Non-Qualified Stock Option Agreement

This Non-Qualified Stock Option Agreement (this “Agreement”), dated as of
January 4, 2008, is by and between Compliance Systems Corporation, a Nevada
corporation (the “Corporation”), and ____________, an individual residing at
___________________ (the "Optionee").

WHEREAS, the Optionee is a valued employee, director and/or officer of, and/or
service provider to, the Corporation; and

WHEREAS, the Corporation deems it desirable and in the Corporation’s best
interests that Optionee be given an opportunity to acquire shares (each, an
“Option Share”) of the common stock, par value $0.001 per share (the "Common
Stock"), of the Corporation upon the terms and subject to the conditions set
forth in this Agreement in order to provide further incentive to Optionee that
is directly linked to increases in stockholder value which will therefore inure
to the benefit of all stockholders of the Corporation.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, and the mutual covenants and agreements contained
in this Agreement, the parties agree as follows:
 

1.
Grant of Option.

(a) The Corporation hereby grants to the Optionee the right, privilege and
option (the "Option") to purchase from the Corporation up to an aggregate of
_______________ Option Shares (subject to adjustment as provided in section 6),
on the terms and subject to the conditions set forth in this Agreement.

(b) The purchase price payable upon any exercise of the Option is $0.026 per
Option Share, subject to adjustment as provided in section 6 (the “Purchase
Price”).

(c) Optionee acknowledges and agrees that the Option is not intended to be an
“Incentive Stock Option” as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”).
 

2.
Exercise of the Option.

(a) Subject to the provisions of sections 3 and 4, the Option shall be
exercisable, in whole or part and from time to time, by written notice of such
exercise, delivered to the President or Secretary of the Corporation, at the
Corporation’s principal executive offices by either (i) personal delivery,
against written receipt therefor, or (ii) by pre-paid, certified or registered
mail, return receipt requested. Such notice shall specify the number of Option
Shares for which the Option is being exercised (which number, if less than all
of the Option Shares then subject to exercise, shall be 100,000 or an integral
multiple thereof; provided, however, that, in the event that less than 100,000
Options Shares remain then subject to exercise, the Option may be exercised for
such remaining Option Shares) and shall be accompanied by (A) payment of the
full aggregate Purchase Price for the Option Shares for which the Option is
being exercised and (B) delivery of a duly executed representation letter of
Optionee, in a form reasonably acceptable to the Corporation, (1) certifying
that Optionee is acquiring such the Option Shares for investment purposes only
and not with a view to their sale or distribution, (2) agreeing not to sell,
pledge, hypothecate or otherwise distribute the Option Shares, unless a
registration statement including such Option Shares is effective under the
Securities Act of 1933, as amended (the "Securities Act"), or there is available
an applicable exemption thereunder and (3) agreeing that an appropriate legend
may be placed on the stock certificate(s) representing the Option Shares have
not been registered under the Act and may only be disposed in accordance with
the Act or an exemption thereunder. As soon as practicable after receipt by the
Corporation of such notice, payment in full of the aggregate Purchase Price for
all the Option Shares with respect to which the Option is being exercised and
duly executed Representation Letter, the Corporation shall take all necessary
actions to cause such Option Shares to be issued and a certificate or
certificates representing such Option Shares shall be delivered to the
Optionee. 
 
 
 

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(b) The form of payment of the Purchase Price for Option Shares purchased
pursuant to the Option shall consist of: (i) cash; (ii) check (subject to
collection); (iii) in the discretion of the Board of Directors (the"Board") of
the Corporation, (A) surrender to the Corporation of other shares of Common
Stock owned by Optionee which are then registered under the Securities Act or
otherwise publicly saleable under Rule 144 or other applicable exemption
promulgated under the Securities Act and have a fair market value on the date of
surrender equal to the aggregate Purchase Price of the Option Shares being
exercised, (B) assignment to the Company of the net proceeds (to the extent
necessary to pay such aggregate Purchase Price) to be received from a registered
broker upon the sale of all or a portion of such Option Shares or assignment of
the net proceeds (to the extent necessary to pay such aggregate Purchase Price)
of a loan from such broker in such amount or (C) such other consideration and
method of payment for the issuance of stock to the extent permitted under all
applicable state and federal laws; or (iv) any combination of such methods of
payment.

(c) No Option Shares shall be delivered upon exercise of the Option until all
laws, rules and regulations which the Board may deem applicable have been
complied with.

(d) Optionee shall not be considered a record holder of the Option Shares
acquired upon exercise of the Option for any purpose until the date on which
Optionee is actually recorded as the holder of such Option Shares on the records
of the Corporation.
 

3.
Term of the Option.

(a) Subject to the earlier termination as provided in this section 3, the Option
shall expire as of 5:00 P.M., Eastern Standard Time, on January 4, 2013 (the
“Termination Time”).
 
 
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(b) Notwithstanding the provisions of paragraph 3(a), the Option, to the extent
not previously exercised, shall terminate upon the first to occur of the
following events:
(i) the first anniversary of Optionee's death;
(ii) the date of the termination of the Optionee's employment or other
relationship with the Corporation for "cause";
(iii) the first anniversary of the date (A) on which the Optionee's employment
or other relationship with the Corporation is terminated without cause (except
if such termination be by reason of death or permanent and total disability of
Optionee); or (B) Optionee voluntarily terminates Optionee’s employment or other
relationship with the Corporation; or
(iv) the first anniversary of the date of Optionee's "permanent and total
disability" (as such term is defined in Section 22(e) of the Code).

For purposes of this paragraph 3(b), “cause” shall mean: (i) Optionee shall have
committed any material act of willful misconduct, dishonesty or breach of trust
which, directly or indirectly, causes the Corporation or any of the
Corporation’s subsidiaries to suffer a material loss, fine, civil penalty,
judgment, claim, damage or expense; or (ii) Optionee shall have been convicted
of, or shall have plead guilty or nolo contendere to, a felony involving the
Corporation or any of the Corporation’s subsidiaries (unless committed in the
reasonable, good faith belief that the Optionee’s actions were in the best
interests of the Corporation and the Corporation’s shareholders and would not
violate criminal law). All determinations that Optionee has been terminated for
cause shall be made by the Board, whose determination shall be final, conclusive
and binding upon Optionee and the Corporation. If Optionee is a director of the
Corporation, Optionee shall abstain from voting on any such determination.
 

4.
Availability of Shares.

(a) The Corporation shall keep available for issuance such number of shares of
Common Stock as necessary in order for the Corporation to issue and deliver all
Option Shares upon the full exchange of the Option.

(b) The Corporation shall utilize its best efforts to comply with the
requirements of each regulatory commission or agency having jurisdiction in
order to issue and sell the Option Shares upon exercise of the Option; provided,
however, that the Corporation shall not be required to register the Option
Shares issuable upon exercise of the Option under the Securities Act. Such
compliance will be a condition precedent to the right to exercise the Option.
The inability of the Corporation to effect such compliance with any such
regulatory commission or agency which counsel for the Corporation, in its
reasonable judgment, deems necessary for the lawful issuance and sale of Option
Shares shall relieve the Corporation from any liability for failure to issue and
sell the Option Shares for such period of time as such compliance is not
effectuated.

5.
Restrictions. Optionee hereby represents and warrants to the Corporation as
follows:

(a) The Option and the right to purchase the Option Shares is personal to the
Optionee and shall not be transferred to any other person, other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code, or Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or by the rules promulgated
under the Code or ERISA. The Option and the right to purchase the Option Shares
shall not be collaterally assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Option or of any rights granted under
this Agreement contrary to the provisions of this section 5, or the levy of any
attachment or similar process upon the Option or such right, shall be null and
void.
 
 
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(b) Notwithstanding anything to the contrary contained in paragraph 5(a),
(i) in the event of Optionee's death, Optionee's executor(s), administrator(s)
or the person(s) to whom the Optionee's rights under the Option shall pass by
will or applicable laws of decent and distribution, may exercise, within one
year of Optionee's death, the Option to the extent that Optionee was entitled to
exercise the Option on the date of Optionee's death; and
(ii) in the event of Optionee's permanent and total disability, Optionee's
legally appointed representative(s) may exercise, within one year of Optionee's
permanent and total disability, the Option to the extent that Optionee was
entitled to exercise the Option on the date of Optionee's permanent and total
disability.

(c) Optionee has been advised and understands that:
(i) the Option has been issued in reliance upon an exemption from registration
under the Securities Act and applicable state statutes;
(ii) the Option Shares have not been registered under the Securities Act or
applicable state statutes and must be held and may not be sold, transferred, or
otherwise disposed of for value unless the Option Shares are subsequently
registered under the Securities Act or an exemption from such registration is
available;
(iii) the Corporation is under no obligation to register the Option or the
Option Shares under the Securities Act or any applicable state statutes;
(iv) the Corporation's registrar and transfer agent will maintain stop-transfer
instructions against registration or transfer of the Option Shares and any
certificate issued upon exercise of the Option representing any Option Shares
will bear on its face a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). SUCH SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
INTEREST UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH SECURITIES TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES
LAWS.”
 
 
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6.
Anti-Dilution Provisions.

(a) If there is any stock dividend, stock split or combination of shares of
Common Stock, the number and amount of Option Shares then subject to the Options
and the Purchase Price shall be proportionately and appropriately adjusted as
determined by the Board, whose determination shall be final, conclusive and
binding upon Optionee and the Corporation.

(b) If there is any other change in the Common Stock, including a
recapitalization, reorganization, sale or exchange of assets, exchange of
shares, offering of subscription rights, or a merger or consolidation in which
the Corporation is the surviving corporation, an adjustment, if any, shall be
made in the Option Shares then subject to the Option as the Board may deem
equitable, and whose determination shall be final, conclusive and binding upon
Optionee and the Corporation. Failure of the Board to provide for an adjustment
pursuant to this paragraph 6(b) prior to the effective date of any Corporation
action referred to in this paragraph 6(b) shall be conclusive evidence that no
adjustment is required in consequence of such action.

(c) If the Corporation is merged into or consolidated with any other corporation
and the Corporation is not the surviving entity, or if the Corporation sells all
or substantially all of the Corporation’s assets to any other person or entity,
then the Corporation shall cause provisions to be made for the continuance of
the Option after such event, or for the substitution for the Option of an option
covering the number and class of securities which Optionee would have been
entitled to receive in such merger or consolidation or by virtue of such sale if
Optionee had been the holder of record of a number of shares of Common Stock
equal to the number of Option Shares covered by the unexercised portion of the
Option immediately prior to such merger, consolidation or sale.

7.    Certain Rights Not Conferred by Option. Optionee shall not, by virtue of
holding the Option, be entitled to any rights of a stockholder in the
Corporation.

8.    Expenses. The Corporation shall pay all original issue and transfer taxes
with respect to the issuance of Option Shares and all other fees and expenses
necessarily incurred by the Corporation in connection with such issuance.

9.    No Employment Contract. The grant of the Option shall not confer upon
Optionee any right to continued employment or continuation of any other
relationship with the Corporation (whether as an officer, director, consultant,
service provider or otherwise) nor shall interfere in any way with the right of
the Corporation to terminate the Optionee’s employment or other relationship
with the Corporation at any time.
 
 
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10.   Validity and Construction. The validity and construction of this Option
shall be governed by the laws of the State of New York.

11.   Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties to this Agreement and their respective heirs,
executors, administrators, successors and assigns.

IN WITNESS WHEREOF, this Option Agreement has been executed by the parties as of
the date first set forth above.

 

        Corporation:       Compliance Systems Corporation  
   
   
    By:      

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Dean Garfinkel, President
   

 

        Optionee:  
   
   
    By:      

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[NAME OF OPTIONEE]
   

 
 
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