NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES OF
COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS
HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.

VOID AFTER 5:00 P.M. ON MAY 5, 2013

COMPLIANCE SYSTEMS CORPORATION
WARRANT CERTIFICATE

900,000 Common Stock Purchase Warrants

Glen Cove, New York
Warrant Certificate No. 08 - 01As of May 6, 2008

THIS IS TO CERTIFY THAT, for value received, Cresta Capital Strategies, LLC
(“Warrantholder”) is the registered owner of the number of common stock purchase
warrants (each, a “Warrant”) of Compliance Systems Corporation, a New York
corporation (the “Company”), set forth above, each Warrant entitling the owner
thereof to purchase from the Company, at a purchase price of $0.05 per Warrant
(the “Purchase Price”), as adjusted from time to time in accordance with section
3 of this Warrant Certificate, at any time on or after the Commencement Date (as
defined in paragraph 1(b) below) and terminating at 5:00 p.m., Glen Cove, New
York time, on May 5, 2013 (the “Expiration Time”), one duly authorized, validly
issued, fully paid and non-assessable share (each, a “Warrant Share”) of the
common stock, par value $0.001 per share (“Common Stock”), of the Company,
subject to the terms and conditions contained herein. The number of Warrants
evidenced by this Warrant Certificate (and the number and kind of securities
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price per share set forth above, are as of the date hereof. As provided herein,
the Purchase Price and the number of shares of Common Stock or other securities
which may be purchased upon the exercise of the Warrants evidenced by this
Warrant Certificate are, upon the happening of certain events, subject to
modification and adjustment.

This Warrant Certificate, together with any warrant certificate(s) issued in
replacement or substitution hereof (as provided for herein) evidencing all or
part of the Warrants evidenced hereby, are sometimes collectively referred to
herein as the “Warrant Certificates.”

 
 

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The rights of the registered holder of this Warrant Certificate shall be subject
to the following further terms and conditions:

1. Exercise of Warrants.

(a) The Warrants may be exercised, in whole or in part, at any time and from
time to time, during the period commencing on the Commencement Date and
terminating at the Expiration Time by surrendering this Warrant Certificate,
with the Exercise Form provided for herein duly completed and executed by the
Warrantholder or by the Warrantholder’s duly authorized attorney-in-fact, at the
principal office of the Company, presently located at 90 Pratt Oval, Glen Cove,
New York 11542, or at such other office or agency in the United States as the
Company may designate by notice in writing to the Warrantholder (in either
event, the “Company Offices”), accompanied by payment in full, either in the
form of cash, bank cashier’s check or certified check payable to the order of
the Company, of the Purchase Price payable in respect of the Warrants being
exercised.

(b)  For purposes of this Warrant Certificate, the term “Commencement Date”
shall mean May 6, 2008.

(c) On the day immediately following the date of a valid exercise of any
Warrants, the Warrantholder exercising such Warrant(s) shall be deemed to have
become the holder of record for all purposes of the Warrant Shares to which such
valid exercise relates.

(d) As soon as practicable, but not in excess of five days, after the valid
exercise of all or part of the Warrants evidenced by this Warrant Certificate,
the Company, at the Company’s expense (including the payment by Company of any
applicable issuance and similar taxes), will cause to be issued in the name of
and delivered to the Warrantholder, or such other party identified in the
purchase form, certificates evidencing the number of duly authorized, validly
issued, fully paid and non-assessable Warrant Shares to which the Warrantholder,
or such other party identified in the Exercise Form, shall be entitled upon such
exercise, as adjusted to reflect the effects, if any, of the anti-dilution
provisions of section 3 of this Warrant Certificate, such certificates to be in
such reasonable denominations as Holder shall request when delivering the duly
completed Exercise Form.

(e) No certificates for fractional Warrant Shares shall be issued upon the
exercise of any of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Shares to the
nearest whole share of Common Stock.

(f) If fewer than all of the Warrants are exercised, the Company shall, upon
each exercise prior to the Expiration Time, execute and deliver to the
Warrantholder a new Warrant Certificate (dated as of the date hereof) evidencing
the balance of the Warrants that remain exercisable.

 
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2. Issuance of Common Stock; Reservation of Warrant Shares. The Company
covenants and agrees that:

(a) all Warrant Shares which may be issued upon the exercise of all or part of
the Warrants will, upon issuance in accordance with the terms hereof, be validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof;

(b) at all times prior to the Expiration Time, the Company shall keep reserved
for issuance a sufficient number of authorized shares of Common Stock to permit
the exercise in full of the Warrants evidenced by this Warrant Certificate; and

(c) if any shares of Common Stock to be reserved for the purpose of the issuance
of Warrant Shares upon the exercise of Warrants require registration with, or
approval of, any governmental authority under any federal or state law before
such shares may be validly issued or delivered upon exercise, then the Company
will promptly use its best efforts to effect such registration or obtain such
approval, as the case may be.

3. Adjustments of Purchase Price, Number and Character of Warrant Shares, Number
of Warrants. The Purchase Price and the number and kind of securities
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time upon the happening of the events enumerated in this section 3.

(a) Stock Dividends, Subdivisions and Combinations. In case the Company shall at
any time on or before the Expiration Time:

(i) pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock or such other stock to holders of all its outstanding shares of
Common Stock;
(ii) subdivide, reclassify or recapitalize the outstanding shares of Common
Stock into a greater number of shares;
(iii) combine, reclassify or recapitalize the outstanding shares of Common Stock
into a smaller number of shares of Common Stock; or
(iv) issue by reclassification of shares of Common Stock into any other
securities of the Company (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
corporation);

then the number and kind of Warrant Shares purchasable upon exercise of each
Warrant outstanding immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of shares of
Common Stock or other securities of the Company which the Warrantholder would
have owned or have been entitled to receive after the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the earlier of the happening of such event or any record date in respect
thereto. In the event of any adjustment of the number of Warrant Shares
purchasable upon the exercise of each then outstanding Warrant pursuant to this
paragraph 3(a), the Purchase Price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock (including fractional shares
of Common Stock) covered by such Warrant immediately after such adjustment into
the total amount payable upon exercise of such Warrant in full immediately prior
to such adjustment. An adjustment made pursuant to this paragraph 3(a) shall
become effective immediately after the effective date of such event retroactive
to the record date for any such event. Such adjustment shall be made
successively whenever any event listed in clauses (i) through (iv) of this
paragraph 3(a) shall occur.

 
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(b) Extraordinary Dividends. In case the Company shall, at any time on or before
the Expiration Time, fix a record date for the issuance of rights, options, or
warrants to all holders of outstanding shares of Common Stock, entitling such
holders (for a period expiring within 45 days after such record date) to
subscribe for or purchase shares of Common Stock (or securities exchangeable for
or convertible into shares of Common Stock) at a price per share of Common Stock
(or having an exchange or conversion price per share of Common Stock, with
respect to a security exchangeable for or convertible into shares of Common
Stock) which is lower than the Purchase Price on such record date, then the
Purchase Price shall be adjusted so that the Purchase Price, as so adjusted,
shall equal the price determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, of which (i) the numerator
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (or the aggregate
initial exchange or conversion price of the exchangeable or convertible
securities so to be offered) would purchase at the Purchase Price and (ii) the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be offered
for subscription or purchase (or into which the exchangeable or convertible
securities so to be offered are initially exchangeable or convertible). Such
adjustment shall become effective at the close of business on such record date;
provided, however, to the extent that shares of Common Stock (or securities
exchangeable for or convertible into shares of Common Stock) are not delivered
after the expiration of such rights, options, or warrants, the Purchase Price
shall be readjusted (but only with respect to Warrants exercised after such
expiration) to the Purchase Price which would then be in effect had the
adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of Common Stock (or
securities exchangeable for or convertible into shares of Common Stock) actually
issued. In case any subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company
and shall be described in a statement mailed to the Warrantholder. Shares of
Common Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation.

(c) Extraordinary Distributions. In case the Company shall, at any time on or
before the Expiration Time, distribute to all holders of shares of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the surviving corporation) evidences of the
Company’s indebtedness or assets (excluding cash dividends and distributions
payable out of consolidated net income or earned surplus in accordance with
Nevada law and dividends or distributions payable in shares of stock described
in paragraph 3(a) of this Warrant Certificate) or rights, options, or warrants
or exchangeable or convertible securities containing the right to subscribe for
or purchase shares of Common Stock (or securities exchangeable for or
convertible into shares of Common Stock), then the Purchase Price shall be
adjusted by multiplying the Purchase Price in effect immediately prior to the
record date for such distribution by a fraction, of which (i) the numerator
shall be the Purchase Price as in effect on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company) of the portion of the evidences of indebtedness or assets so to be
distributed or of such rights, options or warrants applicable to one share of
Common Stock and (ii) the denominator shall be the Purchase Price as in effect
on such record date. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to the record date for such transaction.

 
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(d) Stock Issuances.

(i) If the Company shall, at any time or from time to time on or before the
Expiration Time, issue (x) shares of Common Stock, (y) rights, options, warrants
or other securities entitling the holder thereof to subscribe for, purchase,
convert to, exchange for or otherwise acquire Common Stock or (z) rights,
options, warrants or other securities entitling the holder thereof to subscribe
for, purchase, convert to, exchange for or otherwise acquire such convertible or
exchangeable securities (in each case, other than Excluded Securities (as
defined in subparagraph 3(d)(iii) of this Warrant Certificate and other than
issuances that result in an adjustment under paragraphs 3(a), 3(b) or 3(c) of
this Warrant Certificate), without consideration or for a consideration per
share of Common Stock less than the Purchase Price in effect immediately prior
to the issuance of such Common Stock or such rights, options, warrants or other
securities, the Purchase Price in effect immediately prior to each such issuance
shall forthwith be adjusted to a price equal to the quotient obtained by
dividing: (A) an amount equal to the sum of (I) the total number of shares of
Common Stock outstanding immediately prior to such issuance (including any
shares of Common Stock deemed to have been issued pursuant to subclauses (B)(1)
and (B)(2) of subparagraph 3(d)(ii) of this Warrant Certificate), multiplied by
the Purchase Price in effect immediately prior to such issuance, plus (II) the
consideration received by the Company upon such issuance, by (B) the total
number of shares of Common Stock outstanding (including any shares of Common
Stock deemed to have been issued pursuant to subclauses (B)(1) and (B)(2) of
subparagraph 3(d)(ii) of this Warrant Certificate).
 
(ii) For the purposes of any adjustment of the Purchase Price pursuant to this
paragraph 3(d), the following provisions shall be applicable:
 
(A) In the case of the issuance of Common Stock for a consideration in whole or
in part other than cash, the consideration other than cash shall be deemed to be
the fair market value thereof as determined in good faith by the Board of
Directors of the Company, irrespective of any accounting treatment; and
 
(B) In the case of (x) the issuance of rights, options or warrants entitling the
holder thereof to subscribe for, purchase or otherwise acquire Common Stock, (y)
securities convertible into or exchangeable for Common Stock or (z) rights,
options, warrants or other securities convertible into or exchangeable for such
convertible or exchangeable securities -
 
(1) the aggregate maximum number of shares of Common Stock deliverable upon
exercise of such rights, options or warrants entitling the holder thereof to
subscribe for, purchase or otherwise acquire Common Stock shall be deemed to
have been issued at the time such rights, options or warrants were issued and
for a consideration equal to the consideration (determined in the manner
provided in clause (A) of this subparagraph 3(d)(ii)), if any, received by the
Company upon the issuance of such rights, options or warrants plus the minimum
purchase price provided in such rights, options or warrants for the Common Stock
covered thereby;
 
 
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(2) the aggregate maximum number of shares of Common Stock deliverable upon
conversion of or in exchange for any such convertible or exchangeable securities
or upon the exercise of rights, options or warrants to subscribe for, purchase
or otherwise acquire such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such rights, options, warrants or securities were issued and for a consideration
equal to the consideration received by the Company for any such rights, options,
warrants and securities (excluding any cash received on account of accrued
interest or accrued dividends), plus the consideration, if any, to be received
by the Company upon the conversion or exchange of such securities or the
exercise of any related rights, options or warrants (the consideration in each
case to be determined in the manner provided in clause (A) of this subparagraph
3(d)(ii);
 
(3) on any change in the number of shares of Common Stock deliverable upon
exercise of any such rights, options or warrants or conversions of or exchanges
for such convertible or exchangeable securities or any change in the
consideration to be received by the Company upon the exercise of any such
rights, options or warrants or conversions of or exchanges for such convertible
or exchangeable securities, other than a change resulting from the anti-dilution
provisions thereof, the Purchase Price shall forthwith be readjusted to such
Purchase Price as would have obtained had the adjustment made upon the issuance
of such rights, options, warrants or securities not converted prior to such
change been made upon the basis of such change; and
 
(4) on the expiration of any such rights, options or warrants, the termination
of any such rights to convert or exchange or the expiration of any rights,
options or warrants related to such convertible or exchangeable securities, the
Purchase Price shall forthwith be readjusted to such Purchase Price as would
have obtained had the adjustment made upon the issuance of such rights, options,
warrants or securities or rights, options or warrants related to such securities
been made upon the basis of the issuance of only the number of shares of Common
Stock actually issued upon exercise of such rights, options or warrants, upon
the conversion or exchange of such securities or upon the exercise of the
rights, options or warrants related to such securities and subsequent conversion
or exchange thereof.
 
(iii) For the purposes of this paragraph 3(d), the term “Excluded Securities”
shall mean (A) shares of Common Stock issuable upon conversion or exercise, as
applicable, of the convertible securities, rights, options and warrants of the
Company outstanding as of the Commencement Date, (B) the first 15 million shares
of Common Stock issuable under an equity incentive plan for employees, officers,
directors and/or independent contractors of the Company adopted by the Board of
Directors of the Company, provided such Common Stock is sold at or above the
lower of the Current Market Price as of the date of grant or issuance of the
option or other right granted or issued under such plan or date of issuance of
such Common Stock and (C) any securities of the Company issued by the Company
(1) pursuant to or in connection with the Securities Purchase Agreement, dated
as of the Commencement Date, between the Company and Agile Opportunity Fund, LLC
or (2) to any party in connection therewith Cresta Capital Strategies LLC
(“Cresta”) is entitled to a fee pursuant to the Exclusive Investment Banking
Agreement, dated as of March 17, 2008, between the Company and Cresta.

 
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(e) Current Market Price Defined. For the purposes of this Warrant Certificate,
the “Current Market Price” (the “Current Market Price”) on any date shall be
deemed to be the Closing Price of the shares of Common Stock on the date in
question.

(f) Closing Price Defined. For purposes of this Warrant Certificate, the term
“Closing Price” of the shares of Common Stock for a day or days shall mean:

(i) if the shares of Common Stock are listed or admitted for trading on a
national securities exchange, the last reported sales price or, in case no such
reported sale takes place on such day or days, the average of the reported
closing bid and asked prices, in either case on the principal national
securities exchange on which the shares of the Common Stock are listed or
admitted for trading, or
 
(ii) if the shares of Common Stock are not listed or admitted for trading on a
national securities exchange,
 
(A) the average of the closing bid and asked prices of the Common Stock as
quoted on the Over-The-Counter Bulletin Board (the “Bulletin Board”) maintained
by the Financial Industry Regulatory Authority (“FINRA”), or
 
(B) if the shares of Common Stock are not quoted on the Bulletin Board, the
average of the closing bid and asked prices of the common stock in the
over-the-counter market, as reported by The Pink Sheets, LLC, or an equivalent
generally accepted reporting service, or
 
(iii) if on any such day the shares of Common Stock are not listed on a national
securities exchange nor quoted on the Bulletin Board or by The Pink Sheets, LLC,
the fair market value of the shares of Common Stock as determined in good faith
by the Board of Directors of the Company.

(g) Capital Reorganizations and Other Reclassifications. In case of any capital
reorganization of the Company, or of any reclassification of the shares of
Common Stock (other than a reclassification, subdivision or combination of
shares of Common Stock referred to in paragraph 3(a) of this Warrant
Certificate), or in case of the consolidation of the Company with, or the merger
of the Company with, or merger of the Company into, any other corporation (other
than a reclassification of the shares of Common Stock referred to in paragraph
3(a) of this Warrant Certificate or a consolidation or merger which does not
result in any reclassification or change of the outstanding shares of Common
Stock) or of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation or entity occurring on or
before the Expiration Time, each Warrant shall, after such capital
reorganization, reclassification of shares of Common Stock, consolidation,
merger, or sale, be exercisable, upon the terms and conditions specified in this
Warrant Certificate, for the kind, amount and number of shares or other
securities, assets, or cash to which a holder of the number of shares of Common
Stock purchasable (at the time of such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger or sale) upon exercise of such
Warrant would have been entitled to receive upon such capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, or sale; and
in any such case, if necessary, the provisions set forth in this section 3 with
respect to the rights and interests thereafter of the Warrantholder shall be
appropriately adjusted so as to be applicable, as nearly equivalent as possible,
to any shares or other securities, assets, or cash thereafter deliverable on the
exercise of the Warrants. The Company shall not effect any such consolidation,
merger, or sale, unless prior to or simultaneously with the consummation thereof
the successor corporation or entity (if other than the Company) resulting from
such consolidation or merger or the corporation or entity purchasing such assets
or other appropriate corporation or entity shall assume, by written instrument,
the obligation to deliver to the Warrantholder such shares, securities, assets,
or cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this paragraph 3(g).

 
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(h) Minimum Adjustment. Except as hereinafter provided, no adjustment of the
Purchase Price hereunder shall be made if such adjustment results in a change of
the Purchase Price then in effect of less than one cent ($.01) per share. Any
adjustment of less than one cent ($.01) per share of any Purchase Price shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, together with adjustment or adjustments so carried
forward, amounts to one cent ($.01) per share or more. However, upon exercise of
this Warrant Certificate, the Company shall make all necessary adjustments (to
the nearest cent) not theretofore made to the Purchase Price up to and including
the effective date upon which this Warrant Certificate is exercised.

(i) Notice of Adjustments. Whenever the Purchase Price shall be adjusted
pursuant to this section 3, the Company shall promptly deliver a certificate
signed by the President or a Vice President and by the Chief Financial Officer,
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to the Warrantholder.

(j) Adjustments to Other Securities. In the event that at any time, as a result
of an adjustment made pursuant to this section 3, the Warrantholder shall become
entitled to purchase any shares or securities of the Company other than the
shares of Common Stock, thereafter the number of such other shares or securities
so purchasable upon exercise of each Warrant and the purchase price for such
shares or securities shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in paragraphs 3(a), 3(b), 3(c),
3(d) and 3(g) of this Warrant Certificate.

 
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(k) Deferral of Issuance of Additional Shares in Certain Circumstances. In any
case in which paragraph 3(b) of this Warrant Certificate shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the holder of a Warrant exercised after such record date the
shares of Common Stock, if any, issuable upon such exercise over and above the
Warrant Shares, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver as soon as practicable to such holder a due bill or other
appropriate instrument provided by the Company evidencing such holder’s right to
receive such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.

4. Definition of Common Stock. The Common Stock issuable upon exercise of the
Warrants shall be the Common Stock as constituted on the Commencement Date,
except as otherwise provided in section 3 of this Warrant Certificate.

5. Replacement of Warrant Certificates. If this Warrant Certificate shall be
lost, stolen, mutilated or destroyed, the Company shall, on such terms as to
indemnity or otherwise as the Company may in the Company’s discretion reasonably
impose, issue a new certificate of like tenor or date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder. Any such new
certificate shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
Certificate shall be at any time enforceable by anyone.

6. Registration. This Warrant Certificate, as well as all other warrant
certificates representing Warrants shall be numbered and shall be registered in
a register (the “Warrant Register”) maintained at the Company Offices as they
are issued. The Warrant Register shall list the name, address and Social
Security or other federal taxpayer identifying number, if any, of all
Warrantholders. The Company shall be entitled to treat the Warrantholder as set
forth in the Warrant Register as the owner in fact of the Warrants as set forth
therein for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrants on the part of any other person, and
shall not be liable for any registration of transfer of Warrants that are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration of transfer, or
with such knowledge of such facts that its participation therein amounts to bad
faith. 

7. Transfer.

(a) Subject to paragraph 7(b) of this Warrant Certificate, the Warrantholder may
transfer or assign the Warrants evidenced by this Warrant Certificate, in whole
or in part, to any officer, director, principal, member, equity owner, employee,
consultant or affiliate of the Warrantholder by surrendering this Warrant
Certificate, with the Assignment Form, substantially in the form provided
herein, completed and duly executed by the Warrantholder or by the
Warrantholder’s duly authorized attorney-in-fact, at the Company Offices. The
Company shall execute and deliver a new Warrant Certificate in the name of the
assignee or assignees set forth in the Assignment Form and this Warrant
Certificate shall promptly be canceled. If fewer than all of the Warrants are
assigned, the Company shall execute and deliver to the Warrantholder a new
Warrant Certificate (dated as of the date of this Warrant Certificate)
evidencing the balance of the Warrants that remain exercisable by the
Warrantholder.

 
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(b) NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES
OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS
HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.

(c) In the event of a transfer of any Warrants in accordance with this section
7, the Company shall, upon the surrender of this Warrant Certificate with the
Assignment Form completed, dated and signed, execute and deliver to the
transferee a new warrant certificate, substantially in form to this Warrant
Certificate, evidencing the number of Warrants so transferred to such transferee
and naming the transferee as the Warrantholder.

8. Exchange of Warrant Certificates. This Warrant Certificate may be exchanged
for another certificate or certificates entitling the Warrantholder thereof to
purchase a like aggregate number of Warrant Shares as this Warrant Certificate
entitles such Warrantholder to purchase. A Warrantholder desiring to so exchange
this Warrant Certificate shall make such request in writing delivered to the
Company, and shall surrender this Warrant Certificate therewith. Thereupon, the
Company shall execute and deliver to the person entitled thereto a new
certificate or certificates, as the case may be, as so requested.

9. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing in accordance with this section 9 by the Warrantholder
and, if to the Company, at the Company Offices or such other address as the
Company shall give notice thereof to the Warrantholder in accordance with this
section 9.

 
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10. Registration Rights.

(a) Defined Terms. As used in this section 10, terms defined elsewhere herein
shall have their assigned meanings and each of the following terms shall have
the following meanings (such definitions to be applicable to both the plural and
singular of the terms defined):

(i) Registerable Securities. The term “Registerable Securities” shall mean any
of the Warrant Shares or other securities issuable upon exercise of any of the
Warrants originally issued to Cresta as of the Commencement Date and
represented, in whole or part, by this Warrant Certificate. For the purposes of
this Section 10, securities will cease to be Registerable Securities when:
 
(A) a registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), covering such Registerable Securities has been declared
effective and (1) such Registerable Securities have been disposed of pursuant to
such effective registration statement or (2) such registration statement has
remained effective for 270 consecutive days, or
 
(B) such Registerable Securities are distributed to the public pursuant to the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act, including, without limitation, Rules 144 and 144A
promulgated under the Securities Act and the Company has delivered new
certificates or other evidences of ownership for such securities which are not
subject to any stop transfer order or other restriction on transfer;
 
(ii) Rightsholders. The term “Rightsholders” shall include the Warrantholder,
all successors and assigns of the Warrantholders and all transferees of
Registerable Securities where such transfer affirmatively includes the transfer
and assignment of the rights of the transferor-Warrantholder under this Warrant
Certificate with respect to the transferred Registerable Securities and such
transferee agrees in writing to assume all of the transferor-Warrantholder’s
agreements, obligations and liabilities under this section 10 with respect to
the transferred Registerable Securities; and
 
(iii) Interpretations of Terms. The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this section 10 shall refer to this section
10 as a whole and not to any particular provision of this section 10, and
subsection, paragraph, clause, schedule and exhibit references are to this
section 10 unless otherwise specified.

(b) Piggy-Back Registration.

(i) Piggy-Back Rights. If, at any time on or prior to the first anniversary of
the Expiration Time, the Company (or any successor of the Company, by merger or
otherwise) proposes to file a registration statement under the Securities Act
with respect to an offering by the Company or any other party of any class of
equity security similar to any Registerable Securities (other than a
registration statement on Form S-4 or S-8 or any successor form or a
registration statement filed solely in connection with an exchange offer, a
business combination transaction or an offering of securities solely to the
existing shareholders or employees of the Company), then the Company, on each
such occasion, shall give written notice (each, a “Company Piggy-Back Notice”)
of such proposed filing to all of the Rightsholders owning Registerable
Securities at least twenty days before the anticipated filing date of such
registration statement, and such Company Piggy-Back Notice also shall be
required to offer to such Rightsholders the opportunity to register such
aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the
fifteen days immediately following the giving of a Company Piggy-Back Notice, to
request, by written notice (each, a “Holder Notice”) to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use commercially
best efforts to cause the managing underwriter(s) of a proposed underwritten
offering to permit the inclusion of the Registerable Securities which were the
subject of all Holder Notices in such underwritten offering on the same terms
and conditions as any similar securities of the Company included therein.
Notwithstanding anything to the contrary contained in this subparagraph
10(b)(i), if the managing underwriter(s) of such underwritten offering or any
proposed underwritten offering delivers a written opinion to the Rightsholders
of Registerable Securities which were the subject of all Holder Notices that the
total amount and kind of securities which they, the Company and any other person
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the amount of securities to be offered for
the accounts of such Rightsholders and persons other than the Company shall be
eliminated or reduced pro rata (based on the amount of securities owned by such
Rightsholders and other persons which carry registration rights) to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter(s) in the
managing underwriter’s written opinion.
 
 
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(ii) Number of Piggy-Back Registrations; Expenses. The Rightsholders shall be
entitled, in the aggregate, to two Piggy-Back Registrations. Subject to the
provisions of paragraph 10(d) of this Warrant Certificate, the Company will pay
all Registration Expenses in connection with any registration of Registerable
Securities effected pursuant to this paragraph 10(b), but the Company shall not
be responsible for the payment of any underwriter’s discount, commission or
selling concession in connection therewith.
 
(iii) Withdrawal or Suspension of Registration Statement. The Company shall have
the absolute right, whether before or after the giving of a Company Piggy-Back
Notice or Holder Notice, to determine not to file a registration statement to
which the Rightsholders shall have the right to include their Registerable
Securities therein pursuant to this paragraph 10(b), to withdraw such
registration statement or to delay or suspend pursuing the effectiveness of such
registration statement. In the event of such a determination after the giving of
a Company Piggy-Back Notice, the Company shall give notice of such determination
to all Rightsholders and, thereupon, (A) in the case of a determination not to
register or to withdraw such registration statement, the Company shall be
relieved of its obligation under this paragraph 10(b) to register any of the
Registerable Securities in connection with such registration and (B) in the case
of a determination to delay the registration, the Company shall be permitted to
delay or suspend the registration of Registerable Securities pursuant to this
paragraph 10(b) for the same period as the delay in the registration of such
other securities. No registration effected under this paragraph 10(b) shall
relieve the Company of its obligation to effect any registration upon demand
otherwise granted to a Rightsholder under any other agreement with the Company.

 
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(c) Registration Procedures.

(i) Obligations of the Company. The Company will, in connection with any
registration pursuant to paragraph 10(b) of this Warrant Certificate, as
expeditiously as possible:
 
(A) prepare and file with the Commission a registration statement under the
Securities Act on any appropriate form chosen by the Company, in the Company’s
sole discretion, which shall be available for the sale of all Registerable
Securities in accordance with the intended method(s) of distribution thereof set
forth in all applicable Holder Notices, and use the Company’s commercially best
efforts to cause such registration statement to become effective as soon
thereafter as reasonably practicable but in no event more than 100 days after
receipt of such notices or requests; provided, that, at least five business days
before filing with the Commission of such registration statement, the Company
shall furnish to each Rightsholder whose Registerable Securities are included
therein draft copies of such registration statement, including all exhibits
thereto and documents incorporated by reference therein, and, upon the
reasonable request of any such Rightsholder, shall continue to provide drafts of
such registration statement until filed, and, after such filing, the Company
shall, as diligently as practicable, provide to each such Rightsholders such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), all exhibits thereto and documents incorporated by
reference therein and such other documents as such Rightsholder may reasonably
request in order to facilitate the disposition of the Registerable Securities
owned by such Rightsholder and included in such registration statement;
provided, further, the Company shall modify or amend the registration statement
as it relates to such Rightsholder as reasonably requested by such Rightsholder
on a timely basis, and shall reasonably consider other changes to the
registration statement (but not including any exhibit or document incorporated
therein by reference) reasonably requested by such Rightsholder on a timely
basis, in light of the requirements of the Securities Act and any other
applicable laws and regulations; and provided, further, that the obligation of
the Company to effect such registration and/or cause such registration statement
to become effective, may be postponed for (1) such period of time when the
financial statements of the Company required to be included in such registration
statement are not available (due solely to the fact that such financial
statements have not been prepared in the regular course of business of the
Company) or (2) any other bona fide corporate purpose, but then only for a
period not to exceed 60 calendar days;
 
(B) prepare and file with the Commission such amendments and post-effective
amendments to a registration statement as may be necessary to keep such
registration statement effective for up to nine months; and cause the related
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed to the extent required pursuant to Rule 424 promulgated
under the Securities Act, during such nine-month period; and otherwise comply
with the provisions of the Securities Act with respect to the disposition of all
Registerable Securities covered by such registration statement during the
applicable period in accordance with the intended method(s) of disposition of
such Registerable Securities set forth in such registration statement,
prospectus or supplement to such prospectus;
 
 
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(C) notify the Rightsholders whose Registerable Securities are included in such
registration statement and the managing underwriter(s), if any, of an
underwritten offering of any of the Registerable Securities included in such
registration statement, and confirm such advice in writing, (1) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (3) of the issuance by the Commission
of any stop order suspending the effectiveness of a registration statement or
the initiation of any proceedings for that purpose, (4) if at any time the
representations and warranties of the Company contemplated by subclause (J)(1)
of subparagraph 10(c)(i) of this Warrant Certificate cease to be true and
correct, (5) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registerable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose and (6) of the happening of any event which makes any statement
made in the registration statement, the prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
registration statement or prospectus so that such registration statement,
prospectus or document incorporated by reference will not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
 
(D) make commercially best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement at the earliest
possible moment and to prevent the entry of such an order;
 
(E) use commercially best efforts to register or qualify the Registerable
Securities included in such registration statement under such other securities
or blue sky laws of such jurisdictions as any Rightsholder whose Registerable
Securities are included in such registration statement reasonably requests in
writing and do any and all other acts and things which may be necessary or
advisable to enable such Rightsholder to consummate the disposition in such
jurisdictions of such Registerable Securities; provided, that the Company will
not be required to (1) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this clause (E), (2)
subject itself to taxation in any such jurisdiction or (3) take any action which
would subject it to general service of process in any such jurisdiction;
 
(F) make available for inspection by each Rightsholder whose Registerable
Securities are included in such registration, any underwriter(s) participating
in any disposition pursuant to such registration statement, and any
representative, agent or employee of or attorney or accountant retained by any
such Rightsholder or underwriter(s) (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”) as shall be reasonably necessary to enable
them to exercise their due diligence responsibility (or establish a due
diligence defense), and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any of the Inspectors
in connection with such registration statement; provided, that records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors, unless (1)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (2) the disclosure of such Records is
required by any applicable law or regulation or any governmental regulatory body
with jurisdiction over such Rightsholder or underwriter; provided, further, that
such Rightsholder or underwriter(s) agree that such Rightsholder or
underwriter(s) will, upon learning the disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company’s expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
 
 
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(G) cooperate with the Rightsholders whose Registerable Securities are included
in such registration statement and the managing underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Registerable Securities to be sold thereunder, not bearing any restrictive
legends, and enable such Registerable Securities to be in such denominations and
registered in such names as such Rightsholder or any managing underwriter(s) may
reasonably request at least two business days prior to any sale of Registerable
Securities;
 
(H) comply with all applicable rules and regulations of the Commission and
promptly make generally available to its security holders an earnings statement
covering a period of twelve months commencing, (1) in an underwritten offering,
at the end of any fiscal quarter in which Registerable Securities are sold to
underwriter(s), or (2) in a non-underwritten offering, with the first month of
the Company’s first fiscal quarter beginning after the effective date of such
registration statement, which earnings statement in each case shall satisfy the
provisions of Section 10(a) of the Securities Act;
 
(I) provide a CUSIP number for all Registerable Securities not later than the
effective date of the registration statement relating to the first public
offering of Registerable Securities of the Company pursuant hereto;
 
(J) enter into such customary agreements (including an underwriting agreement in
customary form) and take all such other actions reasonably requested by the
Rightsholders holding a majority of the Registerable Securities included in such
registration statement or the managing underwriter(s) in order to expedite and
facilitate the disposition of such Registerable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (1) make such
representations and warranties, if any, to the holders of such Registerable
Securities and any underwriter(s) with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriter(s) in underwritten
offerings and confirm the same if and when requested, (2) obtain opinions of
counsel to the Company and updates thereof addressed to each such Rightsholder
and the underwriter(s), if any, with respect to the registration statement,
prospectus and documents incorporated by reference, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Rightsholders and
underwriter(s), (3) obtain a “cold comfort” letter and updates thereof from the
Company’s independent certified public accountants addressed to such
Rightsholders and to the underwriter(s), if any, which letters shall be in
customary form and cover matters of the type customarily covered in “cold
comfort” letters by accountants in connection with underwritten offerings, and
(4) deliver such documents and certificates as may be reasonably requested by
the Rightsholders holding a majority of such Registerable Securities and
managing underwriter(s), if any, to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company; each such action required by this clause (J) shall be done
at each closing under such underwriting or similar agreement or as and to the
extent required thereunder; and
 
 
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(K) if requested by the holders of a majority of the Registerable Securities
included in such registration statement, use its best efforts to cause all
Registerable Securities which are included in such registration statement to be
listed, subject to notice of issuance, by the date of the first sale of such
Registerable Securities pursuant to such registration statement, on each
securities exchange, if any, on which securities similar to the Registered
Securities are listed.
 
(ii) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to paragraph 10(b) of this
Warrant Certificate:
 
(A) The Company may require that each Rightsholder whose Registerable Securities
are included in such registration statement furnish to the Company such
information regarding the distribution of such Registerable Securities and such
Rightsholder as the Company may from time to time reasonably request in writing;
 
(B) Each Rightsholder, upon receipt of any notice from the Company of the
happening of any event of the kind described in subclauses (2), (3), (5) and (6)
of clause 10(c)(i)(C) of this Warrant Certificate, shall forthwith discontinue
disposition of Registerable Securities pursuant to the registration statement
covering such Registerable Securities until such Rightsholder’s receipt of the
copies of the supplemented or amended prospectus contemplated by subclause (1)
of said clause 10(c)(i)(C), or until such Rightsholder is advised in writing
(the “Advice”) by the Company that the use of the applicable prospectus may be
resumed, and until such Rightsholder has received copies of any additional or
supplemental filings which are incorporated by reference in or to be attached to
or included with such prospectus, and, if so directed by the Company, such
Rightsholder will deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in the possession of such
Rightsholder, of the current prospectus covering such Registerable Securities at
the time of receipt of such notice; the Company shall have the right to demand
that such Rightsholder or other holder verify its agreement to the provisions of
this clause (B) in any Holder Notice of the Rightsholder or in a separate
document executed by the Rightsholder; and
 
 
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(C)  Each Rightsholder agrees that in a underwritten offering it will not,
without the consent of the managing underwriter, dispose of or offer any
securities of the Company for the period of restrictions on the sale or disposal
of securities of the Company imposed, or consented to, by any principal
shareholder of the Company.

(d) Registration Expenses. All expenses incident to the performance of or
compliance with this Warrant Certificate by the Company, including, without
imitation, all registration and filing fees of the Commission, FINRA and other
agencies, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registerable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing, if any, of the Registerable Securities on any securities exchange
and fees and disbursements of counsel for the Company and the Company’s
independent certified public accountants (including the expenses of any special
audit or “cold comfort” letters required by or incidental to such performance),
Securities Act or other liability insurance (if the Company elects to obtain
such insurance), the fees and expenses of any special experts retained by the
Company in connection with such registration and the fees and expenses of any
other person retained by the Company (but not including any underwriting
discounts or commissions attributable to the sale of Registerable Securities or
other out-of-pocket expenses of the Rightsholders, or the agents who act on
their behalf, unless reimbursement is specifically approved by the Company) will
be borne by the Company. All such expenses are herein referred to as
“Registration Expenses.”

(e) Indemnification: Contribution.

(i) Indemnification by the Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, each Rightsholder, its officers
and directors and each person who controls such Rightsholder (within the meaning
of the Securities Act), if any, and any agent thereof against all losses,
claims, damages, liabilities and expenses incurred by such party pursuant to any
actual or threatened suit, action, proceeding or investigation (including
reasonable attorney’s fees and expenses of investigation) arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in any registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder expressly
for use therein.
 
(ii) Indemnification by Rightsholder. In connection with any registration
statement in which a Rightsholder is participating, each such Rightsholder will
be required to furnish to the Company in writing such information with respect
to such Rightsholder as the Company reasonably requests for use in connection
with any such registration statement or prospectus, and each Rightsholder agrees
to the extent it is such a holder of Registerable Securities included in such
registration statement, and each other such holder of Registerable Securities
included in such Registration Statement will be required to agree, to indemnify,
to the full extent permitted by law, the Company, the directors and officers of
the Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney’s fees and expenses of
investigation incurred by such party pursuant to any actual or threatened suit,
action, proceeding or investigation arising out of or based upon any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact necessary, to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they are made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is based upon information relating to such Rightsholder or other holder
furnished in writing to the Company expressly for use therein.
 
 
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(iii) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under this paragraph 10(e) of written notice of the
commencement of any action, proceeding, suit or investigation or threat thereof
made in writing for which such indemnified party may claim indemnification or
contribution pursuant to this Warrant Certificate, such indemnified party shall
notify in writing the indemnifying party of such commencement or threat; but the
omission so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which the indemnifying party may have to any
indemnified party (A) hereunder, unless the indemnifying party is actually
prejudiced thereby, or (B) otherwise than under this paragraph 10(e). In case
any such action, suit or proceeding shall be brought against any indemnified
party, and the indemnified party shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and the indemnifying party shall assume the defense thereof, with
counsel reasonably satisfactory to the indemnified party, and the obligation to
pay all expenses relating thereto. The indemnified party shall have the right to
employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (A) the indemnifying
party has agreed to pay such fees and expenses, (B) the indemnifying party shall
have failed to assume the defense of such action, suit or proceeding or to
employ counsel reasonably satisfactory to the indemnified party therein or to
pay all expenses relating thereto or (C) the named parties to any such action or
proceeding (including any impleaded parties) include both the indemnified party
and the indemnifying party and the indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to the
indemnified party which are different from or additional to those available to
the indemnifying party and which may result in a conflict between the
indemnifying party and such indemnified party (in which case, if the indemnified
party notifies the indemnifying party in writing that the indemnified party
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding on behalf of the indemnified party; it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for the indemnified party, which firm
shall be designated in writing by the indemnified party).
 
 
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(iv) Contribution. If the indemnification provided for in this paragraph 10(e)
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (A) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or (B)
if the allocation provided by clause (A) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying party and
indemnified party, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and the indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitation set forth in
subparagraph 10(e)(v) of this Warrant Certificate, any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
 
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this subparagraph 10(e)(iv) were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in clauses (A) and (B) of the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 10(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
 
(v) Limitation. Anything to the contrary contained in this paragraph 10(e) or in
paragraph 10(f) of this Warrant Certificate notwithstanding, no holder of
Registerable Securities shall be liable for indemnification and contribution
payments aggregating an amount in excess of the maximum dollar amount of the net
proceeds received by such holder in connection with any sale of Registerable
Securities as contemplated herein.

(f) Participation in Underwritten Registration. No Rightsholder may participate
in any underwritten registration hereunder unless such Rightsholder (i) agrees
to sell such holder’s securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and to comply with Regulation M under the Exchange Act and (ii)
completes and executes all questionnaires, appropriate and limited powers of
attorney, escrow agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangement;
provided, that all such documents shall be consistent with the provisions of
paragraph 10(e) of this Warrant Certificate.

 
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11. Miscellaneous. This Warrant Certificate and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant Certificate is deemed to have been delivered in the
State of New York and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant Certificate are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof.

12. Expiration. Unless as hereinafter provided, the right to exercise the
Warrants shall expire at the Expiration Time.

13. No Rights as Shareholder; Notice to Warrantholder.

(a) Nothing contained in this Warrant Certificate shall be constructed as
conferring upon the Warrantholder the right to vote or to receive distributions
or to consent to or receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter,
or any other rights whatsoever as shareholder of the Company.

(b) The Company shall give notice to the Warrantholder by postage-paid,
certified mail, return receipt requested, if, at any time prior to the
Expiration Time, any of the following events shall occur:

(i) the Company shall authorize the payment of any distributions upon Common
Stock payable in any securities or authorize the making of any distribution
(other than a cash distribution subject to the second parenthetical set forth in
section 3(c) of this Warrant Certificate) to all holders of Common Stock;
 
(ii) the Company shall authorize the issuance to all holders of Common Stock of
any additional shares of Common Stock or of rights, options or warrants to
subscribe for or purchase Common Stock or of any other subscription rights,
options or warrants;
 
(iii) a dissolution, liquidation or winding up of the Company (including,
without limitation, a consolidation, merger, or sale or conveyance of the
property of the Company as an entirety or substantially as an entirety); or
 
(iv) a capital reorganization or reclassification of the Common Stock (other
than a subdivision or combination of the outstanding Common Stock) or any
consolidation or merger of the Company with or into another corporation
(excluding any consolidation or merger in which the Company is the continuing
company and that does not result in any reclassification of, or change to, the
Common Stock then outstanding) or in the case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety.

 
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Such giving of notice shall be given (x) at least twenty business days (a day
other than a Saturday, Sunday or other day on which banks in the State of New
York are authorized by law to remain closed) prior to the date fixed as a record
date or effective date or the date of closing of the Company’s transfer books
for the determination of the holders entitled to such distribution or
subscription rights, or for the determination of the holders entitled to vote on
such proposed merger, consolidation, sale, conveyance, dissolution, liquidation,
winding up or conversion to corporate or other form. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
In addition, the Company shall provide to Warrantholder, at the same time such
notice is provided, such information relating to such distribution or
subscriptions rights, or proposed merger, consolidation, sale, conveyance,
dissolution, liquidation, winding up or conversion to corporate or other form as
may be reasonably necessary for Warrantholder to make an informed decision
whether to exercise Warrantholder’s rights as evidenced by this Warrant
Certificate.

14. Severability. If any term or other provision of this Warrant Certificate is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Warrant Certificate shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to either the Company or Warrantholder. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Company and Warrantholder shall negotiate in good faith to modify this Warrant
Certificate so as to effect the original intent of the Company and Cresta in
connection with the issuance of the Warrants, to the greatest extent possible.
Any provision of this Warrant Certificate held invalid or unenforceable only in
part, degree or in certain jurisdictions will remain in full force and effect to
the extent not held invalid or unenforceable.

IN WITNESS WHEREOF, Compliance Systems Corporation has caused this Warrant
Certificate to be executed by its officer thereunto duly authorized.

       Dated: As of May 6, 2008 Compliance Systems Corporation  
   
   
  By:   /s/   

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

Dean Garfinkel, President    

 

ATTEST:

______________________________
Barry Brookstein, Secretary

 
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EXERCISE FORM

Dated:____________, 20__

TO: Compliance Systems Corporation:

The undersigned hereby irrevocably elects to exercise its warrant exercise
rights evidenced by this Warrant Certificate to the extent of purchasing
_______________ shares of Common Stock of Compliance Systems Corporation and
hereby makes payment of the aggregate Purchase Price therefore by tendering,
contemporaneous with the delivery of this Warrant Certificate, the amount of
$_____________ in the form of (a) cash or (b) bank cashier’s or certified check
payable to the order of “Compliance Systems Corporation.”

________________________________________________

INSTRUCTIONS FOR REGISTRATION OF STOCK
(Please type or print in block letters)

Name:
   
Taxpayer
   
Identification
   
Number:
         
Address:
               

________________________________________________
 

Signature:
     
(Signature must conform in all respects to the name of the Warrantholder as set
forth on the face of this Warrant Certificate.)

 
 
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ASSIGNMENT FORM
(Please type or print in block letters)

FOR VALUE RECEIVED, _____________________________________ hereby sells, assigns
and transfers unto:

Name:
   
Taxpayer
   
Identification
   
Number:
         
Address:
               

this Warrant Certificate and the Warrants represented by this Warrant
Certificate to the extent of ________________ Warrants and does hereby
irrevocably constitute and appoint ___________________________ Attorney-in-Fact,
to transfer the same on the books of the Company with full power of substitution
in the premises.
 

Dated:
       
(Signature must conform in all respects to the name of the Warrantholder as set
forth on the face of this Warrant Certificate.)

     
Signature:
     
(Signature must conform in all respects to the name of the Warrantholder as set
forth on the face of this Warrant Certificate.)

 
 
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