WAIVER AND EXTENSION AGREEMENT

THIS WAIVER AND EXTENSION AGREEMENT (the "Agreement"), dated as of January 4,
2010, is entered into by and among Wizzard Software Corporation, a Colorado
corporation (the "Company"), and the persons identified as "Holders" on the
signature pages hereto (the "Holders").

WHEREAS, on December 2, 2008, the Company closed a Subscription Agreement by
which the Holders purchased Secured Notes having an aggregate principal amount
of $1 million (the "Notes") and the Company and Holders have agreed to extend
the maturity date of the Notes;

WHEREAS, Section 2.2 of each of the Notes provides that 75% of the principal
amount and all other sums due under and in connection with each Note shall be
immediately due and payable out of the net proceeds from the sale and issuance
by the Company of debt and/or equity in excess of $200,000 in a single or series
of offerings of such debt and/or equity;

WHEREAS, Section 1.0 of the Subscription Agreement provides that, until the
Notes are no longer outstanding, the Holders shall be given not less than 10
business days' prior written notice of any proposed sale by the Company of its
common stock or other securities or equity linked debt obligations, with the
Holders to have the right during the five business days following receipt of
such notice to purchase for cash or by using the outstanding balance including
principal, interest, liquidated damages and any other amount then owing to such
Holders by the Company, such offered common stock, debt or other securities in
accordance with the terms and conditions set forth in the notice of sale;

NOW THEREFORE, in consideration of the mutual covenants of the parties, and the
waiver and extension by the Holders (described below), all of which constitutes
adequate consideration, the Company and the Holders hereby agree as follows:

1.

Each of the Holders hereby waives its right to prepayment of its Note under
Section 2.2 thereof, with respect to all sales and issuances by the Company of
debt and/or equity in excess of $200,000 in any single or series of offerings of
such debt and/or equity at any time while the Notes are outstanding.

2.

Each of the Holders hereby waives both its right to written notice of the
Contemplated Transaction under Section 10 of the Subscription Agreement, and its
right of first refusal with respect thereto, with respect to all proposed sales
by the Company of its common stock or other securities or equity linked debt at
any time while the Notes are outstanding.

 

                3.    The Maturity Date of each of the Holders' Notes is hereby
extended to November 1, 2010.

4.

The Company shall, within five business days of the date on which all parties
shall have executed and delivered this Agreement, issue an aggregate of 600,000
"unregistered" and "restricted" shares of its common stock to each of the
Holders on a pro rata basis, as follows:

Holder

No. of Shares

Alpha Capital Anstalt

100,000

Mill City Ventures, LP

312,500

Isles Capital, LLC

187,500

 

5.

Holders Alpha Capital Anstalt and Isles Capital, LLC acknowledge the Company's
right to prepay the Note held by Holder Mill City Ventures, LP without any
prepayment of the other Holders' Notes and they disclaim any cause of action
against the Company whatsoever with respect to any such prepayment.

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6.

The Company undertakes to make a public announcement on Form 8-K describing this
Agreement not later than the fourth business day after the execution of this
Agreement.

7.

 Subject to the modifications and amendments provided herein, both the
Subscription Agreement and the Notes (collectively, the "Transaction Documents")
shall remain in full force and effect. Except as expressly set forth herein,
this Agreement shall not be deemed to be a waiver, amendment or modification of
any provisions of the Transaction Documents or of any right, power or remedy of
the Holders, or constitute a waiver of any provision of the Transaction
Documents (except to the extent herein set forth), or any other document,
instrument and/or agreement executed or delivered in connection therewith, in
each case whether arising before or after the date hereof or as a result of
performance hereunder or thereunder. Except as set forth herein, the Holders
reserve all rights, remedies, powers, or privileges available under the
Transaction Documents, at law or otherwise. This Agreement shall not constitute
a novation or satisfaction and accord of the Transaction Documents or any other
document, instrument and/or agreement executed or delivered in connection
therewith.

8.    This Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement and shall
become effective when counterparts have been signed and delivered by all
parties, it being understood that all parties need not sign the same
counterpart. in the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were an original
thereof.

IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as of the dale first written above.

"The Company"

WIZZARD SOFTWARE CORPORATION, a Colorado corporation

/s/ Christopher J. Spencer          

By: Christopher J. Spencer

Its: President

"Holders"

ALPHA CAPITAL ANSTALT

/s/Konrad Ackerman                  

By: Konrad Ackerman

Its: Director

MILL CITY VENTURES, LP

/s/Joseph A. Geraci II                 

Its: Managing Member of General Partner

ISLES CAPITAL, LLC

/s/Joseph A. Geraci                    

By: Joseph A. Geraci II