Document:

BIO
      SOLUTIONS MANUFACTURING, INC.

    2006
      STOCK INCENTIVE PLAN

    

    STOCK
      AWARD AGREEMENT

    

    This
      Agreement (“Agreement”) is made as of January 15, 2007 by and between Patricia
      Spreitzer (“Participant”) and Bio Solutions Manufacturing, Inc. (the “Company”).

    

    1. AWARD
      OF
      STOCK. The Company hereby grants to Participant an award (the “Award”) of stock
      (the “Stock”) consisting of 150,000 shares of the Company’s common stock, $0.001
      par value (“Common Shares”), pursuant and subject to the Company’s 2006 Stock
      Incentive Plan (the “Plan”). 

    

    2. CONDITION
      TO PARTICIPANT’S RIGHTS UNDER THIS AGREEMENT. This Agreement shall not become
      effective, and Participant shall have no rights with respect to the Award or
      the
      Stock, unless and until Participant has fully executed this Agreement and
      delivered it to the Company. 

     

    3. TERMS
      OF
      PLAN. The Stock shall be subject to the restrictions and other terms and
      conditions set forth in the Plan, which are hereby incorporated herein by
      reference, and in this Agreement. 

    

    4. MANNER
      IN
      WHICH SHARES WILL BE HELD. Stock certificates evidencing the shares of Stock
      awarded under this Agreement shall be registered in the name of Participant.
      

    

    5. RIGHTS
      OF
      SHAREHOLDER. Except as otherwise provided in this Agreement or the Plan,
      Participant shall have, with respect to the shares of Stock awarded hereunder,
      all of the rights of a shareholder of the Company, including
      the right to receive any dividends as declared by the Company’s Board of
      Directors.

    

    6. TAXES.
      No
      later than the date as of which an amount first becomes includable in the gross
      income of Participant for federal income tax purposes with respect to shares
      of
      Stock awarded under this Agreement, Participant shall pay to the Company, or
      make arrangements satisfactory to the Company’s Board of Directors regarding the
      payment of, all federal, state or local taxes or other items of any kind
      required by law to be withheld with respect to such amount. Participant may
      satisfy any applicable tax withholding obligation resulting from the award
      of
      Stock hereunder by surrendering to Company any other unrestricted Common Shares
      of the Company then owned by Participant or Common Shares which are part of
      the
      Award. The obligations of the Company under the Plan shall be conditional on
      such payment or arrangements and the Company, to the extent permitted by law,
      shall have the right to deduct any such taxes from any payment of any kind
      otherwise due to Participant. 

    

    7. ENTIRE
      AGREEMENT. This Agreement constitutes the entire agreement between the parties
      and supersedes and cancels any other agreement, representation or communication,
      whether oral or in writing, between the parties hereto relating to subject
      matter hereof, provided that the Agreement shall be at all times subject to
      the
      Plan as provided above.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    8. AMENDMENT.
      The Board of Directors, in its sole discretion, may hereafter amend the terms
      of
      this Award, but no such amendment shall be made which would impair the rights
      of
      Participant, without Participant’s consent. 

    

    9. DEFINITIONS:
      Unless otherwise defined in this Agreement, each capitalized term in this
      Agreement shall have the meaning given to it in the Plan.

     

    Participant
      hereby: (i) acknowledges receiving a copy of the Plan, and represents that
      he or
      she is familiar with all of the material provisions of the Plan; (ii) accepts
      this Agreement and the Stock awarded pursuant hereto subject to all provisions
      of the Plan and this Agreement; and (iii) agrees to accept as binding,
      conclusive and final all decisions or interpretations of the Board of Directors
      relating to the Plan, this Agreement or the Stock awarded hereunder.

    

    

    PARTICIPANT

    

    

    
      	 Patricia Spreitzer
	 Printed Name 
	 

    

     

     

    
      	 /s/ Patricia
              Spreitzer 	
               January
                15, 2007

            
	 Signature	
                Date
                

            
	 	 

    

    

    DateSECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of March 16, 2007, by and among COMPLIANCE
      SYSTEMS CORPORATION,
      a Nevada
      corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

    

    WITNESSETH

    

    WHEREAS,
      the
      Company and the Buyer(s) are executing and delivering this Agreement in reliance
      upon an exemption from securities registration pursuant to Section 4(2) and/or
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”);

    

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase up to One Hundred Fifty Thousand Dollars
      ($150,000) of secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      which
      shall be funded on the fifth (5th)
      business day following the date hereof (the “Closing”),
      for a
      total purchase price of up to One Hundred Fifty Thousand Dollars ($150,000),
      (the “Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);
      and

    

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement (the
“Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; and

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the
      Company has agreed to provide the Buyers a security interest in Pledged
      Collateral (as this term is defined in the Security Agreement by and between
      the
      Company and the Holder dated March 8, 2006 (the “Security
      Agreement”)
      and
      the UCC-1 filed with New York Department of State Filing No.: 200603140232846
      and the UCC-1 filed with Nevada Secretary of State Filing No.: 2006008088-6,
      to
      secure the Company’s obligations under this Agreement, the Transaction
      Documents, or any other obligations of the Company to the Buyer, Telephone
      Blocking Services Corporation a
      wholly
      owned subsidiary of the Company, has agreed to provide the Buyers a security
      interest in Pledged Collateral (as this term is defined in the Subsidiary
      Security Agreement by and between the Telephone Blocking Services Corporation
      and the Buyer dated March 8, 2006 (referred to as a “Subsidiary
      Security Agreement”)
      and
      the UCC-1 filed with New York Department of State Filing No.: 200603140233987
      to
      secure the Company’s obligations under this Agreement, the Transaction
      Documents, or any other obligations of the Company to the Buyer, Callcenter
      Tools, Inc., a wholly owned subsidiary of the Company, has agreed to provide
      the
      Buyers a security interest in Pledged Collateral (as this term is defined in
      the
      Subsidiary Security Agreement Callcenter Tools, Inc. and the Buyer dated March
      8, 2006 (referred to as a “Subsidiary
      Security Agreement”)
      and
      the UCC-1 filed with Delaware Secretary of State Filing No.: 6085570 0 to secure
      the Company’s obligations under this Agreement, the Transaction Documents, or
      any other obligations of the Company to the Buyer, Jasmin Communications, Inc.
      a
      wholly owned subsidiary of the Company, has agreed to provide the Buyers a
      security interest in Pledged Collateral (as this term is defined in the
      Subsidiary Security Agreement Jasmin Communications, Inc. and the Buyer dated
      March 8, 2006 (referred to as a “Subsidiary
      Security Agreement”)
      and
      the UCC-1 filed with New York Department of State Filing No.:
      200603140233305 to
      secure
      the Company’s obligations under this Agreement, the Transaction Documents, or
      any other obligations of the Company to the Buyer, Call Complinace.com, Inc.,
      a
      wholly owned subsidiary of the Company, has agreed to provide the Buyers a
      security interest in Pledged Collateral (as this term is defined in the
      Subsidiary Security Agreement by and between Call Compliance.com, Inc. and
      the
      Buyer dated March 8, 2006 (referred to as a “Subsidiary
      Security Agreement”)
      and
      the UCC-1 filed with Delaware Secretary of State Filing No.: 6085570 0 to secure
      the Company’s obligations under this Agreement, the Transaction Documents, or
      any other obligations of the Company to the Buyer, Call Compliance,
      Inc., a
      wholly
      owned subsidiary of the Company, has agreed to provide the Buyers a security
      interest in Pledged Collateral (as this term is defined in the Subsidiary
      Security Agreement by and between Call Compliance, Inc. and the Buyer dated
      March 8, 2006 (referred to as a “Subsidiary
      Security Agreement”)
      and
      the UCC-1 filed with New York Department of State Filing No.:
      200603140233381 to
      secure
      the Company’s obligations under this Agreement, the Transaction Documents, or
      any other obligations of the Company to the Buyer, to provide the Buyers a
      security interest in the Patent Collateral (as this term is defined in the
      Security Agreement (Patent) by and between the Company and the Buyers dated
      the
      date hereof (the “Security Agreement (Patent)”) (all such security agreements
      referred to in this section shall be collectively referred to as the
“Security
      Agreement”);

    

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Pledge and Escrow Agreement (the
“Pledge
      and Escrow Agreement”)
      pursuant to which the Company has agreed to provide the Buyer a security
      interest in the Pledged Shares (as this term is defined in the Pledge and Escrow
      Agreement) to secure the Company’s obligations under this Agreement, the
      Transaction Documents, or any other obligations of the Company to the Buyer;
      and

    

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      (the
“Irrevocable
      Transfer Agent Instructions”)

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Buyer(s) hereby agree as follows:

    

    1. PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

    

    (a) Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at the Closing and
      the
      Company agrees to sell and issue to each Buyer, severally and not jointly,
      at
      the Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.

    

    
      
        
        

      

      
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    (b) Closing
      Date.
      The
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on the fifth (5th)
      business day following the date hereof, subject to notification of satisfaction
      of the conditions to the First Closing set forth herein and in Sections 6 and
      7
      below (or such later date as is mutually agreed to by the Company and the
      Buyer(s)) (the “Closing
      Date”).
      The
      Closing shall occur on the Closing Dates at the offices of Yorkville Advisors,
      LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or such
      other place as is mutually agreed to by the Company and the Buyer(s)).

    

    (c) Form
      of Payment.
      Subject
      to the satisfaction of the terms and conditions of this Agreement, on the
      Closing Date, (i) the Buyers shall deliver to the Company such aggregate
      proceeds for the Convertible Debenture to be issued and sold to such Buyer(s),
      minus the fees to be paid directly from the proceeds of the Closing as set
      forth
      herein, and (ii) the Company shall deliver to each Buyer, a Convertible
      Debenture which such Buyer(s) is purchasing in amounts indicated opposite such
      Buyer’s name on Schedule I, duly executed on behalf of the Company.

    

    2. BUYER’S
      REPRESENTATIONS AND WARRANTIES.

    

    Each
      Buyer represents and warrants, severally and not jointly, that:

    

    (a) Investment
      Purpose.
      Each
      Buyer is acquiring the Convertible Debentures and, upon conversion of
      Convertible Debentures, the Buyer will acquire the Conversion Shares then
      issuable, for its own account for investment only and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the Securities Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement covering such Conversion
      Shares or an available exemption under the Securities Act.

    

    (b) Accredited
      Investor Status.
      Each
      Buyer is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D.

    

    (c) Reliance
      on Exemptions.
      Each
      Buyer understands that the Convertible Debentures are being offered and sold
      to
      it in reliance on specific exemptions from the registration requirements of
      United States federal and state securities laws and that the Company is relying
      in part upon the truth and accuracy of, and such Buyer’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire such
      securities.

    

    (d) Information.
      Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer. Each Buyer and its advisors,
      if
      any, have been afforded the opportunity to ask questions of the Company and
      its
      management. Neither such inquiries nor any other due diligence investigations
      conducted by such Buyer or its advisors, if any, or its representatives shall
      modify, amend or affect such Buyer’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. Each Buyer
      understands that its investment in the Convertible Debentures and the Conversion
      Shares involves a high degree of risk. Each Buyer is in a position regarding
      the
      Company, which, based upon employment, family relationship or economic
      bargaining power, enabled and enables such Buyer to obtain information from
      the
      Company in order to evaluate the merits and risks of this investment. Each
      Buyer
      has sought such accounting, legal and tax advice, as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Convertible Debentures and the Conversion Shares.

    

    
      
        
        

      

      
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    (e) No
      Governmental Review.
      Each
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Convertible Debentures or the Conversion Shares, or the
      fairness or suitability of the investment in the Convertible Debentures or
      the
      Conversion Shares, nor have such authorities passed upon or endorsed the merits
      of the offering of the Convertible Debentures or the Conversion
      Shares.

    

    (f) Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of such securities under circumstances in which
      the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. 

    

    (g) Legends.
      Each
      Buyer understands that the certificates or other instruments representing the
      Convertible Debentures and or the Conversion Shares shall bear a restrictive
      legend in substantially the following form (and a stop -transfer order may
      be
      placed against transfer of such stock certificates):

    

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
      VIEW
      TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
      AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

    

    
      
        
        

      

      
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    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the Securities Act or (ii) in connection
      with a sale transaction, after such holder provides the Company with an opinion
      of counsel, which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions, to the effect that a public
      sale, assignment or transfer of the Conversion Shares may be made without
      registration under the Securities Act. 

    

    (h) Authorization,
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of such Buyer and is a valid and binding agreement of such Buyer enforceable
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

    

    (i) Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended December 31, 2005; (iv) the Company’s Form 10-QSB for the
      fiscal quarter ended September 30, 2006 and (v) answers to all questions each
      Buyer submitted to the Company regarding an investment in the Company; and
      each
      Buyer has relied on the information contained therein and has not been furnished
      any other documents, literature, memorandum or prospectus.

    

    (j) Due
      Formation of Corporate and Other Buyers.
      If the
      Buyer(s) is a corporation, trust, partnership or other entity that is not an
      individual person, it has been formed and validly exists and has not been
      organized for the specific purpose of purchasing the Convertible Debentures
      and
      is not prohibited from doing so.

    

    (k) No
      Legal Advice From the Company.
      Each
      Buyer acknowledges, that it had the opportunity to review this Agreement and
      the
      transactions contemplated by this Agreement with his or its own legal counsel
      and investment and tax advisors. Each Buyer is relying solely on such counsel
      and advisors and not on any statements or representations of the Company or
      any
      of its representatives or agents for legal, tax or investment advice with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction. 

    

    
      
        
        

      

      
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    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

    

    The
      Company represents and warrants as of the date hereof to each of the Buyers
      that, except as set forth in the SEC Documents (as defined herein) or in the
      Disclosure Schedule attached hereto (the “Disclosure
      Schedule”):

    

    (a) Organization
      and Qualification.
      The
      Company and its subsidiaries are corporations duly organized and validly
      existing in good standing under the laws of the jurisdiction in which they
      are
      incorporated, and have the requisite corporate power to own their properties
      and
      to carry on their business as now being conducted. Each of the Company and
      its
      subsidiaries is duly qualified as a foreign corporation to do business and
      is in
      good standing in every jurisdiction in which the nature of the business
      conducted by it makes such qualification necessary, except to the extent that
      the failure to be so qualified or be in good standing would not have a material
      adverse effect on the Company and its subsidiaries taken as a
      whole.

    

    (b) Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Irrevocable Transfer Agent Agreement, the
      Pledge and Escrow Agreement, and any related agreements (collectively the
“Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Convertible Debentures the Conversion Shares and the reservation for
      issuance and the issuance of the Conversion Shares issuable upon conversion
      or
      exercise thereof, have been duly authorized by the Company’s Board of Directors
      and no further consent or authorization is required by the Company, its Board
      of
      Directors or its stockholders, (iii) the Transaction Documents have been duly
      executed and delivered by the Company, (iv) the Transaction Documents constitute
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company executing the Transaction Documents knows
      of
      no reason why the Company cannot file the registration statement as required
      under the Investor Registration Rights Agreement or perform any of the Company’s
      other obligations under such documents. 

    

    
      
        
        

      

      
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    (c) Capitalization.
      The
      authorized capital stock of the Company consists of 500,000,000 shares of
      Common Stock and 0 shares of Preferred Stock, par value $0.001
      (“Preferred
      Stock”)
      of
      which 50,000,000 shares of Common Stock and zero shares of Preferred Stock
      are issued and outstanding. All of such outstanding shares have been validly
      issued and are fully paid and nonassessable. No shares of Common Stock are
      subject to preemptive rights or any other similar rights or any liens or
      encumbrances suffered or permitted by the Company. As of the date of this
      Agreement, (i) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, (ii) there are no outstanding debt securities and (iii) there
      are
      no agreements or arrangements under which the Company or any of its subsidiaries
      is obligated to register the sale of any of their securities under the
      Securities Act (except pursuant to the Registration Rights Agreement) and (iv)
      there are no outstanding registration statements and there are no outstanding
      comment letters from the SEC or any other regulatory agency. There are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the issuance of the Convertible Debentures as described
      in
      this Agreement. The Company has furnished to the Buyer true and correct copies
      of the Company’s Articles of Incorporation, as amended and as in effect on the
      date hereof (the “Articles
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

    

    (d) Issuance
      of Securities.
      The
      Convertible Debentures are duly authorized and, upon issuance in accordance
      with
      the terms hereof, shall be duly issued, fully paid and nonassessable, are free
      from all taxes, liens and charges with respect to the issue thereof. The
      Conversion Shares issuable upon conversion of the Convertible Debentures have
      been duly authorized and reserved for issuance. Upon conversion or exercise
      in
      accordance with the Convertible Debentures the Conversion Shares will be duly
      issued, fully paid and nonassessable.

    

    
      
        
        

      

      
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    (e) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      will
      not (i) result in a violation of the Articles of Incorporation, any certificate
      of designations of any outstanding series of preferred stock of the Company
      or
      the By-laws or (ii) conflict with or constitute a default (or an event which
      with notice or lapse of time or both would become a default) under, or give
      to
      others any rights of termination, amendment, acceleration or cancellation of,
      any agreement, indenture or instrument to which the Company or any of its
      subsidiaries is a party, or result in a violation of any law, rule, regulation,
      order, judgment or decree (including federal and state securities laws and
      regulations and the rules and regulations of The National Association of
      Securities Dealers Inc.’s OTC Bulletin Board on which the Common Stock is
      quoted) applicable to the Company or any of its subsidiaries or by which any
      property or asset of the Company or any of its subsidiaries is bound or
      affected. Neither the Company nor its subsidiaries is in violation of any term
      of or in default under its Articles of Incorporation or By-laws or their
      organizational charter or by-laws, respectively, or any material contract,
      agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
      or
      order or any statute, rule or regulation applicable to the Company or its
      subsidiaries. The business of the Company and its subsidiaries is not being
      conducted, and shall not be conducted in violation of any material law,
      ordinance, or regulation of any governmental entity. Except as specifically
      contemplated by this Agreement and as required under the Securities Act and
      any
      applicable state securities laws, the Company is not required to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under or contemplated by this Agreement or the Registration
      Rights Agreement in accordance with the terms hereof or thereof. All consents,
      authorizations, orders, filings and registrations which the Company is required
      to obtain pursuant to the preceding sentence have been obtained or effected
      on
      or prior to the date hereof. The Company and its subsidiaries are unaware of
      any
      facts or circumstance, which might give rise to any of the
      foregoing.

    

    (f) SEC
      Documents: Financial Statements.
      Since
      __________, the Company has filed all reports, schedules, forms, statements
      and
      other documents required to be filed by it with the SEC under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof or amended after the date hereof
      and all exhibits included therein and financial statements and schedules thereto
      and documents incorporated by reference therein, being hereinafter referred
      to
      as the “SEC
      Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov., true and complete copies of
      the SEC Documents. As of their respective dates, the financial statements of
      the
      Company disclosed in the SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the SEC Documents, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

    

    (g) 10(b)-5.
      Neither
      the Transaction Documents nor the SEC Documents include any untrue statements
      of
      material fact, nor do they omit to state any material fact required to be stated
      therein necessary to make the statements made, in light of the circumstances
      under which they were made, not misleading.

    

    (h) Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      against or affecting the Company, the Common Stock or any of the Company’s
      subsidiaries, wherein an unfavorable decision, ruling or finding would (i)
      have
      a material adverse effect on the transactions contemplated hereby (ii) adversely
      affect the validity or enforceability of, or the authority or ability of the
      Company to perform its obligations under, this Agreement or any of the documents
      contemplated herein, or (iii) have a material adverse effect on the business,
      operations, properties, financial condition or results of operations of the
      Company and its subsidiaries taken as a whole.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (i) Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer(s) is acting solely in the
      capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Buyer(s) or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to such Buyer’s purchase
      of the Convertible Debentures or the Conversion Shares. The Company further
      represents to the Buyer that the Company’s decision to enter into this Agreement
      has been based solely on the independent evaluation by the Company and its
      representatives.

    

    (j) No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the Convertible Debentures or the Conversion
      Shares.

    

    (k) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

    

    (l) Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

    

    (m) Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Company and its subsidiaries do
      not
      have any knowledge of any infringement by the Company or its subsidiaries of
      trademark, trade name rights, patents, patent rights, copyrights, inventions,
      licenses, service names, service marks, service mark registrations, trade secret
      or other similar rights of others, and, to the knowledge of the Company there
      is
      no claim, action or proceeding being made or brought against, or to the
      Company’s knowledge, being threatened against, the Company or its subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the
      foregoing.

    

    (n) Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental
      Laws”),
      (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (o) Title.
      Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

    

    (p) Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

    

    (q) Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    

    (r) Internal
      Accounting Controls.
      The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, and (iii) the recorded amounts for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

    

    (s) No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a material adverse effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries. Neither the Company nor any of its subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a material adverse effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its subsidiaries.

    

    (t) Tax
      Status.
      The
      Company and each of its subsidiaries has made and filed all federal and state
      income and all other tax returns, reports and declarations required by any
      jurisdiction to which it is subject and (unless and only to the extent that
      the
      Company and each of its subsidiaries has set aside on its books provisions
      reasonably adequate for the payment of all unpaid and unreported taxes) has
      paid
      all taxes and other governmental assessments and charges that are material
      in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      There are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and the officers of the Company know of no basis
      for any such claim.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (u) Certain
      Transactions.
      Except
      for arm’s length transactions pursuant to which the Company makes payments in
      the ordinary course of business upon terms no less favorable than the Company
      could obtain from third parties and other than the grant of stock options
      disclosed in the SEC Documents, none of the officers, directors, or employees
      of
      the Company is presently a party to any transaction with the Company (other
      than
      for services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

    

    (v) Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

    

    4. COVENANTS.

    

    (a) Best
      Efforts.
      Each
      party shall use its best efforts to timely satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

    

    (b) Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing. The Company shall, on or before the Closing Date, take such
      action as the Company shall reasonably determine is necessary to qualify the
      Conversion Shares, or obtain an exemption for the Conversion Shares for sale
      to
      the Buyers at the Closing pursuant to this Agreement under applicable securities
      or “Blue Sky” laws of the states of the United States, and shall provide
      evidence of any such action so taken to the Buyers on or prior to the Closing
      Date.

    

    (c) Reporting
      Status.
      Until
      the earlier of (i) the date as of which the Buyer(s) may sell all of the
      Conversion Shares without restriction pursuant to Rule 144(k) promulgated under
      the Securities Act (or successor thereto), or (ii) the date on which (A) the
      Buyer(s) shall have sold all the Conversion Shares and (B) none of the
      Convertible Debentures are outstanding (the “Registration
      Period”),
      the
      Company shall file in a timely manner all reports required to be filed with
      the
      SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
      and
      the Company shall not terminate its status as an issuer required to file reports
      under the Exchange Act even if the Exchange Act or the rules and regulations
      thereunder would otherwise permit such termination.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (d) Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes.

    

    (e) Reservation
      of Shares.
      The
      Company shall take all action reasonably necessary to at all times have
      authorized, and reserved for the purpose of issuance, such number of shares
      of
      Common Stock as shall be necessary to effect the issuance of the Conversion
      Shares. If at any time the Company does not have available such shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Conversion Shares, the Company shall call and hold a special meeting
      of
      the shareholders within thirty (30) days of such occurrence, for the sole
      purpose of increasing the number of shares authorized. The Company’s management
      shall recommend to the shareholders to vote in favor of increasing the number
      of
      shares of Common Stock authorized. Management shall also vote all of its shares
      in favor of increasing the number of authorized shares of Common
      Stock.

    

    (f) Listings
      or Quotation.
      The
      Company shall promptly secure the listing or quotation of the Conversion Shares
      upon each national securities exchange, automated quotation system or The
      National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
      Board (“OTCBB”)
      or
      other market, if any, upon which shares of Common Stock are then listed or
      quoted (subject to official notice of issuance) and shall use its best efforts
      to maintain, so long as any other shares of Common Stock shall be so listed,
      such listing of all Conversion Shares from time to time issuable under the
      terms
      of this Agreement. The Company shall maintain the Common Stock’s authorization
      for quotation on the OTCBB.

    

    (g) Fees
      and Expenses.
      

    

    (i) Each
      of
      the Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors LLC a fee equal to ten percent (10%) of the Purchase Price.

    

    (ii) The
      Company shall pay a structuring fee to Yorkville Advisors LLC of Ten Thousand
      Dollars ($10,000) directly from the proceeds of the Closing. 

    

    (iii) The
      Company shall pay Yorkville Advisors, LLC a non-refundable due diligence fee
      of
      Two Thousand Five Hundred Dollars ($2,500) which shall be paid directly from
      the
      proceeds of the Closing.

    

    (h) Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless, prior to the consummation an Organizational Change, the Company obtains
      the written consent of each Buyer. In any such case, the Company will make
      appropriate provision with respect to such holders’ rights and interests to
      insure that the provisions of this Section 4(h) will thereafter be applicable
      to
      the Convertible Debentures.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (i) Transactions
      With Affiliates.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, and shall
      cause each of its subsidiaries not to, enter into, amend, modify or supplement,
      or permit any subsidiary to enter into, amend, modify or supplement any
      agreement, transaction, commitment, or arrangement with any of its or any
      subsidiary’s officers, directors, person who were officers or directors at any
      time during the previous two (2) years, stockholders who beneficially own five
      percent (5%) or more of the Common Stock, or Affiliates (as defined below)
      or
      with any individual related by blood, marriage, or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a “Related
      Party”),
      except for (a) customary employment arrangements and benefit programs on
      reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
      agreement, transaction, commitment, or arrangement on an arms-length basis
      on
      terms no less favorable than terms which would have been obtainable from a
      person other than such Related Party, (d) any agreement, transaction,
      commitment, or arrangement which is approved by a majority of the disinterested
      directors of the Company; for purposes hereof, any director who is also an
      officer of the Company or any subsidiary of the Company shall not be a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement. “Affiliate”
for
      purposes hereof means, with respect to any person or entity, another person
      or
      entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
      interest in that person or entity, (ii) has ten percent (10%) or more common
      ownership with that person or entity, (iii) controls that person or entity,
      or
      (iv) shares common control with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.

    

    (j) Transfer
      Agent.
      The
      Company covenants and agrees that, in the event that the Company’s agency
      relationship with the transfer agent should be terminated for any reason prior
      to a date which is two (2) years after the Closing Date, the Company shall
      immediately appoint a new transfer agent and shall require that the new transfer
      agent execute and agree to be bound by the terms of the Irrevocable Transfer
      Agent Instructions (as defined herein).

    

    (k) Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock without consideration or for a consideration per share
      less than the bid price of the Common Stock determined immediately prior to
      its
      issuance, (ii) issue any preferred stock, warrant, option, right, contract,
      call, or other security or instrument granting the holder thereof the right
      to
      acquire Common Stock without consideration or for a consideration less than
      such
      Common Stock’s Bid Price determined immediately prior to it’s issuance, (iii)
      enter into any security instrument granting the holder a security interest
      in
      any and all assets of the Company, or (iv) file any registration statement
      on
      Form S-8.

    

    (l) Neither
      the Buyer(s) nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer(s) agrees that it shall not, and that it
      will cause its affiliates not to, engage in any short sales of or hedging
      transactions with respect to the Common Stock as long as any Convertible
      Debentures shall remain outstanding. 

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (m) Rights
      of First Refusal.
      So
      long
      as any portion of Convertible Debentures are outstanding, if the Company intends
      to raise additional capital by the issuance or sale of capital stock of the
      Company, including without limitation shares of any class of common stock,
      any
      class of preferred stock, options, warrants or any other securities convertible
      or exercisable into shares of common stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party) the Company shall
      be obligated to offer to the Buyers such issuance or sale of capital stock,
      by
      providing in writing the principal amount of capital it intends to raise and
      outline of the material terms of such capital raise, prior to the offering
      such
      issuance or sale of capital stock  to any third parties including, but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the obligor, underwriters, brokers, agents
      or
      other third parties.  The Buyers shall have ten (10) business days from
      receipt of such notice of the sale or issuance of capital stock to accept or
      reject all or a portion of such capital raising offer. 

    

    (n) Lock
      Up Agreements.
      On the
      date hereof, the Company shall obtain from each officer and director a lock
      up
      agreement in the form attached hereto as Exhibit
      A.

    

    (o) Review
      of Public Disclosures.
      All SEC
      filings (including, without limitation, all filings required under the Exchange
      Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other
      public disclosures made by the Company, including, without limitation, all
      press
      releases, investor relations materials, and scripts of analysts meetings and
      calls, shall be reviewed and approved for release by the Company’s attorneys
      and, if containing financial information, the Company’s independent certified
      public accountants.

    

    5. TRANSFER
      AGENT INSTRUCTIONS.

    

    (a) The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
      purpose of having certificates issued, registered in the name of the Buyer(s)
      or
      its respective nominee(s), for the Conversion Shares representing such amounts
      of Convertible Debentures as specified from time to time by the Buyer(s) to
      the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights Agreement). David
      Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
      occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
      The
      Company shall not change its transfer agent without the express written consent
      of the Buyer(s), which may be withheld by the Buyer(s) in its sole discretion.
      Prior to registration of the Conversion Shares under the Securities Act, all
      such certificates shall bear the restrictive legend specified in Section 2(g)
      of
      this Agreement. The Company warrants that no instruction other than the
      Irrevocable Transfer Agent Instructions referred to in this Section 5, and
      stop
      transfer instructions to give effect to Section 2(g) hereof (in the case of
      the
      Conversion Shares prior to registration of such shares under the Securities
      Act)
      will be given by the Company to its transfer agent and that the Conversion
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Investor
      Registration Rights Agreement. Nothing in this Section 5 shall affect in any
      way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares. If the Buyer(s) provides the Company
      with
      an opinion of counsel, in form, scope and substance customary for opinions
      of
      counsel in comparable transactions to the effect that registration of a resale
      by the Buyer(s) of any of the Conversion Shares is not required under the
      Securities Act, the Company shall within two (2) business days instruct its
      transfer agent to issue one or more certificates in such name and in such
      denominations as specified by the Buyer. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to the Buyer
      by
      vitiating the intent and purpose of the transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5 will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this
      Section 5, that the Buyer(s) shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    6. CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

    

    The
      obligation of the Company hereunder to issue and sell the Convertible Debentures
      to the Buyer(s) at the Closings is subject to the satisfaction, at or before
      the
      Closing Dates, of each of the following conditions, provided that these
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion:

    

    (a) Each
      Buyer shall have executed the Transaction Documents and delivered them to the
      Company.

    

    (b) The
      Buyer(s) shall have delivered to the Company the Purchase Price for Convertible
      Debentures in respective amounts as set forth next to each Buyer as outlined
      on
      Schedule I attached hereto, minus any fees to be paid directly from the proceeds
      the Closings as set forth herein, by wire transfer of immediately available
      U.S.
      funds pursuant to the wire instructions provided by the Company.

    

    (c) The
      representations and warranties of the Buyer(s) shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Dates as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Buyer(s) shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by the Buyer(s)
      at or
      prior to the Closing Dates. 

    

    7. CONDITIONS
      TO THE BUYER’S OBLIGATION TO PURCHASE.

    

    (a) The
      obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
      at
      the Closing is subject to the satisfaction, at or before the First Closing
      Date,
      of each of the following conditions:

    

    (i) The
      Company shall have executed the Transaction Documents and delivered the same
      to
      the Buyer(s).

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (ii) The
      Company, through a registered broker-dealer, shall have applied for the Common
      Stock to be authorized for quotation on the OTCBB and trading in the Common
      Stock shall not have been suspended for any reason. 

    

    (iii) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the First Closing
      Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the First Closing Date

    

    (iv) The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

    

    (v) The
      Buyer(s) shall have received an opinion of counsel from Kirkpatrick &
Lockhart Preston Gates Ellis LLP in a form satisfactory to the
      Buyer(s).

    

    (vi) The
      Company shall have provided to the Buyer(s) a certificate of good standing
      from
      the secretary of state from the state in which the company is
      incorporated.

    

    (vii) The
      Company shall have delivered the Pledged Shares as well as executed and
      medallion guaranteed stock powers as required pursuant to the Pledge and Escrow
      Agreement.

    

    (viii) The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

    

    (ix) The
      Company shall have reserved out of its authorized and unissued Common Stock,
      solely for the purpose of effecting the conversion of the Convertible
      Debentures, shares of Common Stock to effect the conversion of all of the
      Conversion Shares then outstanding. 

    

    (x) The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to
      the Buyer, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

    

    (xi) The
      Company shall have filed the Security Agreement (Patent) with the United States
      Patent and Trademark Office.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    8. INDEMNIFICATION.

    

    (a) In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures the Conversion Shares, as a Buyer of Convertible Debentures in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

    

    (b) In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Buyer’s other obligations under this Agreement, the Buyer
      shall defend, protect, indemnify and hold harmless the Company and all of its
      officers, directors, employees and agents (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Indemnitees
      or
      any of them as a result of, or arising out of, or relating to (a) any
      misrepresentation or breach of any representation or warranty made by the
      Buyer(s) in this Agreement, instrument or document contemplated hereby or
      thereby executed by the Buyer, (b) any breach of any covenant, agreement or
      obligation of the Buyer(s) contained in this Agreement, the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby executed by the Buyer, or (c) any cause of
      action, suit or claim brought or made against such Company Indemnitee based
      on
      material misrepresentations or due to a material breach and arising out of
      or
      resulting from the execution, delivery, performance or enforcement of this
      Agreement, the Investor Registration Rights Agreement or any other instrument,
      document or agreement executed pursuant hereto by any of the parties hereto.
      To
      the extent that the foregoing undertaking by each Buyer may be unenforceable
      for
      any reason, each Buyer shall make the maximum contribution to the payment and
      satisfaction of each of the Indemnified Liabilities, which is permissible under
      applicable law.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    9. GOVERNING
      LAW: MISCELLANEOUS.

    

    (a) Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New Jersey without regard to the principles of conflict of laws.
      The parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County and the United States
      District Court for the District of New Jersey sitting in Newark, New Jersey
      for
      the adjudication of any civil action asserted pursuant to this
      Paragraph.

    

    (b) Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof.

    

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

    

    (d) Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

    

    (e) Entire
      Agreement, Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyer(s), the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

    

    (f) Notices.
      Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered (i) upon receipt, when delivered personally; (ii) upon
      confirmation of receipt, when sent by facsimile; (iii) three (3) days after
      being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
      day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
      	
               

              If
                to the Company, to:

            	
              Compliance
                Systems Corporation

            
	 	
              90
                Pratt Oval

            
	 	
              Glen
                Cove, NY 11542

            
	 	
              Attention: Dean
                Garfinkel

            
	 	
              Telephone: (516)
                656-5155

            
	 	
              Facsimile: (516)
                676-2420

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Preston Gates Ellis LLP

            
	 	
              201
                South Biscayne Boulevard.
                -
                Suite 2000

            
	 	
              Miami,
                Florida 33131-2399

            
	 	
              Attention:
                Clayton E. Parker, Esq.

            
	 	
              Telephone:
                (305) 539-3352 

            
	 	
              Facsimile:
                (305) 358-7095

            
	 	 
	 	 

    

    If
      to the
      Buyer(s), to its address and facsimile number on Schedule I, with copies to
      the
      Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
      days’ prior written notice to the other party of any change in address or
      facsimile number.

    

    (g) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Company nor any Buyer
      shall
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other party hereto.

    

    (h) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

    

    (i) Survival.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted in full. The Buyer(s) shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

    

    (j) Publicity.
      The
      Company and the Buyer(s) shall have the right to approve, before issuance any
      press release or any other public statement with respect to the transactions
      contemplated hereby made by any party; provided, however, that the Company
      shall
      be entitled, without the prior approval of the Buyer(s), to issue any press
      release or other public disclosure with respect to such transactions required
      under applicable securities or other laws or regulations (the Company shall
      use
      its best efforts to consult the Buyer(s) in connection with any such press
      release or other public disclosure prior to its release and Buyer(s) shall
      be
      provided with a copy thereof upon release thereof).

    

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

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (l) Termination.
      In the
      event that the First Closing shall not have occurred with respect to the Buyers
      on or before five (5) business days from the date hereof due to the Company’s or
      the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
      above (and the non-breaching party’s failure to waive such unsatisfied
      condition(s)), the non-breaching party shall have the option to terminate this
      Agreement with respect to such breaching party at the close of business on
      such
      date without liability of any party to any other party; provided, however,
      that
      if this Agreement is terminated by the Company pursuant to this Section 9(l),
      the Company shall remain obligated to reimburse the Buyer(s) for the fees and
      expenses of Yorkville Advisors LLC described in Section 4(g) above.

    

    (m) Brokerage.
      The
      Company represents that no broker, agent, finder or other party has been
      retained by it in connection with the transactions contemplated hereby and
      that
      no other fee or commission has been agreed by the Company to be paid for or
      on
      account of the transactions contemplated hereby.

    

    (n) No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

    

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      Buyers and the Company have caused this Securities Purchase Agreement to be
      duly
      executed as of the date first written above.

    

    

    
      	 	
              COMPANY:

            
	 	
              COMPLIANCE
                SYSTEMS CORPORATION 

            
	 	 
	 	
              By:
                /s/ Dean Garfinkel     

            
	 	
              
                

                Name: Dean
                Garfinkel

            
	 	
              Title: Chairman

            
	 	 

    

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

    

    

    
      	
              Name

            	
              Signature

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
              Amount
                of Subscription

            
	 	 	 	 
	 	 	 	 
	
              Cornell
                Capital Partners, L.P.

            	
              By: Yorkville
                Advisors, LLC

            	
              101
                Hudson Street - Suite 3700

            	
              $150,000

            
	 	
              Its: Investment
                Manager

            	
              Jersey
                City, NJ 07303

            	 
	 	 	
              Facsimile: (201)
                985-8266

            	 
	 	 	 	 
	 	
              By:
                /s/ Mark Angelo  

            	 	 
	 	
              
                

                Name: Mark
                Angelo

            	 	 
	 	
              Its: Portfolio
                Manager 

            	 	 
	 	 	 	 
	
              With
                a copy to: 

            	
              David
                Gonzalez, Esq.

            	
              101
                Hudson Street - Suite 3700

            	 
	 	 	
              Jersey
                City, NJ 07302

            	 
	 	 	
              Facsimile:
                (201) 985-8266

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    DISCLOSURE
      SCHEDULE

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    

    LOCK
      UP AGREEMENT

    

    The
      undersigned hereby agrees that for a period commencing on March 16, 2007 and
      expiring on the date thirty (30) days after the date that all amounts owed
      to
      Cornell Capital Partners, LP (the “Investor”),
      under
      the Secured Convertible Debentures issued to the Investor pursuant to the
      Securities Purchase Agreement between Compliance Systems Corporation (the
“Company”)
      and
      the Investor dated March 16, 2007 have been paid (the “Lock-up
      Period”),
      he,
      she or it will not, directly or indirectly, without the prior written consent
      of
      the Investor, issue, offer, agree or offer to sell, sell, grant an option for
      the purchase or sale of, transfer, pledge, assign, hypothecate, distribute
      or
      otherwise encumber or dispose of any securities of the Company, including common
      stock or options, rights, warrants or other securities underlying, convertible
      into, exchangeable or exercisable for or evidencing any right to purchase or
      subscribe for any common stock (whether or not beneficially owned by the
      undersigned), or any beneficial interest therein (collectively, the
“Securities”)
      except
      in accordance with the volume limitations set forth in Rule 144(e) of the
      General Rules and Regulations under the Securities Act of 1933, as
      amended.

    

    In
      order
      to enable the aforesaid covenants to be enforced, the undersigned hereby
      consents to the placing of legends and/or stop-transfer orders with the transfer
      agent of the Company’s securities with respect to any of the Securities
      registered in the name of the undersigned or beneficially owned by the
      undersigned, and the undersigned hereby confirms the undersigned’s investment in
      the Company.

    

    Dated:
      _______________, 2007

    

    Signature

    

    

                                                                           
____________________________________

    Name:
      ____________________________________

    Address:
      ____________________________________      

    City,
      State, Zip Code: ___________________________

    

    

                                                                           
____________________________________

    Print
      Social Security Number 

    or
      Taxpayer I.D. Number

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