. The Buyer understands that the Securities are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of the 1933 Act and state securities laws and that the Company is
relying upon



 the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.

                  e. The Buyer and its advisors, if any, have been furnished
with or have been given access to all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by the Buyer, including those
set forth in any annex attached hereto. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its management
and have received complete and satisfactory answers to any such inquiries.
Without limiting the generality of the foregoing, the Buyer has also had the
opportunity to obtain and to review the Company's filings on EDGAR listed on
Annex VI hereto (the documents listed on such Annex VI, to the extent available
on EDGAR or otherwise provided to the Buyer as indicated on said Annex VI,
collectively, the "Company's SEC Documents").

                  f. The Buyer understands that its investment in the Securities
involves a high degree of risk.

                  g. If the Buyer is not a United States person (as defined by
Section 7701(a)(30) of the Internal Revenue Code, as currently in effect), such
Buyer hereby represents that it has satisfied itself as to the full observance
of the laws of its jurisdiction in connection with any invitation to subscribe
for the Purchased Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Purchased
Securities, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Securities. The Buyer's
subscription and payment for and continued beneficial ownership, if any, of the
Securities will not violate any applicable securities or other laws of the
Buyer's jurisdiction.

                  h. If the Buyer is an individual, then the Buyer resides in
the state or province identified in the address of the Buyer set forth on the
Buyer's signature page to this Agreement. If the Buyer is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Buyer in which its principal place of business is identified in
the address or addresses of the Buyer set forth on the Buyer's signature page to
this Agreement.

                  i. The Buyer hereby represents that, in connection with the
Buyer's investment or the Buyer's decision to its purchase of the Securities,
the Buyer has not relied on any statement or representation of any Person,
including any such statement or representation by the Company or the Placement
Agent or any of their respective controlling Persons, officers, directors,
partners, agents and employees or any of their respective attorneys, except as
specifically set forth herein. In furtherance of the foregoing, and not in
limitation thereof, the Buyer acknowledges that the Buyer is not relying upon
any Person, other than the Company and its controlling Persons, officers and
directors, as and to the extent specifically set forth herein, in making such
investment. The Buyer agrees that none of (i) any Other Buyer, (ii) any
controlling Persons, officers, directors, partners, agents, or employees of each
respective Other Buyer or (iii) any of their respective attorneys shall be
liable to the Buyer for any action heretofore or hereafter taken or omitted to
be taken by any of them in connection with the purchase of the Purchased
Securities or in connection with the Securities. Each of the Placement Agent,
each Other Buyer and each of their respective controlling Persons, officers,
directors, partners, agents and employees and each of their respective attorneys
is a third party beneficiary of this provision.

                  j. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities.

                  k. This Agreement and the other Transaction Agreements to
which the Buyer is a party, and the transactions contemplated thereby, have been
duly and validly authorized, executed and delivered on behalf of the Buyer and
are valid and binding agreements of the Buyer enforceable in accordance with
their respective terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.

                  l. The Buyer understands that if there is more than one
Closing Date, the terms applicable on the Initial Closing Date (such as, but not
necessarily limited to, the Stated Maturity Date and the Note Principal
specified in the Note amount; the Expiration Date and Exercise Price specified
in the Warrant; and the Initial Required Filing Date and Initial Required
Effective Date specified in the Registration Rights Agreement ) will apply to
subsequent closings as well, although certain facts, such as market prices for
the Common Stock may vary from those in effect or applicable to the Initial
Closing Date. This representation applies to Closing Dates for all Other Buyers,
whether such Closing Dates were before or will be after the Buyer's Closing
Date.

                  3. COMPANY REPRESENTATIONS, ETC. The Company represents and
warrants to the Buyer as of the date hereof and as of the relevant Closing Date
that, except as otherwise provided in the Disclosure Annex or in the Company's
SEC Documents:

                  a. Rights of Others Affecting the Transactions. There are no
preemptive rights of any shareholder of the Company, as such, to acquire the
Note, the Warrant or the Shares. No party has a currently exercisable right of
first refusal which would be applicable to any or all of the transactions
contemplated by the Transaction Agreements.

                  b. Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation and has the requisite corporate power 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 each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect. The Company
has registered its stock and is obligated to file reports pursuant to Section 12
or Section 15(d) of the Securities and Exchange Act of 1934, as amended (the
"1934 Act"). The Common Stock is quoted on the Principal Trading Market. The
Company has received no notice, either oral or written, with respect to the
continued eligibility of the Common Stock for such quotation on the Principal
Trading Market, and the Company has maintained all requirements on its part for
the continuation of such quotation.

                  c. Authorized Shares.

         (i) The authorized capital stock of the Company consists of (x)
9,375,000 shares of Common Stock, $.01 par value per share, of which
approximately 3,831,878 are outstanding as of the date hereof, and (y) 18,750
shares of convertible preferred stock, $.01 par value, of which 9,844.8 shares
of Series F preferred stock are outstanding as of the date hereof.

         (ii) There are no outstanding securities which are convertible into
shares of Common Stock, whether such conversion is currently exercisable or
exercisable only upon some future date or the occurrence of some event in the
future. If any such securities are listed on the Disclosure Annex, the number or
amount of each such outstanding convertible security and the conversion terms
are set forth in said Disclosure Annex.

         (iii) All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. The Company
has sufficient authorized and unissued shares of Common Stock as would be
necessary to effect the issuance of the Shares on the Closing Date, were the
Warrant fully exercised on that date.

         (iv) As of the Initial Closing Date and each Additional Closing Date,
if any, the Shares shall have been duly authorized by all necessary corporate
action on the part of the Company, and, when issued upon exercise of the
Warrant, in accordance with its terms, will have been duly and validly issued,
fully paid and non-assessable and will not subject the Holder thereof to
personal liability by reason of being such Holder.

                  d. Transaction Agreements and Stock. This Agreement and each
of the other Transaction Agreements, and the transactions contemplated thereby,
have been duly and validly authorized by the Company, this Agreement has been
duly executed and delivered by the Company and this Agreement is, and the Note,
the Warrant and each of the other Transaction Agreements, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.

                  e. Non-contravention. The execution and delivery of this
Agreement and each of the other Transaction Agreements by the Company, the
issuance of the Securities, and the consummation by the Company of the other
transactions contemplated by this Agreement, the Note, the Warrant and the other
Transaction Agreements do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or constitute a default
under (i) the certificate of incorporation or by-laws of the Company, each as
currently in effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or by whic



h it or any of its properties or assets are bound, including any listing
agreement for the Common Stock except as herein set forth, or (iii) to its
knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have or result in a Material Adverse
Effect.

                  f. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the shareholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the Buyer
as contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.

                  g. Filings. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading. Since January 1, 2005, the Company has timely filed all
requisite forms, reports and exhibits thereto required to be filed by the
Company with the SEC.

                  h. Absence of Certain Changes. Since the Last Audited Date,
there has been no Material Adverse Effect, except as disclosed in the Company's
SEC Documents. Since the Last Audited Date, except as provided in the Company's
SEC Documents, the Company has not (i) incurred or become subject to any
material liabilities (absolute or contingent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii) discharged or
satisfied any material lien or encumbrance or paid any material obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to shareholders with
respect to its capital stock, or purchased or redeemed, or made any agreements
to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts owed to the Company
by any third party or claims of the Company against any third party, except in
the ordinary course of business consistent with past practices; (v) waived any
rights of material value, whether or not in the ordinary course of business, or
suffered the loss of any material amount of existing business; (vi) made any
increases in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.

                  i. Full Disclosure. To the best of the Company's knowledge,
there is no fact known to the Company (other than general economic conditions
known to the public generally or as disclosed in the Company's SEC Documents)
that has not been disclosed in writing to the Buyer that would reasonably be
expected to have or result in a Material Adverse Effect.

                  j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company before or by any governmental authority or nongovernmental
department, commission, board, bureau, agency or instrumentality or any other
person, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its obligations under,
any of the Transaction Agreements. The Company is not aware of any valid basis
for any such claim that (either individually or in the aggregate with all other
such events and circumstances) could reasonably be expected to have a Material
Adverse Effect. There are no outstanding or unsatisfied judgments, orders,
decrees, writs, injunctions or stipulations to which the Company is a party or
by which it or any of its properties is bound, that involve the transaction
contemplated herein or that, alone or in the aggregate, could reasonably be
expect to have a Material Adverse Effect.

                  k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, (i) neither the Company nor any of its subsidiaries is in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material indenture, mortgage, deed of
trust or other material agreement to which it is a party or by which its
property is bound, and (ii) no Event of Default (or its equivalent term), as
defined in the respective agreement to which the Company or its subsidiary is a
party, and no event which, with the giving of notice or the passage of time or
both, would become an Event of Default (or its equivalent term) (as so defined
in such agreement), has occurred and is continuing, which would have a Material
Adverse Effect.

                  l. Absence of Certain Company Control Person Actions or
Events. To the Company's knowledge, none of the following has occurred during
the past five (5) years with respect to a Company Control Person:






(1) A petition under the federal bankruptcy laws or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such Company Control
Person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association
of which he was an executive officer at or within two years before the time of
such filing;

(2) Such Company Control Person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);

(3) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:





         (i) acting as an investment advisor, underwriter, broker or dealer in
         securities, or as an affiliated person, director or employee of any
         investment company, bank, savings and loan association or insurance
         company, as a futures commission merchant, introducing broker,
         commodity trading advisor, commodity pool operator, floor broker, any
         other Person regulated by the Commodity Futures Trading Commission
         ("CFTC") or engaging in or continuing any conduct or practice in
         connection with such activity;

         (ii) engaging in any type of business practice; or

         (iii) engaging in any activity in connection with the purchase or sale
         of any security or commodity or in connection with any violation of
         federal or state securities laws or federal commodities laws;

(4) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such Company Control Person to engage in any activity described in
paragraph (3) of this item, or to be associated with Persons engaged in any such
activity; or

(5) Such Company Control Person was found by a court of competent jurisdiction
in a civil action or by the CFTC or SEC to have violated any federal or state
securities law, and the judgment in such civil action or finding by the CFTC or
SEC has not been subsequently reversed, suspended, or vacated.






                  m. No Undisclosed Liabilities or Events. To the best of the
Company's knowledge, the Company has no liabilities or obligations other than
those disclosed in the Transaction Agreements or the Company's SEC Documents or
those incurred in the ordinary course of the Company's business since the Last
Audited Date, or which individually or in the aggregate, do not or would not
have a Material Adverse Effect. No event or circumstance (or any combination of
one or more thereof) has occurred or exists with respect to the Company or its
properties, business, operations, condition (financial or otherwise), or results
of operations, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed. There are no proposals currently
under consideration or currently anticipated to be under consideration by the
Board of Directors or the executive officers of the Company which proposal would
(x) change the articles or certificate of incorporation or other charter
document or by-laws of the Company, each as currently in effect, with or without
shareholder approval, which change would reduce or otherwise adversely affect
the rights and powers of the shareholders of the Common Stock or (y) materially
or substantially change the business, assets or capital of the Company,
including its interests in subsidiaries.

                  n. No Integrated Offering. Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, at any time since August 1, 2005, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.

                  o. Dilution. The number of shares issuable upon exercise of
the Warrant may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligations to issue the Warrant Shares upon exercise of the Warrants
or the issuance of Payment Shares as provided in the Registration Rights
Agreement is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company, and the Company will honor such obligations, including honoring every
Notice of Exercise (as contemplated by the Warrant) and every demand for Payment
Shares (as contemplated by the Registration Rights Agreement), , unless the
Company is subject to an injunction (which injunction was not sought by the
Company) prohibiting the Company from doing so.

                  p. Fees to Brokers, Finders and Others. Except for payment of
the Placement Agent's Compensation (as defined below) to the Placement Agent and
the payment of any other fees indicated in the Disclosure Annex, payment of
which is the sole responsibility of the Company, the Company has taken no action
which would give rise to any claim by any Person for brokerage commission,
finder's fees or similar payments by Buyer relating to this Agreement or the
transactions contemplated hereby. In furtherance of the foregoing, and not in
limitation thereof, the Company acknowledges that it has agreed to pay the
Placement Agent's Compensation to the Placement Agent in connection with the
transactions contemplated hereby. Buyer shall have no obligation with respect to
such fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this paragraph that may be due in connection
with the transactions contemplated hereby. The Company shall indemnify and hold
harmless each of Buyer, its employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as and when
incurred. The term "Placement Agent's Compensation" means, in connection with
the consummation of the transactions contemplated by this Agreement, the
consideration contemplated by the Joint Escrow Instructions.

                  q. Confirmation. The Company confirms that all statements of
the Company contained herein shall survive acceptance of this Agreement by the
Buyer for a period of eighteen (18) months from the latest Closing Date. The
Company agrees that, if any events occur or circumstances exist prior to the
relevant Closing Date or the release of the Purchase Price to the Company which
would make any of the Company's representations, warranties, agreements or other
information set forth herein materially untrue or materially inaccurate as of
such date, the Company shall immediately notify the Buyer (directly or through
its counsel, if any) and the Escrow Agent in writing prior to such date of such
fact, specifying which representation, warranty or covenant is affected and the
reasons therefor.

                  4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

                  a. Transfer Restrictions. The Buyer acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement or
otherwise included in an effective registration statement, the Shares have not
been and are not being registered under the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Securities under circumstances in which the
seller, or the Person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other Person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.

                  b. Restrictive Legend. The Buyer acknowledges and agrees that,
until such time as the relevant Shares have been registered under the 1933 Act,
as contemplated by the Registration Rights Agreement and sold in accordance with
an effective Registration Statement or otherwise in accordance with another
effective registration statement, the certificates and other instruments
representing any of the Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
         ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                  c. Filings. The Company undertakes and agrees to make all
filings required to be made by it in connection with the sale of the Securities
to the Buyer under the 1933 Act, the 1934 Act or any United States state
securities laws and regulations thereof applicable to the Company, or by any
domestic securities exchange or trading market, and, unless such filing is
publicly available on the SEC's EDGAR system (via the SEC's web site at no
additional charge), to provide a copy thereof to the Buyer promptly after such
filing.

                  d. Reporting Status. So long as the Buyer beneficially owns
any of the Securities and for at least twenty (20) Trading Days thereafter, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act, shall take all reasonable action under its
control to ensure that adequate current public information with respect to the
Company, as required in accordance with Rule 144(c)(2) of the 1933 Act, is
publicly available, and shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The Company will take all
reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock (including, without limitation, all
Registrable Securities) on the Principal Trading Market or a listing on the
NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will
comply in all material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the Principal Trading Market and/or
the National Association of Securities Dealers, Inc., as the case may be,
applicable to it at least through the date which is sixty (60) days after the
Warrant has been exercised in full or has expired.

                  e. Use of Proceeds. The Company will use the proceeds received
hereunder (excluding amounts paid as contemplated by the Joint Escrow
Instructions) for general corporate purposes.

                  f. Warrant. The Company agrees to issue to each Buyer on the
Buyer's Closing Date a transferable warrant (the "Warrant") for the purchase of
the Buyer's Allocable Share of 600,000 shares of Common Stock. The exercise
price of the Warrant will be equal to $6.50, subject to adjustment as provided
in the Warrant and herein. The Warrant shall be exercisable initially on the
Commencement Date specified in the Warrant and shall expire on the last day of
the calendar month in which the fifth anniversary of the Initial Closing Date
occurs. Except as specified above, each Warrant shall generally be in the form
annexed hereto as Annex IV, and shall have the benefit of the Registration
Rights Agreement.

                  g. Certain Agreements.

                  (i) The Company covenants and agrees that, for as long as the
Note is outstanding, the Company will not, without the prior written consent of
a Majority in Interest of the Holders in each instance (which consent is in the
sole discretion of the Holders and may be withheld for any reason or for no
reason whatsoever), take any of the following actions or permit any of the
following events to occur:

         (x) redeem any shares of the Company's capital stock; or

         (y) issue debt securities or otherwise incur indebtedness for borrowed
         money, except for th following, each of which is permitted: (1) to a
         Strategic Partner (but not any other party) in connection with a
         strategic commercial agreement or transaction, as determined in good
         faith by the Company's board of directors, (2) pursuant to a commercial
         borrowing, lending or lease financing transaction approved in good
         faith by the Company's board of directors, (3) pursuant to the
         acquisition by the Company of another corporation or other entity,
         whether by consolidation, merger or purchase of all or substantially
         all



         of the assets of, or other reorganization with, that corporation or
         entity or (4) the payment in full of the outstanding Notes on the date
         of such transaction.

Any breach of this provision shall, at the election of the Holder, be deemed an
Event of Default under the Note.

                  (ii) Any other provision of this Agreement or any of the other
Transaction Agreements to the contrary notwithstanding, the Company shall not
engage in any offers, sales or other transactions of its securities which would
adversely affect the exemption from registration available for the transactions
contemplated by the Transaction Agreements.

                  h. Registration Rights; Piggy-Back Rights; Rule 144. Reference
is made to the terms of the Registration Rights Agreement, the terms of which
are incorporated herein by reference.

                  i. Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights, a number of
shares (the "Minimum Available Shares") at least equal to one hundred percent
(100%) of the number of shares which would be issuable upon exercise of the
outstanding Warrants held by all Holders (in each case, whether such Warrant
were originally issued to the Holder, the Buyer or to any other party). For the
purposes of such calculations, the Company should assume that the Warrant were
then exercisable without regard to any restrictions which might limit any
Holder's right to exercise the Warrant held by any Holder.

                  j. Publicity, Filings, Releases, Etc. Each of the parties
agrees that it will not disseminate any information relating to the Transaction
Agreements or the transactions contemplated thereby, including issuing any press
releases, holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless in the reasonable opinion of
counsel to the party proposing such statement, such statement is legally
required to be included. In furtherance of the foregoing, the Company will
provide to the Buyer drafts of the applicable text of the first filing of a
Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K
intended to be made with the SEC which refers to the Transaction Agreements or
the transactions contemplated thereby as soon as practicable (but at least two
(2) Trading Days before such filing will be made) and will not include in such
filing any statement or statements or other material to which the other party
reasonably objects, unless in the reasonable opinion of counsel to the party
proposing such statement, such statement is legally required to be included.
Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Transaction Agreements in filings made with the SEC
as well as any descriptive text accompanying or part of such filing which is
accurate and reasonably determined by the Company's counsel to be legally
required. Notwithstanding, but subject to, the foregoing provisions of this
Section 4(j), the Company will, no later than immediately after the Initial
Closing Date, promptly issue a press release and file a Current Report on Form
8-K or, if appropriate, a quarterly or annual report on the appropriate form,
referring to the transactions contemplated by the Transaction Agreements.

                  k. Computation of Dates in Transaction Agreements. The Company
and the Buyer agree that, anything herein or in any other Transaction Agreement
to the contrary notwithstanding, all references in this Agreement or in any
other Transaction Agreement to a date determined (howsoever denominated) in
relation to the "Closing Date," shall be deemed to refer to the date so
determined in relation to the Initial Closing Date, even if the Buyer's Closing
Date was subsequent to the Initial Closing Date. In furtherance of the
foregoing, and not in limitation thereof, each Note shall have the Stated
Maturity Date determined based on the Initial Closing Date and each Warrant
shall have an Expiration Date based on the Initial Closing Date.

                  5. TRANSFER AGENT INSTRUCTIONS.

                  a. The Company warrants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 4(a) hereof,
it will give the Transfer Agent no instructions inconsistent with instructions
to issue Common Stock from time to time upon exercise of the Warrant or in
connection with the issuance of Payment Shares, as may be applicable from time
to time, in such amounts as specified from time to time by the Company to the
Transfer Agent, bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act, registered in
the name of the Buyer or its nominee and in such denominations to be specified
by the Holder in connection with each exercise of the Warrant. Except as so
provided, the Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
other Transaction Agreements. Nothing in this Section shall affect in any way
the Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Buyer provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of a
resale by the Buyer of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the 1933 Act, the Company
shall (except as provided in clause (2) of Section 4(a) of this Agreement)
permit the transfer of the Securities and, in the case of the Warrant Shares or
the Payment Shares, as may be applicable, promptly instruct the Transfer Agent
to issue one or more certificates for Common Stock without legend in such name
and in such denominations as specified by the Buyer.

                  b. Subject to the provisions of this Agreement, the Company
will permit the Buyer to exercise the Warrant in the manner contemplated by the
Warrant.

                  c. (i) The Company understands that a delay in the issuance of
the Shares of Common Stock beyond the Delivery Date (as defined in the Warrant)
could result in economic loss to the Holder of the Warrant being exercised (an
"Exercising Holder"). As compensation to the Buyer for such loss, the Company
agrees to pay late payments to the Exercising Holder for late issuance of Shares
upon exercise in accordance with the following schedule (where "No. Business
Days Late" refers to the number of Trading Days which is beyond two (2) Trading
Days after the Delivery Date):(1)

    Late Payment For Each $10,000
    of Exercise Price of Warrant                        No.
                                                        ----


Business Days Late                          Being Exercised

       1                                           $100
       2                                           $200
       3                                           $300
       4                                           $400
       5                                           $500
       6                                           $600
       7                                           $700
       8                                           $800
       9                                           $900
       10                                          $1,000
       >10                                         $1,000 + $200 for each
                                                Business  Day Late beyond 10
                                                   days

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Exercising Holder's exclusive remedy (other
than the following provisions of this Section 5(c) and the provisions of Section
8 of the Warrant) for such delay. Furthermore, in addition to any other remedies
which may be available to the Exercising Holder, in the event that the Company
fails for any reason to effect delivery of such shares of Common Stock by close
of business on the tenth Trading Day after the Delivery Date, the Exercising
Holder will be entitled to revoke the relevant Notice of Exercise by delivering
a notice to such effect to the Company, whereupon the Company and the Buyer
shall each be restored to their respective positions immediately prior to
delivery of such Notice of Exercise; provided, however, that an amount equal to
any payments contemplated by this Section 5(c) which have accrued through the
date of such revocation notice shall remain due and owing to the Exercising
Holder notwithstanding such revocation.

                           (ii) If, by the close of business of the relevant
Delivery Date, the Company fails for any reason to
deliver the Shares to be issued upon exercise of the Warrant and after such
Delivery Date, the Exercising Holder purchases, in an arm's-length open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") in
order to make delivery in satisfaction of a sale of Common Stock by the
Exercising Holder (the "Sold Shares"), which delivery such Exercising Holder
anticipated to make using the Shares to be issued upon such exercise (a
"Buy-In"), the Exercising Holder shall have the right, in addition to and not in
lieu of all other amounts contemplated in other provisions of the Transaction
Agreements, including, but not limited to, the provisions of the immediately
preceding Section 5(c)(i), the Buy-In Adjustment Amount (as defined below). The
"Buy-In Adjustment Amount" is the amount equal to the number of Sold Shares
multiplied by the excess, if any, of (x) the Exercising Holder's total purchase
price per share (including brokerage commissions, if any) for the Covering
Shares over (y) the net proceeds per share (after brokerage commissions, if any)
received by the Exercising Holder from the sale of the Sold Shares. The Company
shall pay the Buy-In Adjustment Amount to the Exercising Holder in immediately
available funds immediately upon demand by the Exercising Holder. By way of
illustration and not in limitation of the foregoing, if the Exercising Holder
purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Exercising Holder will be $1,000.

                  d. The provisions of this paragraph apply on or after the
Effective Date. After such Effective Date, the Company will issue Shares without
legend and without transfer restrictions on the books of the Transfer Agent,
and, at the request of the Holder, will use it best efforts to have previously
issued certificates representing the Shares re-issued without legend and without
transfer restrictions on the books of the Transfer Agent. In lieu of delivering
physical certificates representing the Common Stock issuable upon exercise of a
Warrant or at the request of the Holder with respect to any Shares previously
issued, provided the Transfer Agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program, upon request of the
Holder and its compliance with the provisions contained in this paragraph, so
long as the certificates therefor do not bear a legend and the Holder thereof is
not obligated to return such certificate for the placement of a legend thereon,
the Company shall use its best efforts to cause the Transfer Agent to
electronically transmit to the Holder the Common Stock issuable upon exercise of
the Warrant or in replacement of any Shares previously issued by crediting the
account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission system. In connection therewith, it will be the Holder's obligation
to obtain formal requirements, such as medallion guaranty, if necessary.

                  e. The Company shall assume any fees or charges of the
Transfer Agent or Company counsel regarding (i) the removal of a legend or stop
transfer instructions with respect to Registrable Securities, and (ii) the
issuance of certificates or DTC registration to or in the name of the Holder or
the Holder's designee or to a transferee as contemplated by an effective
Registration Statement.

                  f. The Holder of the Warrant shall be entitled to exercise its
exercise privilege with respect to the Warrant notwithstanding the commencement
of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"). In the event
the Company is a debtor under the Bankruptcy Code, the Company hereby waives, to
the fullest extent permitted, any rights to relief it may have under 11 U.S.C.
ss.362 in respect of such holder's exercise privilege. The Company hereby
waives, to the fullest extent permitted, any rights to relief it may have under
11 U.S.C. ss.362 in respect of the exercise of the Warrant. The Company agrees,
without cost or expense to such Holder, to take or to consent to any and all
action necessary to effectuate relief under 11 U.S.C. ss.362.

                  g. The Company will authorize the Transfer Agent to give
information relating to the Company directly to the Holder or the Holder's
representatives upon the request of the Holder or any such representative, to
the extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Holder in connection with a Notice of
Exercise, or (ii) the aggregate number of outstanding shares of Common Stock of
all shareholders (as a group, and not individually) as of a current or other
specified date. At the request of the Holder, the Company will provide the
Holder with a copy of the authorization so given to the Transfer Agent.

                  6. CLOSING DATE.

                  a. The Initial Closing Date shall occur on the date which is
the first Trading Day after each of the conditions contemplated by Sections 7
and 8 hereof shall have either been satisfied or been waived by the party in
whose favor such conditions run; provided, however, that on the Initial Closing
Date, the aggregate subscriptions shall be for at least the Minimum Aggregate
Purchase Price. If additional subscriptions and the related Purchase Price are
received after the Initial Closing Date, one or more additional Additional
Closing Dates may be held; provided that (i) for all Closing Dates, the
aggregate Purchase Price of all Buyers for all such Closing Dates shall not
exceed the Maximum Aggregate Purchase Price, and (ii) no Closing Date shall be
later than the Latest Closing Date.

                  b. The closing of the Transactions shall occur on the relevant
Closing Date at the offices of the Escrow Agent and shall take place no later
than 3:00 P.M., New York time, on such day or such other time as is mutually
agreed upon by the Company and the Buyer.

                  c. (i) If the Initial Closing Date does not occur by the close
of business on February 21, 2006, then at any time after that date and prior to
the date on which the Initial Closing Date occurs, the Buyer may, by written
notice to the Escrow Agent (a "Cancellation Notice") with a copy to the Company,
request the return by the Escrow Agent to the Buyer of the Purchase Price. Upon
the Escrow Agent's receipt of such Cancellation Notice, if the Initial Closing
Date has not occurred prior to 5 PM (Eastern Time) of the Trading Day following
such receipt by the Escrow Agent, the Buyer shall have no further obligations
under this Agreement, including, without limitation, the obligation to pay any
part of the Purchase Price, and the Escrow Agent shall return the Buyer's Escrow
Funds to the Buyer and the Certificates issued to the Buyer being held as part
of the Escrow Property to the Company.

                           (ii) If the Escrow Agent receives a Cancellation
Notice from a Buyer, but the Initial Closing Date
occurs prior to 5 PM (Eastern Time) of Trading Day following the Escrow Agent's
receipt of such Cancellation Notice, the Cancellation Notice shall be deemed
null and void ab initio.
                           (iii) If, as a result of effective Cancellation
Notices received from one or more Buyers (whether
such Buyers constitute all Buyers or less than all Buyers), the Aggregate
Purchase Price of all remaining Buyers is less than the Minimum Aggregate
Purchase Price, then the Initial Closing Date shall not occur until the
subscription of the Buyer and any Other Buyers who have not issued Cancellation
Notices are for at least the Minimum Aggregate Purchase Price. If, as of the
Latest Closing Date, the Initial Closing Date has not occurred, this Agreement
shall be deemed canceled with respect to all Buyers as if each of them had
timely given a Cancellation Notice.

                  d. Notwithstanding anything to the contrary contained herein,
the Escrow Agent will be authorized to release the Escrow Funds to the Company
and to others and to release the other Escrow Property on the relevant Closing
Date upon satisfaction of the conditions set forth in Sections 7 and 8 hereof
and as provided in the Joint Escrow Instructions.

                  7.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

                  The Buyer understands that the Company's obligation to sell
the relevant Note and the Warrant to the Buyer pursuant to this Agreement on the
relevant Closing Date is conditioned upon:

                  a. The execution and delivery of this Agreement by the Buyer
on or before the Buyer's Closing Date;

                  b. Delivery by the Buyer by the Buyer's Closing Date to the
Escrow Agent of good funds as payment in full of an amount equal to the Purchase
Price in accordance with this Agreement;

                  c. The accuracy on such Closing Date of the representations
and warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date; and

                  d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

                  8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.

                  The Company understands that the Buyer's obligation to
purchase the relevant Note and the Warrant on the relevant Closing Date is
conditioned upon:

                  a. The execution and delivery of this Agreement and the other
Transaction Agreements by the Company on or before the Buyer's Closing Date;

                  b. Delivery by the Company to the Escrow Agent of the
Certificates in accordance with this Agreement;

                  c. The accuracy in all material respects on such Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date, and the performance by the Company on
or before such date of all covenants and agreements of the Company required to
be performed on or before such date; and with respect to each Additional Closing
Date, (x) there shall have been no Material Adverse Effect from the Initial
Closing Date through and including the Additional Closing Date and (y) an
executive officer of the Company shall issue an Officer's Certificate
substantially in the form of Annex VIII hereto with respect thereto; provided,
however, that such Officer's Certificate may update certain information, such as
the number of shares of the Company's stock outstanding, included in Section 3);

                  d. On the Initial Closing Date, the Buyer shall have received
an opinion of counsel for the Company, dated such Closing Date, in form, scope
and substance reasonably satisfactory to the Buyer, substantially to the effect
set forth in Annex III attached hereto; and on any Additional Closing Date, the
Buyer purchasing a Note and Warrant on such Closing Date shall have received
such an opinion or a statement from counsel to the Company that such Buyer may
rely on an opinion previously issued to Other Buyers;

                  e. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained; and

                  f. From and after the date hereof to and including such
Closing Date, each of the following conditions will remain in effect: (i) the
trading of the Common Stock shall not have been suspended by the SEC or on the
Principal Trading Market; (ii) trading in securities generally on the Principal
Trading Market shall not have been suspended or limited; (iii) no minimum prices
shall been established for securities traded on the Principal Trading Market;
and (iv) there shall not have been any material adverse change in any financial
market.

                  9. INDEMNIFICATION AND REIMBURSEMENT.

                  a. (i) The Company agrees to indemnify and hold harmless the
Buyer and its officers, directors, employees, and agents, and each Buyer Control
Person from and against any losses, claims, damages, liabilities or expenses
incurred (collectively, "Damages"), joint or several, and any action in respect
thereof to which the Buyer, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and any such Buyer Control Person becomes
subject to, resulting from, arising out of or relating to any misrepresentation,
breach of warranty or nonfulfillment of or failure to perform any covenant or
agreement on the part of Company contained in this Agreement, as such Damages
are incurred, except to the extent such Damages result primarily from Buyer's
failure to perform any covenant or agreement contained in this Agreement or the
Buyer's or its officer's, director's, employee's, agent's or Buyer Control
Person's illegal or willful misconduct, gross negligence, recklessness or bad
faith (in each case, as determined by a non-appealable judgment to such effect)
in performing its obligations under this Agreement.

                           (ii) The Company hereby agrees that, if the Buyer,
other than by reason of its gross negligence,
illegal or willful misconduct (in each case, as determined by a non-appealable
judgment to such effect), (x) becomes involved in any capacity in any action,
proceeding or investigation brought by any shareholder of the Company, in
connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements, or if the
Buyer is impleaded in any such action, proceeding or investigation by any
Person, or (y) becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC, any self-regulatory organization or other body
having jurisdiction, against or involving the Company or in connection with or
as a result of the consummation of the transactions contemplated by this
Agreement or the other Transaction Agreements, or (z) is impleaded in any such
action, proceeding or investigation by any Person, then in any such case, the
Company shall indemnify, defend and hold harmless the Buyer from and against and
in respect of all losses, claims, liabilities, damages or expenses resulting
from, imposed upon or incurred by the Buyer, directly or indirectly, and
reimburse such Buyer for its reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith, as
such expenses are incurred. The indemnification and reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Buyer who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and Buyer Control
Persons (if any), as the case may be, of the Buyer and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, the Buyer, any such Affiliate and
any such Person. The Company also agrees that neither the Buyer nor any such
Affiliate, partner, director, agent, employee or Buyer Control Person shall have
any liability to the Company or any Person asserting claims on behalf of or in
right of the Company in connection with or as a result of the consummation of
this Agreement or the other Transaction Agreements, except as may be expressly
and specifically provided in or contemplated by this Agreement.

                  b. All claims for indemnification by any Indemnified Party (as
defined below) under this Section shall be asserted and resolved as follows:

                           (i) In the event any claim or demand in respect of
which any Person claiming indemnification under
any provision of this Section (an "Indemnified Party") might seek indemnity
under paragraph (a) of this Section is asserted against or sought to be
collected from such Indemnified Party by a Person other than a party hereto or
an Affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of this Section against any Person (the "Indemnifying Party"),
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "Claim Notice")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the Indemnified Party as soon as practicable
within the period ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined
below) (the "Dispute Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party under this
Section and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim. The
following provisions shall also apply.

         (x) If the Indemnifying Party notifies the Indemnified Party within the
         Dispute Period that the Indemnifying Party desires to defend the
         Indemnified Party with respect to the Third Party Claim pursuant to
         this paragraph (b) of this Section, then the Indemnifying Party shall
         have the right to defend, with counsel reasonably satisfactory to the
         Indemnified Party, at the sole cost and expense of the Indemnifying
         Party, such Third Party Claim by all appropriate proceedings, which
         proceedings shall be vigorously and diligently prosecuted by the
         Indemnifying Party to a final conclusion or will be settled at the
         discretion of the Indemnifying Party (but only with the consent of the
         Indemnified Party in the case of any settlement that provides for any
         relief other than the payment of monetary damages or that provides for
         the payment of monetary damages as to which the Indemnified Party shall
         not be indemnified in full pursuant to paragraph (a) of this Section).
         The Indemnifying Party shall have full control of such defense and
         proceedings, including any compromise or settlement thereof; provided,
         however, that the Indemnified Party may, at the sole cost and expense
         of the Indemnified Party, at any time prior to the Indemnifying Party's
         delivery of the notice referred to in the first sentence of this
         subparagraph (x), file any motion, answer or other pleadings or take
         any other action that the Indemnified Party reasonably believes to be
         necessary or appropriate protect its interests; and provided further,
         that if requested by the Indemnifying Party, the Indemnified Party
         will, at the sole cost and expense of the Indemnifying Party, provide
         reasonable cooperation to the Indemnifying Party in contesting any
         Third Party Claim that the Indemnifying Party elects to contest. The
         Indemnified Party may participate in, but not control, any defense or
         settlement of any Third Party Claim controlled by the Indemnifying
         Party pursuant to this subparagraph (x), and except as provided in the
         preceding sentence, the Indemnified Party shall bear its own costs and
         expenses with respect to such participation. Notwithstanding the
         foregoing, the Indemnified Party may take over the control of the
         defense or settlement of a Third Party Claim at any time if it
         irrevocably waives its right to indemnity under paragraph (a) of this
         Section with respect to such Third Party Claim.

         (y) If the Indemnifying Party fails to notify the Indemnified Party
         within the Dispute Period that the Indemnifying Party desires to defend
         the Third Party Claim pursuant to paragraph (b) of this Section, or if
         the Indemnifying Party gives such notice but fails to prosecute
         vigorously and diligently or settle the Third Party Claim, or if the
         Indemnifying Party fails to give any notice whatsoever within the
         Dispute Period, then the Indemnified Party shall have the right to
         defend, at the sole cost and expense of the Indemnifying Party, the
         Third Party Clai



         m by all appropriate proceedings, which proceedings shall be prosecuted
         by the Indemnified Party in a reasonable manner and in good faith or
         will be settled at the discretion of the Indemnified Party (with the
         consent of the Indemnifying Party, which consent will not be
         unreasonably withheld). The Indemnified Party will have full control of
         such defense and proceedings, including any compromise or settlement
         thereof; provided, however, that if requested by the Indemnified Party,
         the Indemnifying Party will, at the sole cost and expense of the
         Indemnifying Party, provide reasonable cooperation to the Indemnified
         Party and its counsel in contesting any Third Party Claim which the
         Indemnified Party is contesting. Notwithstanding the foregoing
         provisions of this subparagraph (y), if the Indemnifying Party has
         notified the Indemnified Party within the Dispute Period that the
         Indemnifying Party disputes its liability or the amount of its
         liability hereunder to the Indemnified Party with respect to such Third
         Party Claim and if such dispute is resolved in favor of the
         Indemnifying Party in the manner provided in subparagraph(z) below, the
         Indemnifying Party will not be required to bear the costs and expenses
         of the Indemnified Party's defense pursuant to this subparagraph (y) or
         of the Indemnifying Party's participation therein at the Indemnified
         Party's request, and the Indemnified Party shall reimburse the
         Indemnifying Party in full for all reasonable costs and expenses
         incurred by the Indemnifying Party in connection with such litigation.
         The Indemnifying Party may participate in, but not control, any defense
         or settlement controlled by the Indemnified Party pursuant to this
         subparagraph (y), and the Indemnifying Party shall bear its own costs
         and expenses with respect to such participation.

         (z) If the Indemnifying Party notifies the Indemnified Party that it
         does not dispute its liability or the amount of its liability to the
         Indemnified Party with respect to the Third Party Claim under paragraph
         (a) of this Section or fails to notify the Indemnified Party within the
         Dispute Period whether the Indemnifying Party disputes its liability or
         the amount of its liability to the Indemnified Party with respect to
         such Third Party Claim, the amount of Damages specified in the Claim
         Notice shall be conclusively deemed a liability of the Indemnifying
         Party under paragraph (a) of this Section and the Indemnifying Party
         shall pay the amount of such Damages to the Indemnified Party on
         demand. If the Indemnifying Party has timely disputed its liability or
         the amount of its liability with respect to such claim, the
         Indemnifying Party and the Indemnified Party shall proceed in good
         faith to negotiate a resolution of such dispute; provided, however,
         that if the dispute is not resolved within thirty (30) days after the
         Claim Notice, the Indemnifying Party shall be entitled to institute
         such legal action as it deems appropriate.

                           (ii) In the event any Indemnified Party should have a
claim under paragraph (a) of this Section
against the Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver a written notification of a claim for indemnity
under paragraph (a) of this Section specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably ascertainable, the
estimated amount, determined in good faith, of such claim (an "Indemnity
Notice") with reasonable promptness to the Indemnifying Party. The failure by
any Indemnified Party to give the In



demnity Notice shall not impair such party's rights hereunder except to the
extent that the Indemnifying Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim or the amount of the claim described in such
Indemnity Notice or fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes the claim or the amount of the
claim described in such Indemnity Notice, the amount of Damages specified in the
Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party shall pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that it the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.

                  c. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to.

                  10. JURY TRIAL WAIVER. The Company and the Buyer hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.

                  11. GOVERNING LAW: MISCELLANEOUS.

                  a. (i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of Wilmington or the state courts of the State of Delaware sitting in the
City of Wilmington in connection with any dispute arising under this Agreement
or any of the other Transaction Agreements and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions or
to any claim that such venue of the suit, action or proceeding is improper. To
the extent determined by such court, the Company shall reimburse the Buyer for
any reasonable legal fees and disbursements incurred by the Buyer in enforcement
of or protection of any of its rights under any of the Transaction Agreements.
Nothing in this Section shall affect or limit any right to serve process in any
other manner permitted by law.

                           (ii) The Company and the Buyer acknowledge and agree
that irreparable damage would occur in the event
that any of the provisions of this Agreement or the other Transaction Agreements
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and the other Transaction Agreements and to enforce specifically the
terms and provisions hereof and thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.





                  b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                  c. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.

                  d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

                  e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.

                  f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.

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

                  h. 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 Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

                  i. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.

                  j. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

                  k. All dollar amounts referred to or contemplated by this
Agreement or any other Transaction Agreement shall be deemed to refer to US
Dollars, unless otherwise explicitly stated to the contrary.

                  12. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of

                           (a) the date delivered, if delivered by personal
                  delivery as against written receipt therefor or by confirmed
                  facsimile transmission,

                           (b) the fifth Trading Day after deposit, postage
                  prepaid, in the United States Postal Service by registered or
                  certified mail, or

                           (c) the third Trading Day after mailing by domestic
                  or international express courier, with delivery costs and fees
                  prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

COMPANY:          At the address set forth at the head of this Agreement.
                           Attn: President
                           Telephone No.: (917) 339-7134
                           Telecopier No.: (917) 339-7166

                           with a copy to:

                           Greenberg Traurig, LLP
                           Attn: Siobhan Keegan, Esq.
                           MetLife Building
                           200 Park Avenue
                           New York, NY 10166
                           Telephone No.: (212) 801-9200
                           Telecopier No.: (212) 801-6400

LENDER:        At the address set forth on the signature page of this Agreement.

                           with a copy to:

                                            Krieger & Prager LLP, Esqs.
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Ronald J. Nussbaum, Esq.
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

ESCROW AGENT:     Krieger & Prager LLP, Esqs.
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Samuel Krieger, Esq.
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

                  13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Buyer's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
and the payment of the Purchase Price, and shall inure to the benefit of the
Buyer and the Company and their respective successors and assigns.

                   [Balance of page intentionally left blank]













         IN WITNESS WHEREOF, with respect to the Purchase Price specified below,
this Agreement has been duly executed by the Buyer and the Company as of the
date set first above written.

PURCHASE PRICE:                                      $_______________




                                     BUYER:
Notice Address:

- --------------------------------    ------------------------------------
Address                                     Printed Name of Buyer
- --------------------------------

                                                     By: _______________________
Telecopier No. _________________            (Signature of Authorized Person)

                                                     ---------------------------
______________________________      Printed Name and Title
Jurisdiction of Incorporation
or Organization

If the above Notice Address is not the Residence (for individual Buyer) or
Principal Place of Business (for Buyer which is not an individual), such
Residence or Principal Place of Business is:

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

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

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

                                     COMPANY

MSGI SECURITY SOLUTIONS, INC.

By: _________________________________
(Signature of Authorized Person)

- -------------------------------------
Printed Name and Title











         ANNEX I           FORM OF NOTE

         ANNEX II          JOINT ESCROW INSTRUCTIONS

         ANNEX III                  OPINION OF COUNSEL OF COMPANY

         ANNEX IV          FORM OF WARRANT

         ANNEX V           REGISTRATION RIGHTS AGREEMENT

         ANNEX VI          COMPANY'S SEC DOCUMENTS AVAILABLE ON EDGAR

         ANNEX VII                  COMPANY DISCLOSURE

         ANNEX VIII                 OFFICER'S CERTIFICATE








(1) Example: Notice of Exercise is delivered on Monday, May 1, 2006. The
Delivery Date would be Thursday, May 4 (the third Trading Day after such
delivery). If the certificate is delivered by Monday, May 8 (2 Trading Days
after the Delivery Date), no payment under this provision is due. If the
certificates are delivered on May 9, that is 1 "Business Day Late" in the table
below; if delivered on May 16, that is 6 "Business Days Late" in the table.

EX-10

                                  FORM OF NOTE

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
         ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No.      06-01-                                             US $_____________
         -----------------
                                           MSGI SECURITY SOLUTIONS, INC.

                      PROMISSORY NOTE DUE ______ ____, 2007

         THIS NOTE is one of a duly authorized issue of up to $1,000,000 of MSGI
SECURITY SOLUTIONS, INC., a corporation organized and existing under the laws of
the State of Nevada (the "Company"), designated as its Promissory Note Series
06-01.

         FOR VALUE RECEIVED, the Company promises to pay to
_____________________ , the registered holder hereof (the "Holder"), the
principal sum of ________________Thousand ____________ and 00/100 Dollars (US
$___________) on the Maturity Date (as defined below).

         TIME IS OF THE ESSENCE WITH RESPECT TO THE COMPANY'S FULFILLMENT OF ALL
OF ITS PAYMENT OBLIGATIONS HEREUNDER. The Holder shall not be required to give
the Company any notice of default of payment if any such payment is not timely
paid or otherwise satisfied. All provisions of this Note which apply in the
event of the Company's not timely fulfilling any of its payment obligations
hereunder shall apply whether or not such notice of default is given. The
Holder's giving of any notice to the Company shall not be deemed a waiver,
modification or amendment of this provision with respect to the failure referred
to in that notice or to any other failure by the Company timely to make any
other payment due hereunder.

         This Note or its predecessor was originally issued on ________, 2006
(the "Issue Date").

         This Note is being issued pursuant to the terms of the Bridge Loan
Agreement, dated as of _________, 2006 (the "Bridge Loan Agreement"), to which
the Company and the Holder (or the Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Bridge Loan Agreement.

         This Note is subject to the following additional provisions:

         1. The Note will initially be issued in denominations determined by the
Company, but are exchangeable for an equal aggregate principal amount of Note of
different denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration or transfer or exchange.

         2. No interest will accrue on this Note until the Maturity Date. If any
portion of this Note is outstanding on the Maturity Date, interest at the rate
of eighteen percent (18%) per annum or the highest rate allowed by law,
whichever is lower, shall accrue on the outstanding principal of this Note from
the Maturity Date to and including the date of payment by the Company. Such
interest shall accrue on a daily basis and shall be payable in cash. The Holder
may demand payment of all or any part of this Note, together with accrued
interest, if any, and any other amounts due hereunder, as of the Maturity Date
or any date thereafter.

         3. The Company shall be entitled to withhold from all payments of
principal of, and, if applicable, interest on, this Note any amounts required to
be withheld under the applicable provisions of the United States income tax laws
or other applicable laws at the time of such payments, and Holder shall execute
and deliver all required documentation in connection therewith.

         4. This Note has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws and the terms of the Bridge Loan
Agreement. In the event of any proposed transfer of this Note, the Company may
require, prior to issuance of a new Note in the name of such other person, that
it receive reasonable transfer documentation that is sufficient to evidence that
such proposed transfer complies with the Act and other applicable state and
foreign securities laws and the terms of the Bridge Loan Agreement. Prior to due
presentment for transfer of this Note, the Company and any agent of the Company
may treat the person in whose name this Note is duly registered on the Company's
Note Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note be overdue, and
neither the Company nor any such agent shall be affected by notice to the
contrary.

         5 (a) The term "Maturity Date" means the earliest of (i) ________ ____,
2007 (the "Stated Maturity Date"), (ii) the New Transaction Threshold Date (as
defined below), or (iii) the Default Maturity Date (as defined below).

                  (b) The term "New Transaction Threshold Date" means the date
on which the Company consummates the first New Transaction in which the Company
receives, on a cumulative basis after taking into account the gross proceeds
from all prior New Transactions, if any, after the Issue Date, gross proceeds of
at least One Million Dollars ($1,000,000). All such gross proceeds are
determined before deduction of any fees or other expenses or disbursements of
any kind in connection with the relevant New Transaction.

         6. (a) Any payment made by the Company to the Holder, on account of
this Note or otherwise, shall be applied in the following order of priority: (i)
first, to any amounts due under an of the Transaction Agreements other than this
Note, (ii) second, to any amounts other than principal and accrued interest, if
any, hereunder, (iii) third, to accrued interest, if any, through and including
the date of payment, and (iv) then, to principal of this Note.

                  (b) Subject to the provisions of Section 6(a) hereof, the
outstanding principal of this Note may be prepaid in whole or in part at the
option of the Company at any time prior to the Maturity Date.

         7. All payments contemplated hereby are to be made "in cash" and shall
be made in immediately available good funds of United States of America currency
by wire transfer to an account designated in writing by the Holder to the
Company (which account may be changed by notice similarly given). For purposes
of this Note, the phrase "date of payment" means the date good funds are
received in the account designated by the notice which is then currently
effective.

         8. Subject to the terms of the Bridge Loan Agreement, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and, if applicable, interest on,
this Note at the time, place, and rate, and in the coin or currency, as herein
prescribed. This Note is a direct obligation of the Company.

         9. No recourse shall be had for the payment of the principal of, or, if
applicable, the interest on, this Note, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.

         10. Any notice required or permitted hereunder shall be given in manner
provided in the Section headed "NOTICES" in the Bridge Loan Agreement, the terms
of which are incorporated herein by reference.

         11. (a) This Note shall be governed by and interpreted in accordance
with the laws of the State of Delaware for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the exclusive jurisdiction of
the federal courts whose districts encompass any part of the City of Wilmington
or the state courts of the State of Delaware sitting in the City of Wilmington
in connection with any dispute arising under this Note and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under this Note.

                  (b) JURY TRIAL WAIVER. The Company and the Holder hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out of or
in connection with this Note.

         12. (a) The following shall constitute an "Event of Default":

                  i.       The Company shall default in the timely payment of
                           principal on this Note or any other amount due
                           hereunder (without the requirement of any further
                           notice with respect thereto from the Holder); or

                  ii.      Any of the representations or warranties made by the
                           Company herein, in the Bridge Loan Agreement or any
                           of the other Transaction Agreements shall be false or
                           misleading in any material respect at the time made;
                           or

                  iii.     The Company shall fail to perform or observe, in any
                           material respect, any other covenant, term,
                           provision, condition, agreement or obligation of any
                           Note in this series; provided, however, that if, but
                           only if, such failure is subject to cure within
                           thirty (30) days after the Company's receipt of
                           written notice of such failure from the Holder, such
                           failure shall be deemed to occur only if such failure
                           shall continue uncured for such thirty (30) day
                           period; or

                  iv.      The Company shall fail to perform or observe, in any
                           material respect, any covenant, term, provision,
                           condition, agreement or obligation of the Company
                           under any of the Transaction Agreements; provided,
                           however, that if, but only if, such failure is
                           subject to cure within thirty (30) days after the
                           Company's receipt of written notice of such failure
                           from the Holder, such failure shall be deemed to
                           occur only if such failure shall continue uncured for
                           such thirty (30) day period (except that no such cure
                           period shall apply to a breach of Section 4(g) of the
                           Bridge Loan Agreement); or
                  v.       The Company shall (1) admit in writing its inability
                           to pay its debts generally as they mature; (2) make
                           an assignment for the benefit of creditors or
                           commence proceedings for its dissolution; or (3)
                           apply for or consent to the appointment of a trustee,
                           liquidator or receiver for its or for a substantial
                           part of its property or business; or

                  vi.      A trustee, liquidator or receiver shall be appointed
                           for the Company or for a substantial part of its
                           property or business without its consent and shall
                           not be discharged within sixty (60) days after such
                           appointment; or

                  vii.     Any governmental agency or any court of competent
                           jurisdiction at the instance of any governmental
                           agency shall assume custody or control of the whole
                           or any substantial portion of the properties or
                           assets of the Company and shall not be dismissed
                           within sixty (60) days thereafter; or

                  viii.    Any money judgment, writ or warrant of attachment, or
                           similar process in excess of Two Hundred Fifty
                           Thousand ($250,000) Dollars in the aggregate shall be
                           entered or filed against the Company or any of its
                           properties or other assets and shall remain unpaid,
                           unvacated, unbonded or unstayed for a period of sixty
                           (60) days or in any event later than five (5) days
                           prior to the date of any proposed sale thereunder; or

                  ix.      Bankruptcy, reorganization, insolvency or liquidation
                           proceedings or other proceedings for relief under any
                           bankruptcy law or any law for the relief of debtors
                           shall be instituted by or against the Company and, if
                           instituted against the Company, shall not be
                           dismissed within sixty (60) days after such
                           institution or the Company shall by any action or
                           answer approve of, consent to, or acquiesce in any
                           such proceedings or admit the material allegations
                           of, or default in answering a petition filed in any
                           such proceeding.

                  (b)      If an Event of Default shall have occurred and is
                           continuing, then, or at any time thereafter, and in
                           each and every such case, unless such Event of
                           Default shall have been cured or waived in writing by
                           the Holder (which waiver shall not be deemed to be a
                           waiver of any subsequent default), at the option of
                           the Holder and in the Holder's sole discretion, the
                           Holder may consider this Note immediately due and
                           payable (and the Maturity Date shall be accelerated
                           accordingly; the "Default Maturity Date"), without
                           presentment, demand, protest or notice of any kinds,
                           all of which are hereby expressly waived, anything
                           herein or in any note or other instruments contained
                           to the contrary notwithstanding, and the Holder may
                           immediately enforce any and all of the Holder's
                           rights and remedies provided herein or any other
                           rights or remedies afforded by law, including, but
                           not necessarily limited to, the equitable remedy of
                           specific performance and injunctive relief.


                   [Balance of page intentionally left blank]
















         13. In the event for any reason, any payment by or act of the Company
or the Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation of the law of the jurisdiction applicable to
this Note, then ipso facto the obligation of the Company to pay interest or
perform such act or requirement shall be reduced to the limit authorized under
such law, so that in no event shall the Company be obligated to pay any such
interest, perform any such act or be bound by any requirement which would result
in the payment of interest in excess of the limit so authorized. In the event
any payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Note. If any part of such excess remains after the principal has been paid in
full, whether by the provisions of the preceding sentences of this Section or
otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section shall control every other provision
of this Note.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: _________________, 2006

                                        MSGI SECURITY SOLUTIONS, INC.

                                        By:_____________________________________

                                        ----------------------------------------
                     (Print Name)
                                        ----------------------------------------
(Title)

EX-10

                                 FORM OF WARRANT

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
         ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.


                          MSGI SECURITY SOLUTIONS, INC.

                          COMMON STOCK PURCHASE WARRANT

                  1. Issuance. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
MSGI SECURITY SOLUTIONS, INC., a Nevada corporation (the "Company"),
____________________, or registered assigns (the "Holder") is hereby granted the
right to purchase at any time, on or after the Commencement Date (as defined
below) until 5:00 P.M., New York City time, on _____________, 2011(1) (the
"Expiration Date"), _____________ Thousand _______ (__________)(2) fully paid
and nonassessable shares of the Company's Common Stock, $0.01 par value per
share (the "Common Stock"), at an initial exercise price per share (the
"Exercise Price) of $6.50 per share, subject to further adjustment as set forth
herein. This Warrant is being issued pursuant to the terms of that certain
Bridge Loan Agreement, dated as of _____ ____, 2006 (the "Agreement"), to which
the Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement. This Warrant was originally issued to the Holder of
the Holder's predecessor in interest on _____________, 2006 (the "Issue Date").

                  2. Exercise of Warrants.

                           2.1      General.
                                    -------

                           (a) This Warrant is exercisable in whole or in part
at any time and from time to time
commencing on the Commencement Date (as defined below). Such exercise shall be
effectuated by submitting to the Company (either by delivery to the Company or
by facsimile transmission as provided in Section 8 hereof) a completed and duly
executed Notice of Exercise (substa



ntially in the form attached to this Warrant Certificate) as provided in the
Notice of Exercise (or revised by notice given by the Company as contemplated by
the Section headed "NOTICES" in the Agreement). The date such Notice of Exercise
is faxed to the Company shall be the "Exercise Date," provided that, if such
exercise represents the full exercise of the outstanding balance of the Warrant,
the Holder of this Warrant tenders this Warrant Certificate to the Company
within five (5) Trading Days thereafter. The Notice of Exercise shall be
executed by the Holder of this Warrant and shall indicate (i) the number of
shares then being purchased pursuant to such exercise and (ii) if applicable (as
provided below), whether the exercise is a cashless exercise.

                           (b) The provisions of this Section 2.1(b) shall only
be applicable (i) on or after
the first anniversary of the Issue Date, and (ii) if, and only if, on the
Exercise Date there is no effective Registration Statement covering the resale
of the Warrant Shares by the Holder. If the Notice of Exercise form elects a
"cashless" exercise, the Holder shall thereby be entitled to receive a number of
shares of Common Stock equal to (w) the excess of the Current Market Value (as
defined below) over the total cash exercise price of the portion of the Warrant
then being exercised, divided by (x) the Market Price of the Common Stock as of
the trading day immediately prior to the Exercise Date. For the purposes of this
Warrant, the terms (y) "Current Market Value" shall mean an amount equal to the
Market Price of the Common Stock as of the Trading Day immediately prior to the
Exercise Date, multiplied by the number of shares of Common Stock specified in
such Notice of Exercise Form, and (z) "Market Price of the Common Stock" shall
mean the Closing Price (as defined below) of the Common Stock.

                           (c) If the Notice of Exercise form elects a "cash"
exercise (or if the cashless
exercise referred to in the immediately preceding paragraph (b) is not available
in accordance with its terms), the Exercise Price per share of Common Stock for
the shares then being exercised shall be payable, at the election of the Holder,
in cash or by certified or official bank check or by wire transfer in accordance
with instructions provided by the Company at the request of the Holder.

                           (d) The Exercise Price per share of Common Stock for
the shares then being exercised
shall be payable, at the election of the Holder, in cash or by certified or
official bank check or by wire transfer in accordance with instructions provided
by the Company at the request of the Holder.

                           (e) Upon the appropriate payment, if any, of the
Exercise Price for the shares of
Common Stock purchased, together with the surrender of this Warrant Certificate
(if required), the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. The Company shall
deliver such certificates representing the Warrant Shares in accordance with the
instructions of the Holder as provided in the Notice of Exercise (the
certificates delivered in such manner, the "Warrant Share Certificates") within
three (3) Trading Days (such third Trading Day, a "Delivery Date") of (i) with
respect to a "cashless exercise," the Exercise Date or, (ii) with respect to a
"cash" exercise, the later of the Exercise Date or the date the payment of the
Exercise Price for the relevant Warrant Shares is received by the Company.

                           (f) The Holder shall be deemed to be the holder of
the shares issuable to it in
accordance with the provisions of this Section 2.1 on the Exercise Date.

                           2.2      Limitation on Exercise.  Notwithstanding
the  provisions of this Warrant,  the
                                    ----------------------
Agreement or of the other Transaction Agreements, in no event (except (i) as
specifically provided in this Warrant as an exception to this provision, (ii)
during the forty-five (45) day period prior to the Expiration Date, or (iii)
while there is outstanding a tender offer for any or all of the shares of the
Company's Common Stock) shall the Holder be entitled to exercise this Warrant,
or shall the Company have the obligation to issue shares upon such exercise of
all or any portion of this Warrant to the extent that, after such exercise the
sum of (1) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of the
Warrants or other rights to purchase Common Stock or through the ownership of
the unconverted portion of convertible securities), and (2) the number of shares
of Common Stock issuable upon the exercise of the Warrants with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to the
Holder upon such exercise). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), except as otherwise provided in clause (1) of such sentence. The Holder,
by its acceptance of this Warrant, further agrees that if the Holder transfers
or assigns any of the Warrants to a party who or which would not be considered
such an affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section 2.2
as if such transferee or assignee were the original Holder hereof.

                           2.3      Certain  Definitions.  As used  herein,
each of the  following  terms  has the
                                    --------------------
meaning set forth below, unless the context otherwise requires:

                           (a) "Commencement Date" means the earlier of (i) the
date which is sixty-five (65)
days after the Issue Date or (ii) the Effective Date.

                           (b) "Closing Price" means the 4:00 P.M. closing bid
price of the Common Stock on the
Principal Trading Market on the relevant Trading Day(s), as reported by the
Reporting Service for the relevant date.

                           (c) "Reporting Service" means Bloomberg LP or if that
service is not then reporting
the relevant information regarding the Common Stock, a comparable reporting
service of national reputation selected by a Majority in Interest of the Holders
and reasonably acceptable to the Company.

                  3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant one hundred percent (100%) of the number of shares
of its Common Stock as shall be required for issuance of the Warrant Shares for
the then unexercised portion of this Warrant. For the purposes of such
calculations, the Company should assume that the outstanding portion of this
Warrant was exercisable in full at any time, without regard to any restrictions
which might limit the Holder's right to exercise any portion of this Warrant
held by the Holder.

                  4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

                  5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.

                  6. Protection Against Dilution and Other Adjustments.

                           6.1      Adjustment  Mechanism.  If an  adjustment
of the  Exercise  Price is  required
                                    ---------------------
pursuant to this Section 6 (other than pursuant to Section 6.4), the Holder
shall be entitled to purchase such number of shares of Common Stock as will
cause (i) (x) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant following such adjustment, multiplied by (y)
the adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is entitled
to purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.(3)

                           6.2      Capital  Adjustments.  In case of any stock
split or reverse stock split, stock
                                    --------------------
dividend, reclassification of the Common Stock, recapitalization, merger or
consolidation (where the Company is not the surviving entity), the provisions of
this Section 6 shall be applied as if such capital adjustment event had occurred
immediately prior to the date of this Warrant and the original Exercise Price
had been fairly allocated to the stock resulting from such capital adjustment;
and in other respects the provisions of this Section shall be applied in a fair,
equitable and reasonable manner so as to give effect, as nearly as may be, to
the purposes hereof. A rights offering to stockholders shall be deemed a stock
dividend to the extent of the bargain purchase element of the rights. The
Company will not effect any consolidation or merger, unless prior to the
consummation thereof, the successor or acquiring entity (if other than the
Company) and, if an entity different from the successor or acquiring entity, the
entity whose capital stock or assets the holders of the Common Stock of the
Company are entitled to receive as a result of such consolidation or merger
assumes by written instrument the obligations under this Warrant (including
under this Section 6) and the obligations to deliver to the holder of this
Warrant such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the holder may be entitled to acquire.

                           6.3      Adjustment  for Spin Off.  If, for any
reason,  prior to the  exercise of this
                                    ------------------------
Warrant in full, the Company spins off or otherwise divests itself of a part of
its business or operations or disposes all or of a part of its assets in a
transaction (the "Spin Off") in which the Company does not receive compensation
for such business, operations or assets, but causes securities of another entity
(the "Spin Off Securities") to be issued to security holders of the Company,
then the Company shall cause (i) to be reserved Spin Off Securities equal to the
number thereof which would have been issued to the Holder had all of the
Holder's unexercised Warrants outstanding on the record date (the "Record Date")
for determining the amount and number of Spin Off Securities to be issued to
security holders of the Company (the "Outstanding Warrants") been exercised as
of the close of business on the Trading Day immediately before the Record Date
(the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
exercise of all or any of the Outstanding Warrants, such amount of the Reserved
Spin Off Shares equal to (x) the Reserved Spin Off Shares, multiplied by (y) a
fraction, of which (I) the numerator is the amount of the Outstanding Warrants
then being exercised, and (II) the denominator is the amount of the Outstanding
Warrants.

                           6.4      Adjustment  for Certain  Transactions.
Reference is made to the  provisions of
                                    -------------------------------------
Appendix A to this Warrant, the terms of which are incorporated herein by
reference. The Exercise Price shall be adjusted as provided in the applicable
provisions of said Appendix A.

                  7. Transfer to Comply with the Securities Act; Registration
Rights.

                           7.1      Transfer.  This Warrant has not been
registered  under the  Securities  Act of
                                    ---------
1933, as amended, (the "Act") and has been issued to the Holder for investment
and not with a view to the distribution of either the Warrant or the Warrant
Shares. Neither this Warrant nor any of the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may be sold, transferred,
pledged or hypothecated in the absence of an effective registration statement
under the Act relating to such security or an opinion of counsel satisfactory to
the Company that registration is not required under the Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the face thereof, in
form and substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.

                           7.2      Registration Rights.       Reference  is
 made  to  the   Registration   Rights
                                    --------------------
Agreement, the terms of which are incorporated herein by reference.

                  8. Late Delivery of Warrant Shares. Reference is made to
Section 5(c) of the Agreement, the terms of which are incorporated herein by
reference.

                  9. Notices. Any notice required or permitted hereunder shall
be given in manner provided in the Section headed "NOTICES" in the Agreement,
the terms of which are incorporated herein by reference.

                  10. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.

                  11. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of
Wilmington or the state courts of the State of Delaware sitting in the City of
Wilmington in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.

                  12. JURY TRIAL WAIVER. The Company and the Holder hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.

                  13. Remedies. The Company stipulates that the remedies at law
of the Holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

                  14. Counterparts. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

                   [Balance of page intentionally left blank]










                  15.



Descriptive Headings. Descriptive headings of the several Sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

IN WITNESS  WHEREOF,  the parties hereto have executed this Warrant as of the th
day of _____________________________, 200__.


                                           MSGI SECURITY SOLUTIONS, INC.

                                           By: ________________________________

                                           -----------------------------------
                        (Print Name)

                                           -----------------------------------
                           (Title)








                                   APPENDIX A




                                       TO
                          COMMON STOCK PURCHASE WARRANT
                                       OF
                          MSGI SECURITY SOLUTIONS, INC.


1. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement or in the Warrant.

2. (a) The term "Lower Price Transaction" means a New Transaction offered or
consummated during the New Transaction Period (as defined below), where the
lowest New Transaction Price (as defined below) is, or by its terms or by an
existing understanding of the Company and the New Investor, could subsequently
be adjusted or revised to be, lower than the then effective Exercise Price of
the Warrants (such Exercise Price, in each case, subject to adjustment in the
same manner as the initial Exercise Price of the Warrant is adjusted, other than
as a result of the application of this Appendix A).

         (b) "New Transaction Price" means the Basic New Transaction Price (as
defined below) except that if the New Transaction Exercise Price is lower than
the Basic New Transaction Price, it means the New Transaction Exercise Price.

         (c) "Basic New Transaction Price" means, as may be applicable, on a per
share basis, the lower of (1) the lowest fixed purchase price of any shares of
the New Common Stock contemplated in the New Transaction, or (2) the lowest
conversion price or put or call price which would be applicable under the terms
of the New Transaction; in each such case, whether such purchase or conversion
price or put or call price is stated or otherwise specified or is determined on
the closing date of the New Transaction by the application of a formula set in
the documents reflecting the New Transaction or could result from adjustments or
revisions contemplated in the relevant agreements for the New Transaction and
whenever such adjustment or revision would be applicable (and if no minimum
purchase price, conversion price or put or call price, as the case may be, is
set, it shall be assumed that such minimum purchase price or conversion price is
$.01); and provided, further, that, if the securities issued in the New
Transaction are issued at a Face Value Discount (as defined below), the New
Transaction Price shall be adjusted to reflect such discount.(4)

         (d) "New Transaction Exercise Price" means the lowest exercise price
per share applicable to the warrants, option or similar instrument (howsoever
denominated; collectively, "New Transaction Warrants") included in such New
Transaction, whether such exercise price is stated or could result from
adjustments or revisions contemplated in the relevant agreements for the New
Transaction and whenever such exercise price would be applicable (and, if no
minimum exercise price is set, it shall be assumed that such minimum exercise
price is $.01).

         (e) "Face Value Discount" means consideration less than, as the case
may be, (x) the number of shares being issued multiplied by the stated purchase
price, (y) the stated principal amount of a debenture, note or similar
instrument or (z) the stated value of the shares of convertible stock.

         (f) The term "New Transaction Period" means the period commencing on
the Issue Date and continuing until the earlier of (i) the date which is ninety
(90) days after the Effective Date, plus the number of days, if any, during
which the sale of Registrable Securities was suspended after the Effective
Date,(5) or (ii) the date on which this Warrant has been fully exercised.

4. The Company covenants and agrees that, if there is a Lower Price Transaction
during the New Transaction Period, then the Exercise Price on the unexercised
portion of this Warrant shall be adjusted to equal the lowest New Transaction
Price applicable to the Lower Price Transaction.











                          NOTICE OF EXERCISE OF WARRANT


TO:      MSGI SECURITY SOLUTIONS, INC.               VIA TELECOPIER TO:
         575 Madison Avenue                                      (917) 339-7166
         New York, NY 10022
         Attn: President

         The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate, dated as of ________________, 20___ , to
purchase ___________ shares of the Common Stock, $0.01 par value ("Common
Stock"), of MSGI SECURITY SOLUTIONS, INC. and tenders herewith payment in
accordance with Section 2 of said Common Stock Purchase Warrant, as follows:

9        CASH:    $                       =  (Exercise Price x Exercise Shares)
                    -------------------

                  Payment is being made by:
                           9        enclosed check
                           9        wire transfer
                           9        other
                                          --------------------------------------
9        CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:

     Net number of Warrant Shares to be issued to Holder : _______*

     * based on:       Current Market Value - (Exercise Price x Exercise Shares)
                       ---------------------------------------------------------
                                        Market Price of Common Stock
     where:
     Market Price of Common Stock ["MP"]         =        $_______________
     Current Market Value [MP x Exercise Shares] =        $_______________

         It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believes this exercise complies with the provisions of said Section
2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby,
the Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.

         As contemplated by the Warrant, this Notice of Conversion is being sent
by facsimile to the telecopier number and officer indicated above.

         If this Notice of Exercise represents the full exercise of the
outstanding balance of the Warrant, the Holder either (1) has previously
surrendered the Warrant to the Company or (2) will surrender (or cause to be
surrendered) the Warrant to the Company at the address indicated above by
express courier within five (5) Trading Days after delivery or facsimile
transmission of this Notice of Exercise.

         The certificates representing the Warrant Shares should be transmitted
by the Company to the Holder

         9        via express courier, or

         9        by electronic transfer

after  receipt  of  this  Notice  of  Exercise  (by  facsimile  transmission  or
otherwise) to:

                  =====================================
                  -------------------------------------




Dated: ______________________


- ----------------------------
[Name of Holder]

By: _________________________











                          NOTICE OF EXERCISE OF WARRANT
                               WORKSHEET SCHEDULE



1. Current Common Stock holdings of Holder and Affiliates         _____________
2.  Shares to be issued on current exercise                       _____________
3. Other shares to be issued on other current exercise(s) and
         other current conversion(s)(6)                           _____________
4. Other shares eligible to be acquired within next 60 days
         without restriction                                      _____________
5. Total [sum of Lines 1 through 4]                               _____________

6. Outstanding shares of Common Stock(7) _____________ 7.
Adjustments to
Outstanding
         a. Shares known to Holder as previously issued
             to Holder or others but not included in Line 6      ____________
         b. Shares to be issued per Line(s) 2 and 3              ____________
         c. Total Adjustments [Lines 7a and 7b]                  _____________
8. Total Adjusted Outstanding [Lines 6 plus 7c]                  _____________

9. Holder's Percentage [Line 5 divided by Line 8] _____________% [Note: Line 9
not to be above 4.99%]



(1)Insert date which the last calendar of the month in which the fifth
anniversary of the Initial Closing Date occurs. (2)Insert amount equal to
Buyer's Allocable Share of 600,000 shares.
(3)Example: Assume 10,000 shares remain under Warrant at original stated
Exercise Price of US$6.50. Total exercise price (clause (y) in text) is (i)
10,000 x (ii) US$6.50, or US$65,000. Company effects 2:1 stock split. Exercise
Price is adjusted to US$3.25. Number of shares covered by Warrant is adjusted to
20,000, because (applying clause (x) in text) (i) 20,000 x (ii) US$3.25 =
US$65,000.
(4)By way of illustration, if convertible preferred shares having a stated value
of $1 million and a fixed conversion price of $0.50 (resulting in 2,000,000
shares) were sold for a purchase price of $800,000, the effective New
Transaction Price would be $0.40 (the conversion price at which $800,000 would
convert into 2,000,000 shares).
(5)By way of illustration: If the Effective Date is June 1, 2006, the initial
date referred to in this clause would be August 30, 2006. If, however, the sale
of Registrable Securities was suspended in the interim for thirty (30) days, the
date will be extended to September 29, 2006. If on September 15, 2006, the sale
of Registrable Securities was suspended again for five (5) days, the date will
be October 4, 2006. (6)Includes shares issuable on conversion of convertible
securities (including assumed payment, if relevant, of interest or dividends) or
exercise of other rights, including other warrants or options (7)Based on latest
SEC filing by Company or information provided by executive officer of Company,
counsel to Company or transfer agent

EX-10

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT, dated as of ____ _____,
2006 (this "Agreement"), is made by and between MSGI SECURITY SOLUTIONS, INC., a
Nevada corporation with headquarters located at 575 Madison Avenue, New York, NY
10022 (the "Company"), and each entity named on a signature page hereto (each,
an "Initial Investor") (each agreement with an Initial Investor being deemed a
separate and independent agreement between the Company and such Initial
Investor, except that each Initial Investor acknowledges and consents to the
rights granted to each other Initial Investor under such agreement).

                              W I T N E S S E T H:

                  WHEREAS, upon the terms and subject to the conditions of the
Bridge Loan Agreement of even date herewith, between the Initial Investor and
the Company (the "Bridge Loan Agreement"; capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Bridge Loan
Agreement), the Company has agreed to issue and sell to the Initial Investors
the Warrants; and

                  WHEREAS, the Warrant Shares may be issued upon the exercise of
 the Warrants; and

                  WHEREAS, to induce the Initial Investor to execute and deliver
the Bridge Loan Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Registrable Securities (as defined
below);

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:

                  1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:

                  "Closing Date" means the Initial Closing Date.

                   "Closing Price" means the 4:00 P.M. closing bid price of the
Common Stock on the Principal Trading Market on the relevant Trading Day(s), as
reported by the Reporting Service for the relevant date.
                  "Company Counsel" means Greenberg Traurig, LLP.

                  "Effective Date" means the date the SEC declares a
Registration Statement covering Registrable Securities and otherwise meeting the
conditions contemplated hereby to be effective.

                  "Held Shares" means (i) prior to the Effective Date, shares of
Common Stock acquired by the Investor upon an exercise of a Warrant and (ii) on
or after the Effective Date, shares of Common Stock acquired by the Investor
upon an exercise of a Warrant within the thirty (30) days preceding the
Restricted Sale Date, but not yet sold by the Investor; provided, however, that
if the Investor effected more than one such exercise during such thirty (30) day
period and sold less than all of such shares, the sold shares shall be deemed to
be derived first from the exercises in the sequence of such exercises (that is,
for example, until the number of shares from the first of such exercises have
been sold, all shares shall be deemed to be from the first exercise; and
thereafter, from each sequential exercise until all the shares from such
exercise have been sold).

                  "Held Value" means, as of the first day of the relevant
Computation Period (as defined below), the amount equal to (i) the Held Warrant
Percentage, as of such date, multiplied by (ii) the Note Principal of the
Investor as of the Buyer's Closing Date.

                  "Held Warrant Percentage" means, as of the relevant date, (i)
the sum of the Warrant Shares for outstanding Warrants held by the Investor plus
the Held Shares, divided by (ii) the number of Warrant Shares of the Investor as
of the Buyer's Closing Date.

                  "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof and who holds Warrants or
Registrable Securities.

                  "Other Issuable Shares" means (i) the Payment Shares, if any,
issued or issuable to the Holder as of the date of the filing of the
Registration Statement and any amendment thereto or any subsequent date, and
(ii) the good faith estimate of the Company of the number of other Payment
Shares which the Company anticipates, as of the date of the filing of the
Registration Statement and any amendment thereto, will be issuable to the Holder
pursuant to the provisions of the Transaction Agreements.

                  "Payment Shares" means shares of Common Stock issued by the
Company as provided in Section 2(b)
below.

                  "Permitted Selling Shareholders" means, if the Company files a
registration statement for the resale of shares by other selling shareholders
for whom or for which the Company has a contractual obligation to register such
shares; provided, however, that no such obligation shall limit the number of
shares of the Investor to be included in such registration statement.

                  "Permitted Suspension Period" means not more than two (2)
periods during any consecutive 12-month period during which the Holder's right
to sell Registrable Securities under the Registration Statement is suspended,
provided, however, that each of such periods shall neither (i) be for more than
twenty (20) days nor (ii) begin less than ten (10) Trading Days after the last
day of the preceding suspension period (whether or not such last day was during
or after a Permitted Suspension Period).

                  "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the registration statement would be detrimental to the business and affairs of
the Company; or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in a registration statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the registration statement would be
materially misleading absent the inclusion of such information.

                  "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the SEC.

                  "Registrable Securities" means, collectively, the Warrant
Shares and the Other Issuable Shares.

                  "Registration Statement" means a registration statement of the
Company under the Securities Act covering Registrable Securities on Form S-3, if
the Company is then eligible to file using such form, and if not eligible, on
Form S-2 or other appropriate form; an Other Registration Statement (as defined
below) may be the Registration Statement if, as contemplated below, the Investor
elects to include the Investor's Registrable Securities in such Other
Registration Statement.

                  "Reporting Service" means Bloomberg LP or if that service is
not then reporting the relevant information regarding the Common Stock, a
comparable reporting service of national reputation selected by a Majority in
Interest of the Holders and reasonably acceptable to the Company.

                  "Required Effective Date" means, initially, the Initial
Required Effective Date or the Increased Required Effective Date (as those terms
are defined below), as the case may be.

                  "Required Filing Date" means the earlier of (i) the date the
Company files any Other Registration Statement or (ii) the date which is one
hundred eighty (180) days after the Closing Date.

                  "Restricted Sale Date" means the first date, other than a date
during a Permitted Suspension Period (as defined below), on which the Investor
is restricted from making sales of Registrable Securities pursuant to any
previously effective Registration Statement.
                  2. Registration.

                  (a) Mandatory Registration.

                  (i) The Company shall prepare and file with the SEC, as soon
as practicable after the Closing Date but no later than the Required Filing
Date, a Registration Statement registering for resale by the Investor a
sufficient number of shares of Common Stock for the Initial Investors to sell
the Registrable Securities. Notwithstanding the requirement to register all
Registrable Securities, the Company's obligation to register the Registrable
Securities shall initially be satisfied by the registration of the Initial
Number of Shares to Be Registered (as defined below). The "Initial Number of
Shares to Be Registered" is a number of shares of Common Stock which is at least
equal to the sum of (x) the number of Warrant Shares covered by the Warrants
(assuming for such purposes that all the Warrants had been eligible to be
exercised and had been exercised for the issuance of Warrant Shares in
accordance with their terms, whether or not such eligibility or exercise had in
fact occurred as of such date), and (y) the number of Other Issuable Shares as
of the date of the filing of the Registration Statement or any amendment thereto
(provided, however, that for purposes of this provision, the number of Other
Issuable Shares shall not be greater than the number of such shares which the
SEC permits to be included in the Registration Statement). Unless otherwise
specifically agreed to in writing in advance by the Holder, the Registration
Statement (W) shall include only (1) the Registrable Securities, (2) the shares
issuable on exercise of warrants issued to the Placement Agent in connection
with the transactions contemplated by the Transaction Agreements, and (3) the
shares of the Permitted Selling Shareholders, and (X) shall also state that, in
accordance with Rule 416 and 457 under the Securities Act, it also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon exercise of the Warrants or issuances of Other Issuable Securities covered
by such Registration Statement to prevent dilution resulting from stock splits,
stock dividends or similar transactions.

                  (ii) The Company will use its reasonable best efforts to cause
such Registration Statement to be declared effective on a date (the "Initial
Required Effective Date") which is no later than the earlier of (Y) ten (10)
days after oral or written notice by the SEC that it may be declared effective
or (Z) ninety (90) days after the earlier of (I) the actual filing date of the
Registration Statement or (II) the Required Filing Date.

                  (iii) If at any time (an "Increased Registered Shares Date"),
the number of shares of Common Stock represented by the Registrable Securities,
issued or to be issued as contemplated by the Transaction Agreements, exceeds
the aggregate number of shares of Common Stock then registered or sought to be
registered in a Registration Statement, the Company shall either

         (X) amend the relevant Registration Statement filed by the Company
         pursuant to the preceding provisions of this Section 2, if such
         Registration Statement has not been declared effective by the SEC at
         that time, to register the Increased Number of Shares to Be Registered
         (as defined below), or

         (Y) if such Registration Statement has been declared effective by the
         SEC at that time, file with the SEC an additional Registration
         Statement (an "Additional Registration Statement") to register the
         number of shares equal to the excess of the Increased Number of Shares
         to Be Registered over the aggregate number of shares of Common Stock
         already registered.

The "Increased Number of Shares to Be Registered" is a number of shares of
Common Stock which is at least equal to (A) the number of shares theretofore
issued on exercise of the Warrants, plus (B) the sum of (x) the number of
Warrant Shares covered by the unexercised Warrants (assuming for such purposes
that all the Warrants, reduced by any exercised Warrants, had been eligible to
be exercised and had been exercised for the issuance of Warrant Shares in
accordance with their terms, whether or not such eligibility or exercise had in
fact occurred as of such date), and (y) the number of Other Issuable Shares as
of the date of the filing of the Registration Statement or any amendment thereto
(provided, however, that for purposes of this provision, the number of Other
Issuable Shares shall not be greater than the number of such shares which the
SEC permits to be included in the Registration Statement). The Company will use
its reasonable best efforts to cause such Registration Statement to be declared
effective on a date (each, an "Increased Required Effective Date") which is no
later than (q) with respect to a Registration Statement under clause (X) of this
subparagraph (ii), the Initial Required Effective Date and (r) with respect to
an Additional Registration Statement, the earlier of (I) ten (10) days after
notice by the SEC that it may be declared effective or (II) thirty (30) days
after the Increased Registered Shares Date.

                  (iv) Anything in this Agreement or the other Transaction
Agreements to the contrary notwithstanding, if the Company participates (whether
voluntarily or by reason of an obligation to a third party) in the filing of a
registration statement (an "Other Registration Statement"; except that a
registration statement on Form S-8 or on Form S-4 shall not be deemed an Other
Registration Statement) for the registration of any shares of the Company's
stock, the Company shall give written notice thereof to the Investor and the
Investor shall have the right, exercisable within ten (10) Trading Days after
receipt of such notice, to demand inclusion of all or a portion of the
Investor's Registrable Securities in such Other Registration Statement (which
Other Registration Statement shall then be a Registration Statement contemplated
by this Agreement). If the Holder exercises such election, the Registrable
Securities so designated shall be included in the Other Registration Statement
(without any holdbacks) at no cost or expense to the Holder (other than any
commissions, if any, relating to the sale of Holder's shares). The Investor's
rights under this Section 2(a)(iv) shall expire at such time as such Investor
can sell all of such Investor's remaining Registrable Securities under Rule 144
without volume or other restrictions or limit.


                  (b) Payments by the Company.

                  (i) If the Registration Statement covering the Registrable
Securities is not filed as contemplated by this Agreement with the SEC by the
Required Filing Date, the Company will make payment to the Initial Investor in
such amounts and at such times as shall be determined pursuant to this Section
2(b).
                  (ii) If the Registration Statement covering the Registrable
Securities is not effective by the relevant Required Effective Date or if there
is a Restricted Sale Date, then the Company will make payments to the Initial
Investor in such amounts and at such times as shall be determined pursuant to
this Section 2(b).

                  (iii) The amount (the "Periodic Amount") to be paid by the
Company to the Initial Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to one and one-half percent
(1.5%; the "Periodic Amount Percentage") of the Held Value of the Holder for the
period from the date following the relevant Required Filing Date or the Required
Effective Date or a Restricted Sale Date, as the case may be, to the first
relevant Computation Date, and thereafter to each subsequent Computation Date
(each such period, a "Computation Period"). The Held Value is determined on the
first day of each Computation Period. By way of illustration and not in
limitation of the foregoing, if the Registration Statement is filed on or before
the Required Filing Date, but is not declared effective until seventy-five (75)
days after the Initial Required Effective Date, the Periodic Amount will
aggregate four and one-half percent (4.5%) of the Held Value (1.5% for days
1-30, plus 1.5% for days 31-60, plus 1.5% for days 61-75).

                  (iv) Each Periodic Amount, if any, will be payable by the
Company, except as provided in the other provisions of the immediately
succeeding subparagraph (v), in cash or other immediately available funds to the
Investor on the third Trading Day after

         (A) with respect to Periodic Amounts for Computation Periods ending on
         or before the Effective Date, (i) the earlier of the Effective Date or
         the date which is thirty-one (31) days after the Initial Required
         Effective Date (the "First Specified Periodic Payment Date") and (ii)
         if relevant, the first day of each Computation Period after the First
         Specified Periodic Payment Date, and

         (B) with respect to all Periodic Amounts accruing after the Effective
         Date, the first day of the relevant Computation Period,

in each case, without requiring demand therefor by the Investor.

                  (v) Notwithstanding the provisions of the immediately
preceding subparagraph (iv), at the option of the Investor, exercisable in its
sole and absolute discretion by written notice to the Company at any time before
the Periodic Amount is paid, all or a portion of the Periodic Amount shall be
paid by the issuance of additional shares of Common Stock to the Investor
("Payment Shares") in an amount equal to the Periodic Amount being paid thereby
divided by an amount equal to seventy-five percent (75%) of the average Closing
Price for the five (5) Trading Days immediately preceding the relevant
Computation Date; provided, further that the Delivery Date for the Payment
Shares shall be three (3) Trading Days after the date the Investor gives the
notice contemplated by this subparagraph. The provisions of Section 5(b)(i) of
the Bridge Loan Agreement shall apply to the delivery of the certificates of the
Payment Shares based on the relevant Periodic Amount.

                  (vi) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date or the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended or the shares of the Company's stock are not listed on the Principal
Trading Market, may be difficult to ascertain. The parties agree that the
amounts payable pursuant to the foregoing provisions of this Section 2(b)
represent a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of such damages.

                  (vii) Notwithstanding the foregoing, the amounts payable by
the Company pursuant to this provision shall not be payable to the extent any
delay in the filing or effectiveness of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by the Initial
Investor or its counsel.

                  (viii) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, the Required
Effective Date or a Restricted Sale Date, as the case may be, or (2) the date
after the Required Filing Date, the Required Effective Date or Restricted Sale
Date on which the Registration Statement is filed (with respect to payments due
as contemplated by Section 2(b)(i) hereof) or is declared effective or has its
restrictions removed or the shares of the Company's stock are listed on the
Principal Trading Market (with respect to payments due as contemplated by
Section 2(b)(ii) hereof), as the case may be, and (B) each date which is the
earlier of (1) thirty (30) days after the previous Computation Date or (2) the
date after the previous Computation Date on which the Registration Statement is
filed (with respect to payments due as contemplated by Section 2(b)(i) hereof)
or is declared effective or has its restrictions removed or the shares of the
Company's stock are listed on the Principal Trading Market (with respect to
payments due as contemplated by Section 2(b)(ii) hereof), as the case may be.

                  (ix) Anything in the preceding provisions of this Section 2(b)
to the contrary notwithstanding, if, but only if, the Registration Statement is
declared effective within thirty (30) days following the Initial Required
Effective Date,

         (A) the provisions of Section 2(b)(i) shall not apply; and

         (B) the provisions of Section 2(b)(ii) shall not apply to the fact that
         the Registration Statement was initially declared effective after the
         Initial Required Effective Date;

and the Company will not have any obligation to pay any Periodic Amount to the
Investor with respect thereto; provided, however, that the provisions of Section
2(b)(ii) shall continue to apply to all other events described therein.

                  (x) Anything in the preceding provisions of this Section 2(b)
to the contrary notwithstanding, the Company's obligations to pay Periodic
Amounts contemplated by the provisions of Section 2(b)(i) and contemplated by
the provisions of Section 2(b)(ii) with respect to the fact that the
Registration Statement was initially declared effective after the Initial
Required Effective Date shall terminate at the close of the sixth Computation
Period after the Initial Required Effective Date or on the date the Investor may
sell all Registrable Securities under Rule 144 without volume or other
restrictions or limit, whichever is earlier; provided, however, that the
provisions of Section 2(b)(ii) shall continue to apply to all other events
described therein.

                  3. Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following:

                  (a) Prepare promptly, and file with the SEC by the Required
Filing Date a Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earlier of (i) the date when the
Investors may sell all Registrable Securities under Rule 144 without volume or
other restrictions or limits or (ii) the date the Investors no longer own any of
the Registrable Securities, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;

                  (b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

                  (c) Permit a single firm of counsel designated by the Initial
Investors (which, until further notice, shall be deemed to be Krieger & Prager
LLP, Attn: Samuel Krieger, Esq., which firm has requested to receive such
notification; each, an "Investor's Counsel") to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
(but not less than three (3) Trading Days) prior to their filing with the SEC,
and not file any document in a form to which such counsel reasonably objects;

                  (d) Notify each Investor and the Investor's Counsel and any
managing underwriters immediately (and, in the case of (i)(A) below, not less
than three (3) Trading Days prior to such filing) and (if requested by any such
person) confirm such notice in writing no later than one (1) Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) whenever the SEC notifies the Company whether there will be a "review" of
such Registration Statement; (C) whenever the Company receives (or a
representative of the Company receives on its behalf) any oral or written
comments from the SEC in respect of a Registration Statement (copies or, in the
case of oral comments, summaries of such comments shall be promptly furnished by
the Company to the Investors); and (D) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
proceedings for that purpose; (iv) if at any time any of the representations or
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all material
respects; (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; and (vi) of the occurrence of
any event that to the best knowledge of the Company makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall communicate with the
Investor's Counsel with regard to its proposed written responses to the comments
contemplated in clause (C) of this Section 3(d), so that, to the extent
practicable, the Investors shall have the opportunity to comment thereon;

                  (e) Furnish to each Investor and to Investor's Counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;

                  (f) As promptly as practicable after becoming aware thereof,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;

                  (g) As promptly as practicable after becoming aware thereof,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop
order or other suspension of the effectiveness of the Registration Statement at
the earliest possible time;

                  (h) Comply with Regulation FD or any similar rule or
regulation regarding the dissemination of information regarding the Company, and
in furtherance of the foregoing, and not in limitation thereof, not disclose to
the Investor any non-public material information regarding the Company;

                  (i) Notwithstanding the foregoing, if at any time or from time
to time after the date of effectiveness of the Registration Statement, the
Company notifies the Investors in writing that the effectiveness of the
Registration Statement is suspended for any reason, whether due to a Potential
Material Event or otherwise, the Investors shall not offer or sell any
Registrable Securities, or engage in any other transaction involving or relating
to the Registrable Securities, from the time of the giving of such notice until
such Investor receives written notice from the Company that such the
effectiveness of the Registration Statement has been restored, whether because
the Potential Material Event has been disclosed to the public or it no longer
constitutes a Potential Material Event or otherwise; provided, however, that the
Company may not so suspend the right to such holders of Registrable Securities
during the periods the Registration Statement is required to be in effect other
than during a Permitted Suspension Period (and the applicable provisions of
Section 2(b) shall apply with respect to any such suspension other than during a
Permitted Suspension Period);

                  (j) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the Principal Trading Market and the quotation of the Registrable
Securities on the Principal Trading Market;

                  (k) Provide a transfer agent ("Transfer Agent") and registrar,
which may be a single entity, for the Registrable Securities not later than the
initial Effective Date;

                  (l) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investors may reasonably request, and, within five (5) Trading Days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the Transfer Agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) an appropriate instruction and opinion
of such counsel, which shall include, without limitation, directions to the
Transfer Agent to issue certificates of Registrable Securities(including
certificates for Registrable Securities to be issued after the Effective Date
and replacement certificates for Registrable Securities previously issued)
without legends or other restrictions, subject to compliance with applicable law
and other rules and regulations, including, without limitation, prospectus
delivery requirements;

                  (m) Take all other reasonable administrative steps and actions
(including the participation of Company counsel) necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement; provided, however, that the foregoing does not
require that the Company take any steps whatsoever regarding the identification
or selection of a broker to sell the Registrable Securities, the identification
of buyers of the Registrable Securities, or the negotiation of the sale terms of
the Registrable Securities; and

                  (n) Not file any other registration statement (other than the
Registration Statement and amendments thereto) during the period commencing on
the Closing Date and ending on the Effective Date.

                  4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:

                  (a) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement; and

                  (b) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f),
(g) or (i) above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f), (g) or (i),
and, if so directed by the Company, such Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.

                  5. Expenses of Registration. All reasonable expenses (other
than underwriting discounts and commissions of the Investor) incurred in
connection with registrations, filings or qualifications pursuant to Section 3,
but including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company.

                  6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:

                  (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor, and
each Buyer Control Person (each, an "Indemnified Party"), against any losses,
claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations in the Registration
Statement, or any post-effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act, the Exchange
Act or any state securities law (the matters in the foregoing clauses (i)
through (iii) being, collectively referred to as "Violations"). Subject to
clause (b) of this Section 6, the Company shall reimburse the Investors,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not (I) apply to any Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of such Indemnified Party
expressly for use in connection with the preparation of the Registration
Statement, any such amendment thereof or supplement thereto or prospectus, if
such prospectus (or supplement or amendment thereto) was timely made available
by the Company pursuant to Section 3(b) hereof; (II) be available to the extent
such Claim is based on a failure of the Investor to deliver or cause to be
delivered the prospectus made available by the Company or the amendment or
supplement thereto made available by the Company; (III) be available to the
extent such Claim is based on the delivery of a prospectus by the Investor after
receiving notice from the Company under Section 3(f), (g) or (i) hereof (other
than a notice regarding the effectiveness of the Registration Statement or any
amendment or supplement thereto), or (IV) apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. The
Investor will indemnify the Company and its officers, directors and agents
(each, an "Indemnified Party") against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Investor, expressly
for use in connection with the preparation of the Registration Statement or the
amendment or supplement thereto, subject to such limitations and conditions as
are applicable to the indemnification provided by the Company pursuant to this
Section 6. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.

                  (b) Promptly after receipt by an Indemnified Party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
satisfactory to the indemnifying party (provided such counsel shall not have a
conflict of interest with the Indemnified Party and provided that all defenses
available to the Indemnified Party can be maintained without prejudicing the
rights of the indemnifying party). In case any such action is brought against
any Indemnified Party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the provisions herein
stated and after notice from the indemnifying party to such Indemnified Party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such Indemnified Party under this Section 6 for any legal or other
reasonable out-of-pocket expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to its
final conclusion. The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and reasonable out-of-pocket expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel as provided above. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable; provided, however, that the Investor shall not obligated to make any
indemnification payment to the Company under this Section 6 unless and until
there has been a final adjudication of liability on the part of the Investor.

                  7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) except where the seller has committed fraud (other
than a fraud by reason of the information included or omitted from the
Registration Statement as to which the Company has not given notice as
contemplated under Section 3 hereof) or intentional misconduct, contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.

                  8. Reports under Securities Act and Exchange Act. With a view
to making available to Investor the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit Investor to sell securities of the Company to the public without
Registration ("Rule 144"), the Company agrees to:
                  (a) make and keep public information available, as those terms
are understood and defined in Rule 144;

                  (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

                  (c) furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) if not available on the SEC's EDGAR
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without Registration; and

                  (d) at the request of any Investor holding Registrable
Securities (a "Holder"), give its Transfer Agent instructions (supported by an
opinion of Company counsel, if required or requested by the Transfer Agent) to
the effect that, upon the Transfer Agent's receipt from such Holder of

         (i) a certificate (a "Rule 144 Certificate") certifying (A) that the
         Holder's holding period (as determined in accordance with the
         provisions of Rule 144) for the shares of Registrable Securities which
         the Holder proposes to sell (the "Securities Being Sold") is not less
         than (1) year and (B) as to such other matters as may be appropriate in
         accordance with Rule 144 under the Securities Act, and

         (ii) an opinion of counsel acceptable to the Company (for which
         purposes it is agreed that the initial Investor's Counsel shall be
         deemed acceptable if not given by Company Counsel) that, based on the
         Rule 144 Certificate, Securities Being Sold may be sold pursuant to the
         provisions of Rule 144, even in the absence of an effective
         Registration Statement,

the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the Holder,
as the seller or transferor thereof, or the status, including any relevant
legends or restrictions, of the shares of the Securities Being Sold while held
by the Holder). If the Transfer Agent reasonably requires any additional
documentation at the time of the transfer, the Company shall deliver or cause to
be delivered all such reasonable additional documentation as may be necessary to
effectuate the issuance of an unlegended certificate.

                  9. Assignment of the Registration Rights. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investor to any transferee of the Registrable
Securities (or all or any portion of any unexercised Warrants) only if the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, (b) the securities with respect to which such registration rights are
being transferred or assigned, and (c) written evidence of the transferee's
assumption of the Investor's obligations under this Agreement.

                  10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
represent a Majority in Interest of the Holders as of the relevant date. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.

                  11. Miscellaneous.

                  (a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

                  (b) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Bridge Loan Agreement, (i) if to the
Company or to the Initial Investor, to their respective address contemplated by
the Bridge Loan Agreement, and (ii) if to any other Investor, at such address as
such Investor shall have provided in writing to the Company, or at such other
address as each such party furnishes by notice given in accordance with this
Section 11(b).

                  (c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                  (d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of Wilmington or the state courts of the State of Delaware sitting in the
City of Wilmington in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing of any
such proceeding in such jurisdictions.

                  (e) The Company and the Investor hereby waive a trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out of or in
connection with this Agreement or any of the other Transaction Agreements.

                  (f) 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 Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

                  (g) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.

                  (h) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

                  (i) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.

                  (j) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

                  (k) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3(a) hereof, or any delay in such
performance could result in loss to the Investors, and the Company agrees that,
in addition to any other liability the Company may have by reason of such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay, unless the same is the result of force majeure.
Neither party shall be liable for consequential damages.

                  (l) This Agreement (including to the extent relevant the
provisions of other Transaction Agreements) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]















                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.


                            INITIAL INVESTOR:

                            ------------------------------------
                                     [Print Name of Initial Investor]

                            By: _________________________________
                            Name: ______________________________
                            Title: _______________________________



                            COMPANY:
          MSGI SECURITY SOLUTIONS, INC.


                            By: _________________________________
                            Name: ______________________________
                            Title: _______________________________