Document:

EXHIBIT
        4.3

    

     

    THIS
      WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
      TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
      TO
      THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
      ACT.

    

    DEBT
      RESOLVE, INC.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    Warrant
      No.: CW-__

    

    ___________
      __, 2006

    

    This
      COMMON
      STOCK PURCHASE WARRANT
      certifies that ______________________, having an address at
      ______________________, or permitted assignees is the registered holder (the
      “Holder”)
      of
      this Common Stock Purchase Warrant (the “Warrant”)
      to
      purchase shares of the common stock, par value $.001 per share (the
“Common
      Stock”),
      of
      Debt Resolve, Inc., a Delaware corporation (the “Company”).
      This
      Warrant has been issued to the Holder in connection with the private placement
      of securities offered by the Company pursuant to, or contemplated by, that
      certain: (i) Securities Purchase Agreement, (ii) a confidential private
      placement term sheet booklet with exhibits, as the same may be amended or
      supplemented from time to time, (iii) a registration rights agreement, (iv)
      this
      Warrant, (v) a 15% senior secured convertible promissory note or 15% senior
      secured promissory note (each, a “Note”
and
      collectively, the “Notes”),
      (vi)
      a security agreement, (vii) a stock pledge agreement and (viii) a lock-up
      agreement, each dated as of the date of this Warrant (collectively, the
“Transaction
      Documents”).
      The
      Holder takes this Warrant subject to the terms and restrictions set forth in
      the
      Transaction Documents and shall be entitled to certain rights and privileges
      as
      set forth in the Transaction Documents.

    

    FOR
      VALUE RECEIVED,
      the
      Company hereby certifies that the Holder is entitled to purchase from the
      Company ______________________ (__________) (representing that number of shares
      of Common Stock as equals the principal face amount of the Note purchased by
      the
      Holder divided by (a) $.30 if the Company’s proposed 1-for-10 reverse stock
      split has not yet occurred as of the date hereof or (b) $3.00 if the Company’s
      proposed 1-for-10 reverse stock split has occurred as of the date hereof) duly
      authorized, validly issued, fully paid and nonassessable shares of Common Stock
      (the “Warrant
      Shares”)
      at a
      purchase price per share set forth in Section 3 below, and otherwise subject
      to
      the terms, conditions and adjustments set forth below in this Warrant and in
      the
      Transaction Documents. The Holder is the person or entity in whose name this
      Warrant is registered on the records of the Company regarding registration
      and
      transfers of this Warrant (the “Warrant
      Register”)
      and is
      the owner and holder thereof for all purposes, except as described in Section
      9
      hereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    1. Exercise
      of Warrant.
      This
      Warrant will be exercisable at any time, in the sole discretion of the Holder,
      commencing upon the effective date (the “Commencement
      Date”)
      of the
      Company’s proposed initial public offering (the “IPO”).

    

    2. Expiration
      of Warrant.
      This
      Warrant shall expire at 5:00 p.m., New York local time, on April 30, 2009 (the
      “Expiration
      Date”).

    

    3. Warrant
      Price.
      At any
      time from the Commencement Date through the Expiration Date, all or any portion
      of this Warrant may be exercised for Warrant Shares, in the Holder’s sole
      discretion, at a price (the “Warrant
      Price”)
      equal
      to (a) $.001 per share if the Company’s proposed 1-for-10 reverse stock split
      has not yet occurred as of the date hereof or (b) $.01 per share if the
      Company’s proposed 1-for-10 reverse stock split has occurred as of the date
      hereof. 

    

    4. Exercise
      of Warrant.
      This
      Warrant shall be exercisable as follows:

    

    4.1 Manner
      of Exercise.
      This
      Warrant may be exercised into shares of Common Stock by the Holder hereof,
      in
      accordance with the terms and conditions hereof, in whole or in part with
      respect to any portion of this Warrant and in the discretion of the Holder,
      during the period beginning on the Commencement Date and ending on the
      Expiration Date. Any exercise shall be undertaken during normal business hours
      on any day other than a Saturday or a Sunday or a day on which commercial
      banking institutions in New York, New York are authorized by law to be closed
      (a
“Business
      Day”)
      on or
      prior to the Expiration Date with respect to such portion of this Warrant,
      by
      surrender of this Warrant to the Company at its office maintained pursuant
      to
      Section 9.2(a) hereof, accompanied by an election to purchase form in
      substantially the form attached at the end of this Warrant duly executed by
      or
      on behalf of the Holder together with the payment of the Warrant Price in cash
      by bank check or wire transfer of immediately available funds.

    

    4.2 When
      Exercise Effective.
      Each
      exercise of this Warrant shall be deemed to have been effected immediately
      prior
      to the close of business on the Business Day on which this Warrant shall have
      been surrendered to the Company as provided in Section 4.1 hereof (“Exercise
      Date”),
      and,
      at such time, the corporation, association, partnership, organization, business,
      individual, government or political subdivision thereof or a governmental agency
      (a “Person”
or
      the
“Persons”)
      in
      whose name or names any certificate or certificates for shares of Common Stock
      shall be issuable upon exercise as provided herein shall be deemed to have
      become the holder or holders of record thereof. 

    

    4.3 Delivery
      of Stock Certificates.
      As soon
      as practicable after each exercise of this Warrant, in whole or in part, and
      in
      any event within ten (10) Business Days thereafter, the Company, at its expense
      (including the payment by it of any applicable issue taxes), will cause to
      be
      issued in the name of and delivered to the Holder hereof or, subject to Section
      9 hereof, as the Holder (upon payment by the Holder of any applicable transfer
      taxes) may direct:

    

    (a) a
      certificate or certificates (with appropriate restrictive legends, as
      applicable) for the number of duly authorized, validly issued, fully paid and
      nonassessable shares of Common Stock to which the Holder shall be entitled
      upon
      exercise plus, in lieu of any fractional share to which the Holder would
      otherwise be entitled, all issuances of Common Stock shall be rounded up to
      the
      nearest whole share.

    
      
        
        

      

      
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    (b) in
      case
      exercise is in part only, a new Warrant of like tenor, dated the date hereof
      and
      stating on the face thereof for the number of shares of Common Stock equal
      to
      the number of shares called for on the face of this Warrant minus the number
      of
      shares designated by the Holder upon exercise as provided in Section 4.1 hereof
      (without giving effect to any adjustment thereof).

    

    4.4 Shares
      to be Fully Paid.
      The
      Company covenants and agrees that all shares of Common Stock which may be issued
      upon the exercise of rights presented by this Warrant will, upon issuance by
      the
      Company, be validly issued, fully paid and nonassessable, and free from
      preemptive rights and free from all taxes, liens and charges with respect
      thereto. 

    

    4.5 Company
      to Reaffirm Obligations.
      The
      Company will, at the time of each exercise of this Warrant, upon the written
      request of the Holder hereof, acknowledge in writing its continuing obligation
      to afford to the Holder all rights (including without limitation any rights
      to
      registration of the shares of Common Stock issued upon exercise) to which the
      Holder shall continue to be entitled after exercise in accordance with the
      terms
      of this Warrant; provided,
      however,
      that if
      the Holder shall fail to make a request, the failure shall not affect the
      continuing obligation of the Company to afford the rights to such
      Holder.

    

    4.6 Cashless
      Exercise.
      If at
      any time after one (1) year from the date of issuance of this Warrant there
      is
      no effective registration filed with the U.S. Securities and Exchange Commission
      under the Securities Act (as defined below) registering, or no current
      prospectus available for, the resale of the shares of Common Stock issuable
      upon
      exercise of this Warrant by the Holder, then this Warrant may also be exercised
      at such time by means of a “cashless exercise” (by surrender of this Warrant to
      the Company at its office maintained pursuant to Section 9.2(a) hereof,
      accompanied by a notice of cashless exercise form in substantially the form
      attached at the end of this Warrant duly executed by or on behalf of the Holder)
      in which the Holder shall be entitled to receive a certificate for the number
      of
      shares of Common Stock equal to the quotient obtained by dividing [(A-B)(X)]
      by
      (A), where:

    

    (A)
      = the
      average 4:00 pm closing bid price of the Common Stock over the five (5) trading
      days immediately preceding the date of such election, as such closing price
      is
      reported on the Bloomberg system;

    

    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and

    

    (X)
      - the
      number of shares of Common Stock then issuable upon exercise of this Warrant
      in
      accordance with the terms of this Warrant by means of a cash exercise rather
      than a cashless exercise.

    
      
        
        

      

      
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    5. Adjustments.
      

    

    5.1 Splits,
      Subdivisions, etc.
      In the
      event that the Company should at any time or from time to time, after the date
      first referenced above, fix a record date for the effectuation of a split or
      subdivision of the outstanding shares of Common Stock, or the determination
      of
      holders of Common Stock entitled to receive a dividend or other distribution
      payable in additional shares of Common Stock or other securities or rights
      convertible into, or entitling the holder thereof to receive directly or
      indirectly additional shares of Common Stock (hereinafter referred to as
“Common
      Stock Equivalents”)
      without payment of any consideration by such holder for the additional shares
      of
      Common Stock or the Common Stock Equivalents (including the additional shares
      of
      Common Stock issuable upon conversion or exercise thereof), then, as of such
      record date (or the date of such dividend, distribution, split or subdivision
      if
      no record date is fixed), the Warrant Price shall be appropriately decreased
      so
      that the number of shares of Common Stock issuable on exercise of this Warrant
      shall be increased in proportion to such increase in the aggregate number of
      shares of the Common Stock outstanding.

    

    5.2 Combinations.
      If the
      number of shares of Common Stock outstanding at any time after the date first
      referenced above is decreased by a combination of the outstanding shares of
      Common Stock (except for the Company’s proposed 1-for-10 reverse stock split
      prior to the IPO which has already been factored into this Warrant), then,
      following the record date of such combination, the Warrant Price, shall be
      appropriately increased so that the number of shares of Common Stock issuable
      upon exercise of this Warrant shall be decreased in proportion to such decrease
      in outstanding shares. 

    

    5.3 Mergers,
      Consolidations, etc.
      In case
      of any consolidation of the Company with, or merger of the Company into any
      other corporation, or in the case of any sale or conveyance of all or
      substantially all of the assets of the Company other than in connection with
      a
      plan of complete liquidation of the Company, then as a condition of such
      consolidation, merger or sale or conveyance, adequate provision will be made
      whereby the registered Holder will have the right to acquire and receive upon
      exercise of this Warrant in lieu of the shares of Common Stock immediately
      theretofore subject to acquisition upon the exercise of this Warrant, such
      shares of stock, securities or assets as may be issued or payable with respect
      to or in exchange for the number of shares of Common Stock immediately
      theretofore subject to acquisition and receivable upon exercise of this Warrant
      had such consolidation, merger or sale or conveyance not taken place. In any
      such case, the Company will make appropriate provision to insure that the
      provisions of this Section 5 hereof will thereafter be applicable as nearly
      as
      may be in relation to any shares of stock or securities thereafter deliverable
      upon the exercise of this Warrant.

    

    5.4 Notice
      of Adjustments.
      Upon
      any adjustment of the terms of this Warrant pursuant to this Section 5, then
      and
      in each such case the Company shall promptly deliver a notice to the registered
      Holder of this Warrant, which notice shall state the Warrant Price resulting
      from such adjustment and the changes, if any, in the number of Warrant Shares
      or
      kind of securities or other property purchasable at such price upon the exercise
      hereof, setting forth in reasonable detail the method of calculation and the
      facts upon which such calculation is based.

    
      
        
        

      

      
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    5.5 Adjustment
      in Number of Securities.
      Upon
      each adjustment of the Warrant Price pursuant to the provisions of this Section
      5, the number of securities issuable upon the exercise of each Warrant shall
      be
      adjusted to the nearest full amount by multiplying a number equal to the Warrant
      Price in effect immediately prior to such adjustment by the number of Warrant
      Shares issuable upon exercise of the Warrants immediately prior to such
      adjustment and dividing the product so obtained by the adjusted Warrant
      Price.

    

    5.6 No
      Fractional Shares.
      No
      fractional shares shall be issuable upon exercise of this Warrant and the number
      of Warrant Shares to be issued shall be rounded down to the nearest whole share.
      

    

    6. Reservation
      of Shares.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, free from all taxes, liens and charges with
      respect to the issue thereof, and not subject to preemptive rights or other
      similar rights of stockholders of the Company, solely for the purpose of issuing
      the shares of Common Stock underlying this Warrant, such number of its shares
      of
      Common Stock as shall from time to time be sufficient to effect the issuance
      or
      exercise thereof, and if at any time the number of authorized but unissued
      shares of Common Stock shall not be sufficient to issue the Common Stock and
      effect the exercise of this Warrant, in addition to such other remedies as
      shall
      be available to Holder, the Company shall take such corporate action as may,
      in
      the opinion of its counsel, be necessary to increase the number of authorized
      but unissued shares of Common Stock to such number of shares as shall be
      sufficient for such purposes, including without limitation, using its best
      efforts to obtain the requisite stockholder approval necessary to increase
      the
      number of authorized shares of the Company’s Common Stock. All shares of Common
      Stock issuable upon exercise of this Warrant shall be duly authorized and,
      when
      issued upon exercise, shall be validly issued and, in the case of shares, fully
      paid and nonassessable and free from preemptive rights and free from taxes,
      liens and charges with respect thereto.

    

    7. No
      Impairment.
      The
      Company will not, by amendment of its charter or through reorganization,
      consolidation, merger, dissolution, sale of assets or any other voluntary
      action, avoid or seek to avoid the observance or performance of any of the
      terms
      of this Warrant but will at all times carry out all such terms and take all
      such
      action as may be reasonably necessary or appropriate in order to protect the
      rights of the holder of this Warrant against impairment.

    

    8. Restrictions
      on Transfer.

    

    8.1 Restrictive
      Legends.
      This
      Warrant and each Warrant issued upon transfer or in substitution for this
      Warrant pursuant to Section 9, each certificate for Common Stock issued upon
      the
      exercise of any Warrant and each certificate issued upon the transfer of any
      such Common Stock shall be transferable only upon satisfaction of the conditions
      specified in this Section 8. Each of the foregoing securities shall be stamped
      or otherwise imprinted with a legend reflecting the restrictions on transfer
      set
      forth in this Section 8 and any restrictions required under the Securities
      Act
      of 1933, as amended (the “Act”).

    

    8.2 Notice
      of Proposed Transfer; Opinion of Counsel.
      Prior
      to any transfer of any securities which are not registered under an effective
      registration statement under the Act (“Restricted
      Securities”),
      the
      Holder will give written notice to the Company of the Holder’s intention to
      affect a transfer and to comply in all other respects with this Section 8.2.
      Each notice: (i) shall describe the manner and circumstances of the proposed
      transfer, and (ii) shall designate counsel for the Holder giving the notice.
      The
      Holder giving notice will submit a copy thereof to the counsel designated in
      the
      notice. The following provisions shall then apply:

    
      
        
        

      

      
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    (a) If
      in the
      opinion of counsel for the Holder reasonably satisfactory to the Company the
      proposed transfer may be effected without registration of Restricted Securities
      under the Act (which opinion shall state the basis of the legal conclusions
      reached therein), the Holder shall thereupon be entitled to transfer the
      Restricted Securities in accordance with the terms of the notice delivered
      by
      the Holder to the Company. Each certificate representing the Restricted
      Securities issued upon or in connection with any transfer shall bear the
      restrictive legends required by Section 8.1 hereof.

    

    (b) If
      the
      opinion called for in (a) above is not delivered, the Holder shall not be
      entitled to transfer the Restricted Securities until either: (i) receipt by
      the
      Company of a further notice from such Holder pursuant to the foregoing
      provisions of this Section 8.2 and fulfillment of the provisions of clause
      (a)
      above, or (ii) such Restricted Securities have been effectively registered
      under
      the Act.

    

    8.3 Termination
      of Restrictions.
      The
      restrictions imposed by this Section 8 upon the transferability of Restricted
      Securities shall cease and terminate as to any particular Restricted Securities:
      (a) which Restricted Securities shall have been effectively registered under
      the
      Act, or (b) when, in the opinions of both counsel for the Holder thereof and
      counsel for the Company, such restrictions are no longer required in order
      to
      insure compliance with the Act or Section 8 hereof. Whenever such restrictions
      shall cease and terminate as to any Restricted Securities, the Holder thereof
      shall be entitled to receive from the Company, without expense (other than
      applicable transfer taxes, if any), new securities of like tenor not bearing
      the
      applicable legends required by Section 8.1 hereof.

    

    9. Ownership,
      Transfer and Substitution of Warrant.

    

    9.1 Ownership
      of Warrant.
      The
      Company may treat the person in whose name this Warrant is registered in the
      Warrant Register maintained pursuant to Section 9.2(b) hereof as the owner
      and
      holder thereof for all purposes, notwithstanding any notice to the contrary,
      except that, if and when any Warrant is properly assigned in blank, the Company
      may (but shall not be obligated to) treat the bearer thereof as the owner of
      such Warrant for all purposes, notwithstanding any notice to the contrary.
      Subject to Section 8 hereof, this Warrant, if properly assigned, may be
      exercised by a new holder without a new Warrant first having been
      issued.

    

    9.2 Office;
      Transfer and Exchange of Warrant.

    

    (a) The
      Company will maintain its principal offices as the office where notices,
      presentations and demands in respect of this Warrant may be made upon it until
      the Company notifies the holder of this Warrant of any change of location of
      the
      office.

    
      
        
        

      

      
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    (b) The
      Company shall cause to be kept at its office maintained pursuant to Section
      9.2(a) hereof a Warrant Register for the registration and transfer of this
      Warrant. The names and addresses of holders of this Warrant, the transfers
      thereof and the names and addresses of transferees of this Warrant shall be
      registered in such Warrant Register. The Person in whose name any Warrant shall
      be so registered shall be deemed and treated as the owner and holder thereof
      for
      all purposes of this Warrant, and the Company shall not be affected by any
      notice or knowledge to the contrary.

    

    (c) Upon
      the
      surrender of this Warrant, properly endorsed, for registration of transfer
      or
      for exchange at the office of the Company maintained pursuant to Section 9.2(a)
      hereof, the Company at its expense will (subject to compliance with Section
      8
      hereof, if applicable) execute and deliver to or upon the order of the Holder
      thereof a new Warrant of like tenor, in the name of such holder or as such
      holder (upon payment by such holder of any applicable transfer taxes) may
      direct, calling in the aggregate on the face thereof for the number of shares
      of
      Common Stock called for on the face of this Warrant so surrendered.

    

    9.3 Replacement
      of Warrant.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, upon delivery of indemnity reasonably
      satisfactory to the Company in form and amount or, in the case of any
      mutilation, upon surrender of this Warrant for cancellation at the office of
      the
      Company maintained pursuant to Section 9.2(a) hereof, the Company at its expense
      will execute and deliver, in lieu thereof, a new Warrant of like tenor and
      dated
      the date hereof.

    

    10. No
      Rights or Liabilities as Stockholder.
      No
      Holder shall be entitled to vote or receive dividends or be deemed the holder
      of
      any shares of Common Stock or any other securities of the Company which may
      at
      any time be issuable on the exercise hereof for any purpose, nor shall anything
      contained herein be construed to confer upon the Holder, as such, any of the
      rights of a stockholder of the Company or any right to vote for the election
      of
      directors or upon any matter submitted to stockholders at any meeting thereof,
      or to give or withhold consent to any corporate action (whether upon any
      recapitalization, issuance of stock, reclassification of stock, change of par
      value, consolidation, merger, conveyance, or otherwise) or to receive notice
      of
      meetings, or to receive dividends or subscription rights or otherwise until
      this
      Warrant shall have been exercised and the shares of Common Stock purchasable
      upon the exercise hereof shall have become deliverable, as provided herein.
      The
      Holder will not be entitled to share in the assets of the Company in the event
      of a liquidation, dissolution or the winding up of the Company.

    

    11. Notices
      of Record Date, etc.
      In case
      the Company shall take a record of the holders of its Common Stock (or other
      stock or securities at the time deliverable upon the exercise of this Warrant)
      for the purpose of entitling or enabling them to receive any dividend or other
      distribution, or to receive any right to subscribe for or purchase any shares
      of
      stock of any class or any other securities, or to receive any other right;
      or of
      any capital reorganization of the Company, any reclassification of the capital
      stock of the Company, any consolidation or merger of the Company with or into
      another corporation (other than a consolidation or merger in which the Company
      is the surviving entity), or any transfer of all or substantially all of the
      assets of the Company; or of the voluntary or involuntary dissolution,
      liquidation or winding-up of the Company, then, and in each such case, the
      Company will mail or cause to be mailed to the registered holder of this Warrant
      a notice specifying, as the case may be: (i) the date on which a record is
      to be
      taken for the purpose of such dividend, distribution or right, and stating
      the
      amount and character of such dividend, distribution or right, or (ii) the
      effective date on which such reorganization, reclassification, consolidation,
      merger, transfer, dissolution, liquidation or winding-up is to take place,
      and
      the time, if any is to be fixed, as of which the holders of record of Common
      Stock (or such other stock or securities at the time deliverable upon the
      exercise of this Warrant) shall be entitled to exchange their shares of Common
      Stock (or such other stock or securities) for securities or other property
      deliverable upon such reorganization, reclassification, consolidation, merger,
      transfer, dissolution, liquidation or winding-up. Such notice shall be mailed
      at
      least ten (10) days prior to the record date or effective date for the event
      specified in such notice unless such prior notice is waived by the registered
      holder of this Warrant. 

    
      
        
        

      

      
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    12. Notices.
      Any
      notice or other communication in connection with this Warrant shall be deemed
      to
      be given if in writing (or in the form of a facsimile) addressed as hereinafter
      provided and actually delivered at said address: (a) if to any Holder, at the
      registered address of such holder as set forth in the Warrant Register kept
      at
      the office of the Company maintained pursuant to Section 9.2(a) hereof, or
      (b)
      if to the Company, to the attention of its Chief Financial Officer at its office
      maintained pursuant to Section 9.2(a) hereof; provided,
      however,
      that the
      exercise of any Warrant shall be effective in the manner provided in Section
      4
      hereof.

    

    13. Payment
      of Taxes.
      The
      Company will pay all documentary stamp taxes attributable to the issuance of
      shares of Common Stock underlying this Warrant upon exercise of this Warrant;
      provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the registration of any certificate for shares
      of
      Common Stock underlying this Warrant in a name other that of the Holder. The
      Holder is responsible for all other tax liability that may arise as a result
      of
      holding or transferring this Warrant or receiving shares of Common Stock
      underlying this Warrant upon exercise hereof.

    

    14. Governing
      Law; Jurisdiction; Waiver of Jury Trial.
      

    

    14.1 THIS
      WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
      ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
      LAW. 

    

    14.2 THE
      COMPANY HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK STATE
      OR
      UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
      ANY
      DISPUTE ARISING UNDER THIS WARRANT. THE COMPANY IRREVOCABLY WAIVES THE DEFENSE
      OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. THE
      COMPANY FURTHER AGREES THAT SERVICE OF PROCESS UPON IT MAILED BY FIRST CLASS
      MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE
      COMPANY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE HOLDER’S
      RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE COMPANY AGREES
      THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
      CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
      OR IN ANY OTHER LAWFUL MANNER. 

    
      
        
        

      

      
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    14.3 THE
      COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT.

    

    15. Miscellaneous.
      Any
      provision of this Warrant and the observance of any term hereof may be amended,
      waived or modified (either generally or in a particular instance and either
      retroactively or prospectively) only with the written consent of the Company
      and
      the holders of greater than 50% of the face amount of all then outstanding
      Notes
      issued to the Purchasers (as defined in the other Transaction Documents);
provided,
      however,
      that
      with respect to the Warrant issued to the holder of the 15% Senior Secured
      Promissory Note, any provision of such Warrant and the observance of any term
      thereof may be amended, waived or modified (either generally or in a particular
      instance and either retroactively or prospectively) only with the written
      consent of the Company and the holder of the 15% Senior Secured Promissory
      Note.
      If one or more provisions of this Warrant are held to be unenforceable under
      applicable law, such provisions shall be excluded from this Warrant, and the
      balance of this Warrant shall be interpreted as if such provisions were so
      excluded and shall be enforceable in accordance with its terms. The section
      headings in this Warrant are for purposes of convenience only and shall not
      constitute a part hereof.

    

    [Remainder
      of page intentionally left blank; signature page
      follows.]

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Common Stock Purchase Warrant to be duly executed as
      of
      the date first above written.

    

    
      	 	 	 
	 	DEBT
              RESOLVE, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                

              Title:
                

            
	 	 

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    ELECTION
      TO PURCHASE

     

    (To
      be
      executed by the registered holder if such holder desires to exercise the
      attached Warrant.)

     

    Debt
      Resolve, Inc.

    Attention:
      Chief Financial Officer

     

    The
      undersigned hereby (1) irrevocably elects to exercise his, her or its rights
      to
      purchase ____________ shares of Common Stock covered by the attached Warrant
      (No. CW-___), (2) makes payment in full of the Warrant Price by enclosure of
      cash, certified check or bank draft, or by wire transfer, (3) requests that
      certificates for such shares of Common Stock be issued in the name
      of:

     

    Please
      print name, address and Social Security or Tax Identification
      Number:

     

    ________________________________________________

     

    ________________________________________________

     

    ________________________________________________

     

    ________________________________________________

     

    and
      (4)
      if said number of shares of Common Stock shall not be all the shares evidenced
      by the attached Warrant, requests that a new warrant certificate for the balance
      of the shares covered by the attached Warrant be registered in the name of,
      and
      delivered to:

     

    Please
      print name and address:

     

    ________________________________________________

     

    ________________________________________________

     

    ________________________________________________

     

    
      	 	 	 
	Dated: _____________________	
              
HOLDER 
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

              Title:

            
	 	 

    

    

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    NOTICE
      OF CASHLESS EXERCISE

     

    (To
      be
      executed upon exercise of the attached Warrant pursuant to Section
      4.6.)

     

    The
      undersigned, the Holder of the attached Warrant (No. CW-___), hereby irrevocably
      elects to exercise his, her or its Warrant for ____________ shares of Common
      Stock pursuant to the cashless exercise provisions of the attached Warrant,
      as
      provided for in Section 4.6 of such Warrant, and requests that a certificate
      or
      certificates for such Warrant Shares be issued in the name of and delivered
      to
      __________________________ whose address is _______________________________
      (social security or taxpayer identification number ___________) and, if such
      shares shall not include all of the shares issuable under such Warrant, that
      a
      new warrant certificate of like tenor and date for the balance of the shares
      issuable thereunder be delivered to the undersigned.

    
       

      
        	 	 	 
	Dated: _____________________	
                
HOLDER 
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:

                Title:

              
	 	 

      

      

        
          
            
            

          

          
            12Unassociated Document

    EXHIBIT
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”)
      is
      made and entered into by and between Debt Resolve, Inc., a Delaware corporation,
      with its
      principal executive offices
      located
      at 707 Westchester Avenue, Suite
      L7,
      White
      Plains, New York 10604 (the “Company”),
      and
      each of the purchasers listed on Schedule
      A
      hereto
      (the “Purchasers”),
      and
      is dated with respect to each of the Purchasers as of the date noted on each
      such Purchaser’s counterpart signature page.

    

    WHEREAS,
      the
      Company and the Purchasers are executing and delivering this Agreement in
      reliance upon the exemption from securities registration afforded by the rules
      and regulations as promulgated by the United States Securities and Exchange
      Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”);

    

    WHEREAS,
      the
      Purchasers, severally and not jointly, desire to purchase and the Company
      desires to issue and sell to the Purchasers, in each case upon the terms and
      subject to the conditions set forth in this Agreement (i) 15% senior secured
      convertible promissory notes, or 15% senior secured promissory notes in the
      case
      of one Purchaser, of the Company, in the form attached hereto as Exhibit
      A,
      in the
      aggregate principal face amount of up to Four Million Dollars ($4,000,000),
      which includes a $1,000,000 over-allotment option (together with any note(s)
      issued in replacement thereof or as a dividend thereon or otherwise with respect
      thereto in accordance with the terms thereof, the “Notes”),
      a
      portion of which Notes is convertible into shares of common stock, par value
      $.001 per share, of the Company (the “Common
      Stock”),
      and
      (ii) warrants, in the form attached hereto as Exhibit
      B,
      to
      purchase up to an aggregate of 13,333,334 shares of Common Stock, which includes
      up to 3,333,334 shares if the over-allotment option is exercised (the
“Warrants”);

    

    WHEREAS,
      each
      Purchaser wishes to purchase, upon the terms and conditions stated in this
      Agreement, such face value amount of Notes and Warrants exercisable into such
      number of shares of Common Stock as is set forth immediately next to such
      Purchaser’s name on Schedule
      A;
      

    

    WHEREAS,
      simultaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement, in the
      form
      attached hereto as Exhibit
      C
      (the
“Registration
      Rights Agreement”)
      pursuant to which the Company has agreed to provide to the Purchasers certain
      registration rights under the 1933 Act and the rules and regulations promulgated
      thereunder, and applicable state securities laws;

    

    WHEREAS,
      simultaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Security Agreement, in the form attached
      hereto as Exhibit
      D
      (the
“Security
      Agreement”)
      pursuant to which the Company has agreed to collateralize the Notes with a
      first
      lien on all the assets of the Company and any of its Subsidiaries (as defined
      herein);

     

    WHEREAS,
      simultaneously with the execution and delivery of this Agreement, the
      co-chairmen of the Company and the parties hereto are executing and delivering
      a
      Stock Pledge Agreement, in the form attached hereto as Exhibit
      E
      (the
“Stock
      Pledge Agreement”)
      pursuant to which the co-chairman have agreed to collateralize the Notes with
      a
      pledge of the Common Stock held by them; and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS,
      simultaneously with the execution and delivery of this Agreement,
      the
      Purchasers are executing and delivering a Lock-Up Agreement, in the form
      attached hereto as Exhibit
      F
      (the
“Lock-Up
      Agreement”
      and,
      collectively with this Agreement, the confidential private placement term sheet
      booklet delivered to the Purchasers by the Company, as supplemented or amended
      from time to time, the Note, the Warrant, the Registration Rights Agreement,
      the
      Security Agreement and the Stock Pledge Agreement, the “Transaction
      Documents”).

    

    NOW
      THEREFORE,
      in
      consideration of the foregoing and the representations, warranties, covenants
      and agreements herein contained, the Company and each of the Purchasers
      severally (and not jointly) hereby agree as follows:

     

    1.    Purchase
      and Sale of Notes and Warrants.

    

    (a) Purchase
      of Notes and Warrants.
      On the
      Closing Date (as defined below), the Company shall issue and sell to each
      Purchaser and each Purchaser severally agrees to purchase from the Company
      such
      principal face amount of Notes and number of Warrants as is set forth next
      to
      such Purchaser’s name on Schedule
      A
      hereto.

    

    (b) Form
      of Payment.
      On the
      Closing Date: (i) each
      Purchaser shall pay the purchase price for the Notes and Warrants to be issued
      and sold to it at the Closing (as defined below) (the “Purchase
      Price”)
      by
      wire transfer of immediately available funds to the Company, in accordance
      with
      the Company’s written wiring instructions, against delivery of the Notes with
      principal face amount and number of Warrants as is set forth next to such
      Purchaser’s name on Schedule
      A
      hereto,
      and (ii) the
      Company shall deliver such Notes duly executed on behalf of the Company, to
      such
      Purchaser, against delivery of such Purchase Price. The Purchase Price will
      equal the principal face amount of the Notes purchased. 

    

    (c) Closing
      Date.
      Subject
      to the satisfaction (or written waiver) of the conditions thereto set forth
      in
      Section 6 and Section 7 below, the date and time of the issuance and sale of
      the
      Notes and Warrants pursuant to this Agreement (the “Closing
      Date”)
      shall
      be 12:00 noon, New York City Time on the date noted on the subject Purchasers’
counterpart signature pages, or such other mutually agreed upon time. The
      closing of the transactions contemplated by this Agreement (the “Closing”)
      shall
      occur on the Closing Date at such location as may be agreed to by the parties
      and may be undertaken remotely by facsimile or other electronic
      transmission.

     

    2.     Representations
      and Warranties of the Purchasers. Each Purchaser severally (and not
      jointly) represents and warrants to the Company solely as to such Purchaser
      that:

     

    (a) Knowledge
      of Offering.
      The
      Purchaser learned of the Company’s private placement of the Notes and Warrants
      exclusively through the placement agent in the offering, with whom the Purchaser
      has a pre-existing relationship. The Purchaser did
      not
      learn of
      the Company’s private placement of the Notes and Warrants through any of the
      Company’s public filings with the SEC.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (b) Investment
      Purpose.
      As of
      the date hereof, the Purchaser is purchasing the Notes and any shares of Common
      Stock issuable upon conversion of the Notes or otherwise pursuant to this
      Agreement or the other Transaction Documents (such shares of Common Stock being
      collectively referred to herein as the “Conversion
      Shares”)
      and
      the Warrants and the shares of Common Stock issuable upon exercise thereof
      (the
“Warrant
      Shares”
and,
      collectively with the Notes, Warrants and Conversion Shares, the “Securities”)
      for
      its own account and not with a present view towards the public sale or
      distribution thereof, except pursuant to sales registered or exempted from
      registration under the 1933 Act; provided,
      however,
      that by
      making the representations herein, the Purchaser does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act, except as otherwise
      provided for in the Lock-Up Agreements.

    

    (c) Accredited
      Investor Status.
      The
      Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D promulgated under the 1933 Act (an “Accredited
      Investor”).

    

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

    

    (e) Information.
      The
      Purchaser and its advisors, if any, have been furnished with all materials
      relating to the business, finances and operations of the Company and materials
      relating to the offer and sale of the Securities which have been requested
      by
      the Purchaser or its advisors. The Purchaser and its advisors, if any, have
      been
      afforded the opportunity to ask questions of the Company. Notwithstanding the
      foregoing representations, neither such inquiries nor any other due diligence
      investigation conducted by Purchaser or any of its advisors or representatives
      shall modify, amend or affect Purchaser’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. The Purchaser
      has,
      in connection with his, her or its decision to purchase the Securities, not
      relied on completion of the Company’s contemplated initial public offering as
      set forth in the Registration Statement on Form SB-2 that the Company has
      previously filed with the SEC in connection therewith on September 30, 2005,
      and
      which was withdrawn on February 10, 2006, and this offering is not a part of
      that contemplated initial public offering.

    

    (f) No
      Governmental Review.
      The
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Securities.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    (g) Transfer
      or Resale.
      The
      Purchaser understands that: 

    

    (i) Except
      as
      provided in the Registration Rights Agreement, the sale or resale of all or
      any
      portion or component of the Securities has not been and is not being registered
      under the 1933 Act or any applicable state securities laws, and the all or
      any
      portion or component of Securities may not be transferred unless: 

    

    (A) the
      Securities are sold pursuant to an effective registration statement under the
      1933 Act,

    

    (B) the
      Purchaser shall have delivered to the Company, at the cost of the Company,
      a
      customary opinion of counsel that shall be in form, substance and scope
      reasonably acceptable to the Company, to the effect that the Securities to
      be
      sold or transferred may be sold or transferred pursuant to an exemption from
      such registration,

    

    (C) the
      Securities are sold or transferred to an “affiliate” (as defined in Rule 144
      promulgated under the 1933 Act (or a successor rule) (“Rule
      144”))
      of
      the Purchaser who agrees to sell or otherwise transfer the Securities only
      in
      accordance with this Section 2(f) and who is an Accredited Investor,

    

    (D) the
      Securities are sold pursuant to Rule 144, or 

    

    (E) the
      Securities are sold pursuant to Regulation S under the 1933 Act (or a successor
      rule) (“Regulation
      S”),
      

    

    and,
      in
      each case, the Purchaser shall have delivered to the Company, at the cost of
      the
      Company, a customary opinion of counsel, in form, substance and scope reasonably
      acceptable to the Company; 

    

    (ii) Any
      sale
      of such Securities made in reliance on Rule 144 may be made only in accordance
      with the terms of said Rule and further, if said Rule is not applicable, any
      resale of such Securities under circumstances in which the seller (or the person
      through whom the sale is made) may be deemed to be an underwriter (as that
      term
      is defined in the 1933 Act) may require compliance with some other exemption
      under the 1933 Act or the rules and regulations of the SEC thereunder;
      and

    

    (iii) neither
      the Company nor any other person is under any obligation to register such
      Securities under the 1933 Act or any state securities laws or to comply with
      the
      terms and conditions of any exemption thereunder (in each case, other than
      pursuant to the Registration Rights Agreement). 

    

    Notwithstanding
      the foregoing or anything else contained herein to the contrary, the Securities
      may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement. 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (h) Legends.
      The
      Purchaser understands that the Notes and Warrants and, until such time as the
      Conversion Shares and Warrant Shares have been registered under the 1933 Act
      as
      contemplated by the Registration Rights Agreement or otherwise may be sold
      pursuant to Rule 144 or Regulation S without any restriction as to the number
      of
      securities as of a particular date that can then be immediately sold, the
      Conversion Shares and Warrant Shares may bear a restrictive legend in
      substantially the following form (and a stop-transfer order may be placed
      against transfer of the certificates for such Securities):

    

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended. The securities may not be sold, transferred
      or assigned in the absence of an effective registration statement for the
      securities under said Act, or an opinion of counsel, in form, substance and
      scope customary for opinions of counsel in comparable transactions, that
      registration is not required under said Act or unless sold pursuant to Rule
      144
      or Regulation S under said Act.”

    

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of any Security upon which it
      is
      stamped, if, unless otherwise required by applicable state securities laws:
      (i)
      such Security is registered for sale under an effective registration statement
      filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
      Regulation S without any restriction as to the number of securities as of a
      particular date that can then be immediately sold or (ii) such holder provides
      the Company with a reasonable and customary opinion of counsel to the effect
      that a public sale or transfer of such Security may be made without registration
      under the 1933 Act. The Purchaser agrees to sell all Securities, including
      those
      represented by a certificate(s) from which the legend has been removed, in
      compliance with applicable prospectus delivery requirements, if
      any.

    

    (i) Authorization;
      Enforcement.
      Each
      Transaction Document to which the Purchaser is a party: (i) has been duly and
      validly authorized, (ii) has been duly executed and delivered on behalf of
      the
      Purchaser, and (iii) will constitute, upon execution and delivery by the
      Purchaser thereof and the Company, the valid and binding agreements of the
      Purchaser enforceable in accordance with their terms, except to the extent
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights and
      general principles of equity that restrict the availability of equitable or
      legal remedies.

    

    (j) Residency.
      The
      Purchaser is a resident of the jurisdiction set forth immediately below such
      Purchaser’s name on the signature pages hereto. 

     

    3.    Representations
      and Warranties of the Company. The Company hereby represents and
      warrants to each Purchaser as of the date hereof (unless the context
      specifically indicates otherwise) that:

     

    (a) Organization
      and Qualification.
      The
      Company and each of its Subsidiaries (as defined below), if any, is a
      corporation or other entity duly organized, validly existing and in good
      standing under the laws of the jurisdiction in which it is incorporated or
      organized, with full power and authority (corporate and other) to own, lease,
      use and operate its properties and to carry on its business as and where now
      owned, leased, used, operated and conducted. Schedule
      3(a)
      hereto
      sets forth a complete list of all of the Subsidiaries of the Company and the
      jurisdiction in which each is incorporated or organized. The Company and each
      of
      its Subsidiaries is duly qualified as a foreign corporation to do business
      and
      is in good standing in every jurisdiction in which its ownership or use of
      property or the nature of the business conducted by it makes such qualification
      necessary except where the failure to be so qualified or in good standing would
      not have a Material Adverse Effect. As used in this Agreement, the term
“Material
      Adverse Effect”
means
      any material adverse effect on the business, operations, assets, financial
      condition or prospects of the Company or its Subsidiaries, if any, taken as
      a
      whole, or on the transactions contemplated hereby or by the other Transaction
      Documents. As used in this Agreement, the term “Subsidiaries”
means
      any corporation or other entity or organization, whether incorporated or
      unincorporated, in which the Company owns, directly or indirectly, any equity
      or
      other ownership interest or otherwise controls through contract or
      otherwise.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (b) Authorization;
      Enforcement.
      (i) The
      Company has all requisite corporate power and authority to enter into and
      perform this Agreement and the other Transaction Documents and to consummate
      the
      transactions contemplated hereby and thereby and to issue the Securities, in
      accordance with the terms hereof and thereof, (ii) the execution and delivery
      of
      this Agreement and the other Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and thereby
      (including without limitation, the issuance of the Notes and the Warrants,
      and
      the issuance and reservation for issuance of the Conversion Shares and the
      Warrant Shares issuable upon conversion or exercise thereof) have been duly
      authorized by the Company’s Board of Directors and no further consent or
      authorization of the Company, its Board of Directors, or its stockholders,
      is
      required, (iii) each Transaction Document has been duly executed and delivered
      by the Company by its authorized representative, and such authorized
      representative is a true and official representative with authority to sign
      each
      Transaction Document and the other documents or certificates executed in
      connection herewith and bind the Company accordingly, and (iv) each Transaction
      Document constitutes, and upon execution and delivery thereof by the Company
      will constitute, a legal, valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms, except to the
      extent limited by applicable bankruptcy, insolvency, reorganization, moratorium
      or other laws of general application affecting enforcement of creditors’ rights
      and general principles of equity that restrict the availability of equitable
      or
      legal remedies. The Company is proposing sell Notes and Warrants to certain
      other accredited investors pursuant to the Transaction Documents.

    

    (c) Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of: (i)
      50,000,000 shares of Common Stock, of which 29,703,900 shares are issued and
      outstanding, 900,000 shares are reserved for issuance pursuant to the Company’s
      2005 Incentive Compensation Plan, and 18,924,520 shares are reserved for
      issuance pursuant to securities (other than the Notes and Warrants) exercisable
      for, or convertible into or exchangeable for shares of Common Stock; and (ii)
      10,000,000 shares of preferred stock, of which no shares are issued and
      outstanding. All of such outstanding shares of capital stock are, or upon
      issuance will be, duly authorized, validly issued, fully paid and nonassessable.
      All Conversion Shares and Warrant Shares will be duly reserved for future
      issuance. No shares of capital stock of the Company are subject to preemptive
      rights or any other similar rights of the stockholders of the Company or any
      mortgage, lien, title claim, assignment, encumbrance, security interest, adverse
      claim, contract of sale, restriction on use or transfer or other defect of
      title
      of any kind (each, a “Lien”)
      imposed through the actions or failure to act of the Company. Except as
      disclosed in the SEC Documents: (i) there are no outstanding options, warrants,
      scrip, rights to subscribe for, puts, calls, rights of first refusal,
      agreements, understandings, claims or other commitments or rights of any
      character whatsoever relating to, or securities or rights convertible into
      or
      exchangeable for any shares of capital stock of the Company or any of its
      Subsidiaries, 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, (ii) except for the registration obligations with
      respect to the Company’s April 2005 and June/September 2005 private financing
      securities, there are no agreements or arrangements under which the Company
      or
      any of its Subsidiaries is obligated to register the sale of any of its or
      their
      securities under the 1933 Act (except the Registration Rights Agreement) and
      (iii) except for the anti-dilution provisions of the Company’s April 2005 and
      June/September 2005 private financing securities, there are no anti-dilution
      or
      price adjustment provisions contained in any security issued by the Company
      (or
      in any agreement providing rights to security holders) that will be triggered
      by
      the issuance of the Notes, the Warrants, the Conversion Shares or the Warrant
      Shares, and the Company is not currently contemplating any issuances of its
      debt
      or equity securities which would trigger the anti-dilution or price adjustment
      provisions contained in the Notes. The Certificate of Incorporation of the
      Company as in effect on the date hereof (“Certificate
      of Incorporation”),
      the
      Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      all securities convertible into or exercisable for Common Stock of the Company
      and the material rights of the holders thereof in respect thereto are as
      described in or filed as exhibits to the SEC Documents. 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d) Issuance
      of Shares.
      The
      Conversion Shares and Warrant Shares will be duly authorized and reserved for
      issuance and, upon conversion of the Notes and exercise of the Warrants in
      accordance with their respective terms, will be validly issued, fully paid
      and
      non-assessable, and free from all taxes or Liens with respect to the issue
      thereof and shall not be subject to preemptive rights or other similar rights
      of
      stockholders of the Company.

    

    (e) Acknowledgment
      of Dilution.
      The
      Company understands and acknowledges the potentially dilutive effect to the
      Common Stock upon the issuance of the Conversion Shares and the Warrant Shares
      upon conversion of the Notes or exercise of the Warrants. The Company further
      acknowledges that its obligation to issue Conversion Shares and Warrant Shares
      upon conversion of the Notes or exercise of the Warrants in accordance with
      this
      Agreement, the Notes and the Warrants is absolute and unconditional regardless
      of the dilutive effect that such issuance may have on the ownership interests
      of
      other stockholders of the Company.

    

    (f) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the other Transaction
      Documents by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby (including, without limitation, the issuance
      and
      reservation for issuance of the Conversion Shares and the Warrant Shares) will
      not: (i) conflict with or result in a violation of any provision of the
      Certificate of Incorporation or By-laws or (ii) violate or conflict with, or
      result in a breach of any provision of, or constitute a default (or an event
      which with notice or lapse of time or both could become a default) under, or
      give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture, patent, patent license or instrument
      to which the Company or any of its Subsidiaries is a party, except for possible
      violations, conflicts or defaults as would not, individually or in the
      aggregate, have a Material Adverse Effect, or (iii) result in a violation of
      any
      law, rule, regulation, order, judgment or decree (including federal and state
      securities laws and regulations and regulations of any self-regulatory
      organizations to which the Company or its securities are subject) 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
      any of its Subsidiaries is in violation of its Certificate of Incorporation,
      By-laws or other organizational documents. Neither the Company nor any of its
      Subsidiaries is in default (and no event has occurred which with notice or
      lapse
      of time or both could put the Company or any of its Subsidiaries in default)
      under, and neither the Company nor any of its Subsidiaries has taken any action
      or failed to take any action that would 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 by which any property or assets of the Company or any of its
      Subsidiaries is bound or affected, except for possible defaults as would not,
      individually or in the aggregate, have a Material Adverse Effect. The businesses
      of the Company and its Subsidiaries are not being conducted in violation of
      any
      law, rule ordinance or regulation of any governmental entity, except for
      possible violations which would not, individually or in the aggregate, have
      a
      Material Adverse Effect. Except as required under the 1933 Act, the 1934 Act
      (as
      defined below) 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, governmental agency, regulatory agency, self
      regulatory organization or stock market or any third party in order for it
      to
      execute, deliver or perform any of its obligations under this Agreement or
      any
      Transaction Document in accordance with the terms hereof or thereof or to issue
      and sell the Notes in accordance with the terms hereof and to issue the
      Conversion Shares upon conversion of the Notes. Except as disclosed on
Schedule
      3(f)
      hereto,
      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. 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (g) SEC
      Documents; Financial Statements.
      Except
      as disclosed on Schedule
      3(g)
      attached
      hereto, the Company has timely filed all reports, schedules, forms, statements
      and other documents required to be filed by it with the SEC pursuant to the
      reporting requirements of the Securities Exchange Act of 1934, as amended (the
      “1934
      Act”)
      (all
      of the foregoing and all other documents filed with the SEC prior to the date
      hereof and all exhibits included therein and financial statements and schedules
      thereto and documents incorporated by reference therein, being hereinafter
      referred to herein as the “SEC
      Documents”).
      The
      SEC Documents are in the form available to the public via the SEC’s EDGAR
      system. As of their respective dates, the SEC Documents complied in all material
      respects with the requirements of the 1934 Act and the rules and regulations
      of
      the SEC promulgated thereunder applicable to the SEC Documents, and none of
      the
      SEC Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. None of the
      statements made in any such SEC Documents is, or has been, required to be
      amended or updated under applicable law (except for such statements as have
      been
      amended or updated in subsequent filings prior the date hereof). As of their
      respective dates, the financial statements of the Company included in the SEC
      Documents 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
      United States 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 not include footnotes or may be
      condensed or summary statements) and fairly present in all material respects
      the
      consolidated financial position of the Company and its consolidated Subsidiaries
      as of the dates thereof and the consolidated results of their operations and
      cash flows for the periods then ended (subject, in the case of unaudited
      statements, to normal year-end audit adjustments). Except as set forth in the
      financial statements of the Company included in the SEC Documents, the Company
      has no liabilities, contingent or otherwise, other than: (i) liabilities
      incurred in the ordinary course of business subsequent to December 31, 2005
      and
      (ii) obligations under contracts and commitments incurred in the ordinary course
      of business and not required under generally accepted accounting principles
      to
      be reflected in such financial statements, which, individually or in the
      aggregate, are not material to the financial condition or operating results
      of
      the Company.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (h) Absence
      of Certain Changes.
      Except
      as set forth in the SEC Documents or on Schedule
      3(h)
      attached
      hereto, since December 31, 2005, there has been no material adverse change
      and
      no material adverse development in the assets, liabilities, business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or any of its Subsidiaries. Without limiting the foregoing and
      except as set forth in the SEC Documents, neither the Company nor any Subsidiary
      has, since December 31, 2005:

    

    (i) issued
      any stock, bonds or other corporate securities or any rights, options or
      warrants with respect thereto, except as contemplated hereby and in the other
      Transaction Documents;

     

    (ii) borrowed
      any amount or incurred or become subject to any liabilities (absolute or
      contingent) except trade payables incurred in the ordinary
      course of business;

     

    (iii) discharged
      or satisfied any Lien or paid any obligation or liability (absolute or
      contingent), other than current
      liabilities paid in the ordinary course of business consistent with past
      practices;

     

    (iv) declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or
      redeemed, or made any agreements so to purchase or redeem, any shares of its
      capital stock;

     

    (v) mortgaged
      or pledged any of its assets, tangible or intangible, or subjected them to
      any
      Lien;

     

    (vi) sold,
      assigned or transferred any other tangible assets, 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (vii) canceled
      any debts or claims;

     

    (viii) sold,
      assigned or transferred any intangible property (including any Intellectual
      Property, as defined below) or disclosed any proprietary confidential
      information to any persons except to potential customers, investors or corporate
      partners or
      collaborators in the ordinary course of business consistent with past practices
      (with all of such disclosures being done in a manner consistent with applicable
      securities laws);

     

    (ix) suffered
      any substantial losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the
      loss of
      any material amount of prospective business;

     

    (x) made
      any
      changes in employee compensation in excess of $25,000;

     

    (xi) except
      for the Company’s new 401K plan with 3% matching Company contribution that went
      into effect January 1, 2006, adopted or amended any employee benefits or plan
      relating thereto;

     

    (xii) made
      capital expenditures or commitments therefor that aggregate in excess of $25,000
      for the Company and its Subsidiaries;

     

    (xiii) entered
      into any other material transaction other than in the ordinary course of
      business;

     

    (xiv) made
      charitable contributions or pledges in excess of $5,000 in the
      aggregate;

     

    (xv) suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xvi) experienced
      any union organizing effort or strike problems with labor or management in
      connection with the terms and conditions of their
      employment; or

     

    (xvii) effected
      or agreed to do any of the foregoing.

     

    (i) Absence
      of Litigation.
      There
      is no action, suit, claim, proceeding, inquiry or investigation before or by
      any
      court, public board, government agency, self-regulatory organization or body
      pending or, to the knowledge of the Company or any of its Subsidiaries,
      threatened against or affecting the Company or any of its Subsidiaries, or
      their
      respective businesses, properties or assets or their officers or directors
      in
      their capacity as such, that would have a Material Adverse Effect. The Company
      and its Subsidiaries are unaware of any facts or circumstances which might
      give
      rise to any of the foregoing. Schedule
      3(i)
      attached
      hereto contains a complete list and summary description of any pending or
      threatened proceeding against or affecting the Company or any of its
      Subsidiaries, or their respective businesses, properties or assets or their
      officers or directors in their capacity as such, without regard to whether
      it
      would have a Material Adverse Effect.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    (j) Intellectual
      Property.
      Schedule
      3(j)
      attached
      hereto sets forth a complete and accurate listing of the Company’s and each of
      its Subsidiaries’ patents, patent applications, provisional patents, trademarks,
      service marks, trade names, trademark registrations, service mark registrations,
      copyrights, licenses, formulae, mask works, customer lists, internet domain
      names, know-how and other intellectual property, including trade secrets and
      other unpatented and/or unpatentable proprietary or confidential information,
      systems, procedures or registrations or applications relating to the same
      (collectively, “Intellectual
      Property”).
      The
      Company owns valid title, free and clear of any Liens, or possesses the
      requisite valid and current licenses or rights, free and clear of any Liens,
      to
      use all Intellectual Property in connection with the conduct its business as
      now
      operated (and, except as set forth in Schedule
      3(j)
      hereto,
      to the best of the Company’s knowledge, as presently contemplated to be operated
      in the future). There is no claim or action by any person pertaining to, or
      proceeding pending, or to the Company’s knowledge threatened, which challenges
      the right of the Company or of a Subsidiary with respect to any Intellectual
      Property necessary to enable it to conduct its business as now operated (and,
      except as set forth in Schedule
      3(j)
      hereto,
      to the best of the Company’s knowledge, as presently contemplated to be operated
      in the future). To the best of the Company’s knowledge, the Company’s or its
      Subsidiaries’ current and intended products, services and processes do not
      infringe on any Intellectual Property or other rights held by any person, and
      the Company is unaware of any facts or circumstances which might give rise
      to
      any of the foregoing. The Company has not received any notice of infringement
      of, or conflict with, the asserted rights of others with respect to the
      Intellectual Property. The Company and each of its Subsidiaries have taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of their Intellectual Property.

    

    (k) No
      Materially Adverse Contracts, 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. Neither the Company nor any of its
      Subsidiaries is a party to any contract or agreement which has or is reasonably
      expected to have a Material Adverse Effect.

    

    (l) Tax
      Matters.
      Except
      as set forth on Schedule
      3(l)
      hereto,
      the Company and each of its Subsidiaries has made or filed all federal, state
      and foreign income and all other tax returns, reports and declarations required
      by any jurisdiction to which it is subject and 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 provisions
      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. The Company has not executed a waiver with respect to the statute of
      limitations relating to the assessment or collection of any foreign, federal,
      state or local tax. Except as set forth on Schedule
      3(l)
      hereto,
      the Company has not received notice that any of its tax returns is presently
      being audited by any taxing authority.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (m) Certain
      Transactions.
      Except
      as set forth on Schedule
      3(m)
      attached
      hereto or in the SEC Documents, there are no loans, leases, royalty agreements
      or other transactions between: (i) the
      Company or any of its Subsidiaries or any of their respective customers or
      suppliers, and (ii) any officer, employee, consultant or director of the Company
      or any person owning five percent (5%) or more of the capital stock of the
      Company or five percent (5%) or more of the ownership interests of the Company
      or any of its Subsidiaries or any member of the immediate family of such
      officer, employee, consultant, director, stockholder or owner or any corporation
      or other entity controlled by such officer, employee, consultant, director,
      stockholder or owner, or a member of the immediate family of such officer,
      employee, consultant, director, stockholder or owner.

    

    (n) Disclosure.
      All
      information relating to or concerning the Company or any of its Subsidiaries,
      officers, directors, employees, customers or clients (including, without
      limitation, all information regarding the Company’s internal financial
      accounting controls and procedures): (i) set forth in this Agreement or any
      other Transaction Document and/or (ii) as disclosed in any SEC Document or
      exhibit or certification thereto and/or (iii) as provided to the Purchasers
      pursuant to Section 2(d) hereof, is true and correct in all material respects
      and the Company has not omitted to state any material fact necessary in order
      to
      make the statements made herein or therein, in light of the circumstances under
      which they were made, not misleading. 

    

    (o) No
      General Solicitation.
      Neither
      the Company nor any person participating on the Company’s behalf in the
      transactions contemplated hereby has
      conducted any “general solicitation,” as such term is defined in Regulation D
      promulgated under the 1933 Act, with respect to any of the Securities being
      offered hereby.

    

    (p) 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 in any security
      or
      solicited any offers to buy any security under circumstances that would require
      registration under the 1933 Act of the issuance of the Securities to the
      Purchasers. The issuance of the Securities to the Purchasers will not be
      integrated with any other issuance of the Company’s securities (past, current or
      future) for purposes of any stockholder approval provisions applicable to the
      Company or its securities. 

    

    (q) No
      Brokers.
      Except
      as set forth in Schedule
      3(q)
      hereto,
      the Company has taken no action which would give rise to any claim by any person
      for brokerage commissions, transaction fees or similar payments relating to
      this
      Agreement or the transactions contemplated hereby. 

    

    (r) Permits;
      Compliance.
      The
      Company and each of its Subsidiaries is in possession of all franchises, grants,
      authorizations, licenses, permits, easements, variances, exemptions, consents,
      certificates, approvals and orders necessary to own, lease and operate its
      properties and to carry on its business as it is now being conducted
      (collectively, the “Company
      Permits”),
      and
      there is no action pending or, to the knowledge of the Company, threatened
      regarding suspension or cancellation of any of the Company Permits. Neither
      the
      Company nor any of its Subsidiaries is in conflict with, or in default or
      violation of, any of the Company Permits, except for any such conflicts,
      defaults or violations which, individually or in the aggregate, would not
      reasonably be expected to have a Material Adverse Effect. Since December 31,
      2005, neither the Company nor any of its Subsidiaries has received any
      notification with respect to possible conflicts, defaults or violations of
      applicable laws, except for notices relating to possible conflicts, defaults
      or
      violations, which conflicts, defaults or violations would not have a Material
      Adverse Effect.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (s) ERISA.
      Neither
      the Company nor any of its Subsidiaries has made or currently makes any
      contributions to any employee pension benefit plan for its employees which
      plan
is
      subject to the Employee
      Retirement Income Security Act of l974, as amended from time to time
      (“ERISA”).

    

    (t) Title
      to Property.
      The
      Company and its Subsidiaries hold no title in fee simple to any real property.
      The Company and its Subsidiaries hold good and marketable title to all personal
      property owned by them which is material to the business of the Company and
      its
      Subsidiaries, in each case free and clear of all Liens, except such as are
      described on Schedule
      3(t)
      attached
      hereto. Any real property and facilities held under lease by the Company and
      its
      Subsidiaries are held by them under valid, subsisting and enforceable
      leases.

    

    (u) Insurance.
      The
      Company and each of its Subsidiaries, officers and directors, assets and
      properties 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
      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 have a Material Adverse Effect. The Company has provided to Purchaser,
      upon Purchaser’s request, true and correct copies of all policies relating to
      directors’ and officers’ liability coverage, errors and omissions coverage, and
      commercial general liability coverage.

    

    (v) Internal
      Accounting Controls.
      The
      Company and has not received, orally or in writing, any adverse notification
      (including any “management letters”) from its auditors relating to the Company’s
      internal financial controls and procedures.

    

    (w) Books
      and Records.
      The
      books of account, ledgers, order books, records and documents of the Company
      and
      its subsidiaries accurately and completely reflect
      all material information relating to the business of the Company and its
      Subsidiaries, the location and collection of their respective assets, and the
      nature of all transactions giving rise to the obligations or accounts receivable
      of the Company or any of its Subsidiaries.

    

    (x) FCPA
      Matters.
      Neither
      the Company, nor any of its Subsidiaries, nor any director, officer, agent,
      employee or other person acting on behalf of the Company or any Subsidiary
      has,
      in the course of his or her actions for, or on behalf of, the Company: (i)
      used
      any corporate funds for any unlawful contribution, gift, entertainment or other
      unlawful expenses relating to political activity, (ii) made any direct or
      indirect unlawful payment to any foreign or domestic government official or
      employee from corporate funds, (iii) violated or is in violation of any
      provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or
      (iv)
      made any bribe, rebate, payoff, influence payment, kickback or other unlawful
      payment to any foreign or domestic governmental or private official or
      person.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (y) Seniority
      of Notes.
      Upon
      issuance, the Notes will rank senior to any current Indebtedness of the Company
      except for the Company’s previously issued 7% Senior Convertible Promissory
      Notes which shall rank senior to the Notes. Except for the Company’s previously
      issued 7% Senior Convertible Promissory Notes, the Company currently has no
      senior or secured Indebtedness outstanding. As used herein, the term
“Indebtedness”
means:
      (i) all
      obligations for borrowed money, (b) all obligations evidenced by bonds,
      debentures, notes, or other similar instruments and all reimbursement or other
      obligations in respect of letters of credit or other financial products, (c)
      all
      payment obligations (other than trade payables incurred in the ordinary course
      of business 

    

    (z) Assumptions
      or Guaranties of Indebtedness of Other Persons.
      Except
      as set forth on Schedule
      3(z)
      attached
      hereto, neither the Company nor any of its Subsidiaries has assumed, guaranteed,
      endorsed, or otherwise
      become directly or contingently liable on, any Indebtedness or any other
      agreement of any other person.

    

    (aa) Investments
      in Other Persons.
      Except
      as set forth in Schedule
      3(aa)
      attached
      hereto, neither the Company nor any of its Subsidiaries has made any loan or
      advance to any
      person which is outstanding, nor is it committed or obligated to make any such
      loan or advance, nor does the Company or any of its Subsidiaries own any capital
      stock, assets compromising the business of, obligations of, or any equity,
      ownership or other interest in, any person or entity. 

    

    (bb) No
      Investment Company.
      The
      Company is not, and upon the issuance and sale of the Securities as contemplated
      by this Agreement will not be an “investment company” required to be registered
      under the Investment Company Act of 1940 (an “Investment
      Company”).
      The
      Company is not controlled by an Investment Company.

    

    (cc) Title
      to Collateral; Priority of Liens.
      The
      Company has good, indefeasible and marketable title to all of the Collateral
      (as
      defined in the Security Agreement), free and clear of all Liens. The Company
      has
      paid or discharged all lawful claims that are due which, if unpaid, might become
      a Lien against or encumbrance upon any of the Collateral. The Liens granted
      pursuant to the Security Agreement are first priority liens and security
      interests in the Collateral.

    

    (dd) No
      Default.
      As of
      the date hereof, except as set forth in the SEC Documents, there does not exist
      any Event of Default (as defined in the Notes).

     

    4.    Covenants.
      In
      addition to the other agreements and covenants set forth herein, the applicable
      parties hereto hereby covenant as follows:

     

    (a) Stop
      Orders.
      The
      Company will advise each Purchaser, and Capital
      Growth Financial, LLC and Maxim Group LLC (together, the “Placement
      Agents”),
      promptly
      after it receives notice of issuance by the SEC, any state securities commission
      or any other regulatory authority of any stop order or of any order preventing
      or suspending any offering of the Securities, or of the suspension of the
      qualification of the Common Stock of the Company for offering or sale in any
      jurisdiction, or the initiation of any proceeding for any such
      purpose.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    (b) Form
      D; Blue Sky Laws.
      The
      Company agrees to file a Form D with respect to the Securities as required
      under
      Regulation D and to provide a copy thereof to each Purchaser 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 Securities
      for sale to the Purchasers at the applicable closing pursuant to this Agreement
      under applicable securities or “blue sky” laws of the states of the United
      States (or to obtain an exemption from such qualification), and shall provide
      evidence of any such action so taken to each Purchaser and to the Placement
      Agents on or prior to the Closing Date.

    

    (c) Reporting
      Status. So
      long
      as any Purchaser beneficially owns any of the Securities, the Company shall
      use
      its best efforts timely file all reports required to be filed with the SEC
      pursuant to the 1934 Act, and the Company shall not terminate its status as
      an
      issuer required to file reports under the 1934 Act even if the 1934 Act or
      the
      rules and regulations thereunder would permit such termination. Following the
      consummation by the Company of any underwritten public offering of its
      securities occurring after the date hereof, the Company shall file all reports
      required to be filed by the Company with the SEC in a timely manner so as to
      become eligible, and thereafter to maintain its eligibility, if any, for the
      use
      of Form S-3. The Company shall issue a press release and file a Form 8-K
      describing the materials terms of the transaction contemplated hereby as soon
      as
      practicable following the Closing Date but in no event more than three (3)
      business days of the Closing Date, which press release shall be subject to
      prior
      review by the Purchasers and the Placement Agents. The Company agrees that
      such
      press release shall not disclose the name of the Purchasers unless expressly
      consented to in writing by the Purchasers or unless required by applicable
      law
      or regulation, and then only to the extent of such requirement.

    

    (d) Use
      of
      Proceeds.
      The
      Company shall use the proceeds from the sale of the Notes in the manner set
      forth in Schedule
      4(d)
      attached
      hereto and made a part hereof and shall not, directly or indirectly, without
      the
      prior written consent of the Placement Agents, use such proceeds for any loan
      to
      or investment in any other corporation, partnership, enterprise or other person,
      including any director or officer of the Company (except in connection with
      its
      currently existing direct or indirect Subsidiaries).

    

    (e) Expenses.
      At the
      Closing, the Company shall reimburse the Placement Agents for reasonable,
      out-of-pocket expenses incurred by it in connection with the negotiation,
      preparation, execution, delivery and performance of the Transaction Documents,
      including, without limitation, reasonable attorneys’ fees and expenses and
      transfer agent fees, and the commissions or other compensation due and owing
      to
      the Placement Agents as set forth in the agreements concerning the same by
      and
      between the Company and Capital Growth Financial, LLC, dated January 20, 2006,
      and by and between the Company and Maxim Group LLC, dated March 10, 2006. In
      addition, at the Closing, the Company will pay the Purchaser of the 15% senior
      secured promissory notes a structuring fee of $28,000 and $10,000 to cover
      such
      Purchaser’s investment costs and expenses. The Company shall pay these fees
      directly out of the proceeds received at the Closing.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (f) Authorization
      and Reservation of Shares.
      Within
      30 days of closing and at all times thereafter, the Company shall have
      authorized, and reserved for the purpose of issuance, a sufficient number of
      shares of Common Stock to provide for the full conversion or exercise of the
      outstanding Notes and Warrants and issuance of the Conversion Shares and Warrant
      Shares in connection therewith (based on the Conversion Price of the Notes
      or
      Exercise Price of the Warrants in effect from time to time) and as otherwise
      required by the Notes and Warrants (collectively, the “Reserved
      Amount”).
      The
      Company shall not reduce the number of shares of Common Stock reserved for
      issuance upon conversion of Notes and exercise of the Warrants. If at any time
      the number of shares of Common Stock authorized and reserved for issuance
      (“Authorized
      and Reserved Shares”)
      is
      below the Reserved Amount, the Company will promptly take all corporate action
      necessary to authorize and reserve a sufficient number of shares, including,
      without limitation, calling a special meeting of stockholders to authorize
      additional shares to meet the Company’s obligations under this Section 4(f), in
      the case of an insufficient number of authorized shares, obtain stockholder
      approval of an increase in such authorized number of shares, and voting the
      shares of the Company’s officer’s and directors in favor of an increase in the
      authorized shares of the Company to ensure that the number of authorized shares
      is sufficient to meet the Reserved Amount. The Company shall use its best
      efforts to obtain such stockholder approval within thirty (30) days following
      the date on which the number of Reserved Amount exceeds the Authorized and
      Reserved Shares. 

     

    (g) Corporate
      Existence.
      So long
      as a Purchaser beneficially owns any Notes or Warrants, the Company shall
      maintain its corporate existence and shall not sell all or substantially all
      of
      the Company’s assets, except in the event of a merger or consolidation or sale
      of all or substantially all of the Company’s assets, where the surviving or
      successor entity in such transaction: (i) assumes the Company’s obligations
      hereunder and under the agreements and instruments entered into in connection
      herewith and (ii) is a publicly traded corporation whose Common Stock is listed
      for trading on the Over the Counter Bulletin Board, Nasdaq National Market,
      Nasdaq Capital Market, New York Stock Exchange or American Stock
      Exchange.

     

    (h) Sarbanes-Oxley
      Matters.
      When
      required to do so, the Company will comply with any and all applicable
      requirements of the Sarbanes-Oxley Act of 2002 that are effective for the
Company,
      and any and all applicable rules and regulations promulgated by the SEC
      thereunder. The Company shall implement such programs and shall take such steps
      reasonably necessary to provide for its future compliance (not later than the
      relevant statutory and regulatory deadline therefor) with all provisions of
      Section 404 of the Sarbanes-Oxley Act that shall become applicable to the
      Company.

     

    (i) Accounting
      Changes.
      Make,
      or permit any Subsidiary to make, any change in their accounting treatment
      or
      financial reporting practices except as required or permitted by generally
      accepted accounting principles in effect from time to time

     

    (j) ERISA.
      The
      Company shall not: (i) terminate any plan (“Plan”)
      of a
      type described in Section 402l(a) of ERISA in respect of which the Company
      is an
“employer” as defined in Section 3(5) of ERISA so as to result in any material
      liability to the Pension Benefit Guaranty Corporation (the “PBGC”)
      established pursuant to Subtitle A of Title IV of ERISA; (ii) engage in or
      permit any person to engage in any “prohibited transaction” (as defined in
      Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954,
      as
      amended) involving any Plan which would subject the Company to any material
      tax,
      penalty or other liability; (iii) incur or suffer to exist any material
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
      or not waived, involving any Plan; or (iv) allow or suffer to exist any event
      or
      condition, which presents a material risk of incurring a material liability
      to
      the PBGC by reason of termination of any Plan.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (k) Indebtedness.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, without the prior written approval
      of a majority in interest of the Purchasers, the Company and each of its
      Subsidiaries will not: (i) incur any new Indebtedness in excess of $500,000
      in
      the aggregate at any one time outstanding (except for Indebtedness incurred
      solely for the financing of the purchase of debt portfolios by the Company
      or
      any of its Subsidiaries), provided,
      however,
      that
      any such new Indebtedness shall be junior to the Notes, unsecured, expressly
      subordinated to the Notes and maturing beyond the term of the Notes;
      (ii) (A)
      prepay any Indebtedness or (B) enter into or modify any agreement as a result
      of
      which the terms of payment of any Indebtedness are amended or modified in a
      manner which would accelerate its payment; or (iii) allow any Lien, except
      as
      contemplated by the Security Agreement, to be placed on any assets of the
      Company and any of its Subsidiaries (except
      for any Lien on debt portfolios purchased by the Company or any of its
      Subsidiaries which Lien results solely as a result of the financing of any
      such
      debt portfolio purchase).

     

    (l) Redemptions
      and Dividends.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, without the prior written approval
      of a majority in interest of the Purchasers (which majority in interest must
      include the Purchaser of the 15% senior secured promissory notes as long as
      the
      15% senior secured promissory notes remain outstanding and unpaid), the Company
      shall not repurchase,
      redeem, or declare or pay any cash dividend or distribution on, any shares
      of
      capital stock of the Company.

     

    (m) No
      Integration.
      The
      Company shall not make any offers or sales of any security (other than the
      Securities) under circumstances that would require registration of the
      Securities being offered or sold hereunder under the 1933 Act or cause the
      offering of the Securities to be integrated with any other offering of
      securities by the Company for the purpose of any stockholder approval provision
      applicable to the Company or its securities.

     

    (n) Insurance.
      Subsequent to the Closing, each of the Company and its Subsidiaries will keep
      their respective assets which are of an insurable character insured by
      financially sound and reputable institutional insurers against loss or damage
      by
      fire, explosion and other risks customarily insured against by companies in
      similar business similarly situated as the Company and its Subsidiaries, and
      the
      Company and its Subsidiaries will maintain, with financially sound and reputable
      institutional insurers, insurance against other hazards and risks and liability
      to persons and property to the extent and in the manner which the Company
      reasonably believes is customary for companies in similar business similarly
      situated as the Company and its Subsidiaries.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (o) Key
      Man Insurance.
      For so
      long as any Purchaser holds any of the Securities, the Company shall maintain
      in
      full force and effect its currently held “key man” life insurance (with the
      Company as sole beneficiary) on the life of James D. Burchetta and shall not
      reduce the amount of such insurance, change the beneficiary thereof or make
      any
      other material changes thereto.

     

    (p) Capital
      Expenditures.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, without the prior written approval
      of a majority in interest of the Purchasers (which majority in interest must
      include the Purchaser of the 15% senior secured promissory notes as long as
      the
      15% senior secured promissory notes remain outstanding and unpaid), the Company
      shall not expend in the aggregate for the Company and all its Subsidiaries
      in
      excess of $50,000 in any fiscal year for Capital Expenditures (as defined
      below). For purposes of the foregoing, Capital Expenditures shall include
      payments made on account of any deferred purchase price or on account of any
      indebtedness incurred to finance any such purchase price. “Capital
      Expenditures”
shall
      mean for any period, the aggregate amount of all payments made by any person
      directly or indirectly for the purpose of acquiring, constructing or maintaining
      fixed assets, real property or equipment which, in accordance with generally
      accepted accounting principles, would be added as a debit to the fixed asset
      account of the Company or any Subsidiary. 

     

    (q) Lease
      Payments.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, without the prior written approval
      of a majority in interest of the Purchasers (which majority in interest must
      include the Purchaser of the 15% senior secured promissory notes as long as
      the
      15% senior secured promissory notes remain outstanding and unpaid), the Company
      shall not expend in the aggregate for the Company and its Subsidiaries in excess
      of $50,000 in any fiscal year for the lease, rental or hire of real or personal
      property pursuant to any rental agreement therefor, whether an operating lease
      or otherwise.

     

    (r) Nature
      of Business.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, without the prior written approval
      of a majority in interest of the Purchasers, the Company shall not materially
      alter the nature of the Company’s business or engage in any business other than
      the business engaged in or proposed to be engaged in on the date of this
      Agreement.

    

    (s) Intellectual
      Property.
      For
      so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, the Company shall and
      each
      of its Subsidiaries shall maintain in full force and effect its existence,
      rights and franchises and all licenses and other rights to use Intellectual
      Property owned or possessed by it and reasonably deemed to be necessary to
      the
      conduct of its business.

    

    (t) Properties.
      For
      so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, each
      of
      the Company and each of its Subsidiaries will keep its owned or leased
      properties and other assets in good repair, working order and condition,
      reasonable wear and tear excepted, and from time to time make all needful and
      proper repairs, renewals, replacements, additions and improvements thereto;
      and
      each of the Company and each of its Subsidiaries will at all times comply with
      each provision of all leases to which it is a party or under which it occupies
      property if the breach of such provision could, either individually or in the
      aggregate, reasonably be expected to have a Material Adverse
      Effect.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (u) Taxes.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, the Company shall duly pay and
      discharge all taxes or other claims, which might become a lien upon any of
      its
      property except to the extent that any thereof are being in good faith
      appropriately contested with adequate reserves provided therefor.

    

    (v) Notice
      of Litigation.
      For so
      long as the Notes remain outstanding and unpaid, or any other amount is owing
      to
      any Purchaser under any Transaction Document, the Company shall promptly notify
      the Purchasers in writing, with a reasonably detailed description thereof,
      of
      any litigation, legal proceeding or dispute, other than disputes in the ordinary
      course of business or, whether or not in the ordinary course of business,
      involving amounts in excess of Fifty Thousand ($50,000.00) Dollars, affecting
      either the Company or any Subsidiary, whether or not fully covered by insurance,
      and regardless of the subject matter thereof.

    

    (w) Additional
      Investment Right.
      

    

    (i) From
      the
      date hereof through April 30, 2008 (the “Additional
      Investment Period”),
      the
      Company grants to each Purchaser the right (the “Additional
      Investment Right”)
      to
      participate in all debt, equity and/or equity-linked financings of the Company
      or any of its Subsidiaries (each, an “Additional
      Financing”)
      on the
      same terms as offered to other third party investors (which may include
      officers, directors, existing stockholders or other “affiliates” of the Company
      (as that term is defined under Rule 144)); provided,
      however,
      that
      any financing for the purchase of debt portfolios by the Company or any of
      its
      Subsidiaries shall not be considered an Additional Financing, and any such
      financing for the purchase of debt portfolios shall not be subject to the
      additional investment right set forth in this subsection (w); provided,
      further,
      with
      respect to the Purchaser of the 15% senior secured promissory notes, and only
      with respect to such Purchaser, the Additional Investment Right shall also
      extend to any financing for the purchase of debt portfolios by the Company
      or
      any of its Subsidiaries, but only if, and to the extent, consented to by any
      third party investors in any such financing for the purchase of debt portfolios
      by the Company or any of its Subsidiaries.

    

    (ii)
       During
      the Additional Investment Period, and prior to the consummation by the Company
      of any Additional Financing, the Company shall notify the Agent in writing
      of
      its intention to enter into such Additional Financing. In connection therewith,
      the Company shall submit to Agent a term sheet (a “Proposed
      Term Sheet”)
      which
      shall set forth in detail the terms, conditions and pricing of any such
      Additional Financing. 

    

    (iii) Within
      fifteen (15) days of its receipt of the Proposed Term Sheet, Agent shall notify
      the Company in writing as to whether any Purchaser(s) desire to participate
      in
      the Additional Financing (it being agreed that no Purchaser shall be obligated
      to participate in any Additional Financing). Any Purchaser(s) so electing to
      participate shall do so on the terms set forth in the Proposed Term Sheet and
      in
      an amount up to 100% of the amount invested by such Purchaser(s) in the offering
      contemplated by this Agreement (or a pro rata portion thereof, if the aggregate
      amount of the Additional Financing is less than the amount raised in the
      offering contemplated by this Agreement). 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (iv) The
      Company will not, and will not permit its Subsidiaries to, agree, directly
      or
      indirectly, to any restriction with any person or entity which limits the
      ability of the Purchasers to participate in an Additional Financing as
      contemplated herein.

    

    (x) Registration
      Statement Filing.
      As
      contemplated by the Registration Rights Agreement, the Company shall promptly
      file a Registration Statement (as such term is defined in the Registration
      Rights Agreement), which shall include the Registrable Securities (as such
      term
      is defined in the Registration Rights Agreement), and the Company has no reason
      to believe that such Registration Statement will not be declared effective
      in a
      timely manner.

    

    (y) Cash
      Run Rate.
      The
      Company’s use of cash between the date hereof and September 15, 2006 shall be as
      approximated on Schedule
      4(y)
      attached
      hereto and made a part hereof.

     

    (z) Minimum
      Sale.
      For the
      sole benefit of the Purchaser of the 15% senior secured promissory notes, the
      Company agrees that a minimum aggregate of $1,250,000 of Notes will be sold
      in
      this offering.

     

    5.    Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent to issue
      certificates, registered in the name of each Purchaser or its nominee, for
      any
      Conversion Shares and Warrant Shares in such amounts as specified from time
      to
      time by each Purchaser to the Company upon conversion of the Notes or exercise
      of the Warrants in accordance with the terms thereof (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and Warrant Shares under the 1933
      Act
      or the date on which the Conversion Shares and Warrant Shares may be sold
      pursuant to Rule 144 without any restriction as to the number of Securities
      as
      of a particular date that can then be immediately sold, 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(f) hereof (in the case of the Conversion Shares
      and
      Warrant Shares, prior to registration of the Conversion Shares and Warrant
      Shares under the 1933 Act or the date on which the Conversion Shares and Warrant
      Shares may be sold pursuant to Rule 144 without any restriction as to the number
      of Securities as of a particular date that can then be immediately sold), will
      be given by the Company to its transfer agent and that the Securities shall
      otherwise be freely transferable on the books and records of the Company as
      and
      to the extent provided in this Agreement and the Registration Rights Agreement.
      Nothing in this Section shall affect in any way the Purchaser’s obligations and
      agreement set forth in Section 2(g) hereof to comply with all applicable
      prospectus delivery requirements, if any, upon re-sale of the Securities. If
      a
      Purchaser provides the Company, at the cost of the Company, with a customary
      opinion of counsel, that shall be in form, substance and scope reasonably
      acceptable to such counsel, to the effect that a public sale or transfer of
      such
      Securities may be made without registration under the 1933 Act and such sale
      or
      transfer is effected, the Company shall permit the transfer, and, in the case
      of
      the Conversion Shares and Warrant Shares, promptly instruct its transfer agent
      to issue one or more certificates, free from restrictive legend, in such name
      and in such denominations as specified by such Purchaser. The Company
      acknowledges that a breach by it of its obligations hereunder will cause
      irreparable harm to the Purchasers, by vitiating the intent and purpose of
      the
      transactions contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Section 5 may be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Section, that the Purchasers shall be
      entitled, in addition to all other available remedies, to an injunction
      restraining any breach and requiring immediate transfer, without the necessity
      of showing economic loss and without any bond or other security being
      required.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    6.    
      Conditions to the Company’s Obligation to Sell.
      The
      obligation of the Company hereunder to issue and sell the Notes and Warrants
      to
      a Purchaser at the Closing is subject to the satisfaction, at or before the
      Closing Date of each of the following conditions thereto, 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) The
      applicable Purchaser shall have executed this Agreement, the Lock-Up Agreement,
      the Registration Rights Agreement, the Security Agreement and the Stock Pledge
      Agreement, and delivered the same to the Company.

     

    (b) The
      applicable Purchaser shall have delivered the Purchase Price in accordance
      with
      Section 1(b) above.

     

    (c) The
      representations and warranties of the applicable Purchaser shall be true and
      correct in all material respects, and the applicable Purchaser 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 applicable Purchaser at or prior to the Closing Date.
      

     

    (d) No
      litigation, statute, rule, regulation, executive order, decree, ruling or
      injunction shall have been enacted, entered, promulgated or endorsed by or
      in
      any court or governmental authority of competent jurisdiction or any
      self-regulatory organization having authority over the matters contemplated
      hereby which prohibits the consummation of any of the transactions contemplated
      by this Agreement.

     

    7.    Conditions
      to Each Purchaser’s Obligation to Purchase.
      The
      obligation of each Purchaser hereunder to purchase the Notes and Warrants at
      the
      Closing is subject to the satisfaction, at or before the Closing Date of each
      of
      the following conditions, provided that these conditions are for such
      Purchaser’s sole benefit and may be waived by such Purchaser at any time in its
      sole discretion:

     

    (a) The
      Company shall have executed this Agreement, the Registration Rights Agreement,
      the Security Agreement and the Stock Pledge Agreement (which shall have also
      been executed by the co-chairmen of the Company), and delivered the same to
      the
      Purchaser.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (b) The
      Company shall have delivered to such Purchaser duly executed Notes (in such
      denominations as the Purchaser shall request) and Warrants in accordance with
      Section 1(b) above.

     

    (c) The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to a
      majority-in-interest of the Purchasers, shall have been delivered to the
      Company’s Transfer Agent.

     

    (d) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects, 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 Closing Date. The Purchaser shall have received a certificate
      or
      certificates, executed by the chief executive officer of the Company, dated
      as
      of the Closing Date, to the foregoing effect and as to such other matters as
      may
      be reasonably requested by such Purchaser including, but not limited to
      certificates with respect to the incumbency of the officers of the Company
      executing the Transaction Documents on behalf of the Company and Company’s good
      standing in the State of Delaware and such other states where it is foreign
      qualified and the Company’s Certificate of Incorporation, By-laws and Board of
      Directors’ resolutions relating to the transactions contemplated
      hereby.

     

    (e) No
      litigation, statute, rule, regulation, executive order, decree, ruling or
      injunction shall have been enacted, entered, promulgated or endorsed by or
      in
      any court or governmental authority of competent jurisdiction or any
      self-regulatory organization having authority over the matters contemplated
      hereby which prohibits the consummation of any of the transactions contemplated
      by this Agreement.

     

    (f) No
      event
      shall have occurred which would reasonably be expected to have a Material
      Adverse Effect on the Company.

     

    (g) The
      Purchaser shall have received the favorable opinion of the Company’s counsel,
      dated as of the Closing Date, in the same form as Exhibit
      G
      attached
      hereto.

     

    (h) The
      Company’s controlling shareholders, officers and directors shall have executed a
      Lock-Up Agreement, in the same form as Exhibit
      H
      attached
      hereto.

     

    8.    Governing
      Law; Jurisdiction; Fees; Waiver of Jury Trial.

     

    (a) THIS
      AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
      ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
      LAW. 

     

    (b) THE
      PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK
      STATE
      OR UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT
      TO
      ANY DISPUTE ARISING UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR
      THE
      TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE PARTIES IRREVOCABLY WAIVE
      THE
      DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
      THE PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
      CLASS MAIL IN ACCORDANCE WITH SECTION 9(e) HEREOF SHALL BE DEEMED IN EVERY
      RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
      PROCEEDING. NOTHING HEREIN SHALL AFFECT A PARTY’S RIGHT TO SERVE PROCESS IN ANY
      OTHER MANNER PERMITTED BY LAW. THE PARTIES AGREE THAT A FINAL NON-APPEALABLE
      JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
      IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
      

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (c) THE
      PARTY
      OR PARTIES WHICH DO NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT
      OR
      ANY OTHER TRANSACTION DOCUMENT PRIOR TO THE CONSUMMATION BY THE COMPANY OF
      ANY
      UNDERWRITTEN PUBLIC OFFERING OF ITS SECURITIES SHALL BE RESPONSIBLE FOR ALL
      FEES
      AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
      CONNECTION WITH SUCH DISPUTE.

     

    (d) EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
      TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
      THEREBY.

     

    9.    Miscellaneous.

     

    (a) Counterparts;
      Signatures by Facsimile.
      This
      Agreement may be executed in one or more counterparts (with the Purchasers
      each
      executing the counterpart in the form of Annex
      A
      hereto).
      Each of such counterparts shall be deemed an original, and all of which shall,
      when taken together, constitute one and the same agreement, and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party. This Agreement, once executed by a party (including in the manner
      described above), may be delivered to the other party hereto by facsimile
      transmission of a copy of this Agreement bearing the signature of the party
      so
      delivering this Agreement.

     

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

     

    (c) Severability.
      In the
      event that any provision of this Agreement is invalid or unenforceable under
      any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any provision hereof
      which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision hereof.

     

    (d) Entire
      Agreement; Amendments.
      This
      Agreement, the other Transaction Documents and the instruments, documents and
      schedules 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 Purchaser 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 Company and a majority in interest of the
      Purchasers (which majority in interest must include the Purchaser of the 15%
      senior secured promissory notes as long as the 15% senior secured promissory
      notes remain outstanding and unpaid).

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (e) Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be sent by certified or registered mail (return receipt requested) or
      delivered personally or by courier (including a recognized overnight delivery
      service) or by facsimile transmission and shall be effective five days after
      being placed in the mail, if mailed by regular United States mail, or upon
      receipt, if delivered personally or by courier (including a recognized overnight
      delivery service) or by facsimile transmission, with printed confirmation of
      receipt, in each case addressed to a party. The addresses for such
      communications shall be:

    

    
      	
            	(i)	
              If
                to the Company:

            

    

    

    Debt
      Resolve, Inc.

    707
      Westchester Avenue, Suite L-7

    White
      Plains, NY 10604

    Attention:
      James D. Burchetta

    Telephone:
      (914) 949-5500

    Facsimile:
      (914) 428-3044

    

    With
      a
      copy to:

    

    Greenberg
      Traurig LLP

    MetLife
      Building

    200
      Park
      Avenue, 15th Floor

    New
      York,
      NY 10166

    Attention:
      Spencer G. Feldman, Esq.

    Telephone:
      (212) 801-9200

    Facsimile:
      (212) 801-6400

    

    
      	
            	(ii)	
              If
                to a Purchaser:  To
                the address and fax number set forth immediately below such Purchaser’s
                name on the counterpart signature pages
                hereto.

            

    

    

    With
      copies to:

    

    Capital
      Growth Financial, Inc.

    225
      NE
      Mizner Boulevard, Suite #750 

    Boca
      Raton, FL 33432 

    Attention:
      Alan Jacobs

    Telephone:
      (561) 417-5680

    Facsimile:
      (561) 417-5680

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    

    and

    

    Maxim
      Group LLC

    405
      Lexington Avenue

    New
      York,
      NY 10174 

    Attention:
      Clifford A. Teller

    Telephone:
      (212) 895-3500

    Facsimile:
      (212) 895-3783

    

    Each
      party shall provide notice to the other party of any change in address,
      telephone or facsimile number.

    

    (f) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. Neither the Company nor any Purchaser shall assign
      this Agreement or any rights or obligations hereunder without the prior written
      consent of the other. Notwithstanding the foregoing, but subject to the
      provisions of Section 2(f) hereof, any Purchaser may, without the consent of
      the
      Company, assign its rights hereunder to any person that purchases Securities
      in
      a private transaction from a Purchaser or to any of its “affiliates,” as that
      term is defined under the 1934 Act.

    

    (g) Third
      Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and, except for the Placement Agents, who
      are
      specifically agreed to be and acknowledged by each party as third party
      beneficiaries hereof, is not for the benefit of, nor may any provision hereof
      be
      enforced by, any other person.

    

    (h) Survival;
      Indemnification; Limitation on Liability.
      

    

    (i) The
      representations and warranties of the Purchasers and the Company set forth
      in
      Sections 2 and 3 hereof shall survive for 12 months following the Closing Date
      notwithstanding any due diligence investigation conducted by or on behalf of
      the
      Purchasers or the Company, as applicable. 

    

    (ii) The
      Company agrees to indemnify and hold harmless each of the Purchasers and all
      of
      their respective officers, directors, employees, agents and representative
      from
      and against any and all claims, costs, expenses, liabilities, obligations,
      losses or damages (including reasonable legal fees) of any nature (“Losses”),
      incurred by or imposed upon any such party arising
      as a result of or related to any actual or alleged breach by the Company of
      any
      of its representations, warranties and covenants set forth in Sections 3 and
      4
      hereof or any of its covenants, agreements and obligations under this Agreement
      or any other Transaction Document. 

    

    (iii) Each
      Purchaser agrees, severally but not jointly, to indemnify and hold harmless
      the
      Company and its officers, directors, employees and agents for Losses arising
      arising as a result of or related to any actual or alleged breach any breach
      by
      such Purchaser of any of its representations or warranties set forth in Section
      2 hereof or any of its covenants, agreements and obligations under this
      Agreement or any other Transaction Document.

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (iv) Notwithstanding
      the foregoing: (A) an indemnifying party shall not be liable for any claim
      for
      indemnification or Loss associated therewith unless and until the aggregate
      amount of indemnifiable Losses which may be recovered from the indemnifying
      party equals or exceeds $50,000, after which the indemnifying party shall be
      liable, subject to the provisions hereof, for all Losses, including the initial
      $50,000 of Losses, and (ii) in no event shall the aggregate amount paid by
      an
      indemnifying party pursuant to this Section 9(h) exceed $4,000,000.

    

    (i) Publicity.
      The
      Company and the Placement Agents shall have the right to review a reasonable
      period of time before issuance of any press releases or SEC or other regulatory
      filings, or any other public statements with respect to the transactions
      contemplated hereby; provided,
      however,
      that
      the Company shall be entitled, without the prior approval of the Placement
      Agents or the Purchasers, to make any press release or SEC or other regulatory
      filings with respect to such transactions as is required by applicable law
      and
      regulations (although the Placement Agents shall be consulted by the Company
      in
      connection with any such press release prior to its release and shall be
      provided with a copy thereof and be given an opportunity to comment
      thereon).

    

    (j) 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.

    

    (k) 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
      of page intentionally left blank; signature pages
      follow.]

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

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

    
      	 	 	 
	 	DEBT
              RESOLVE, INC.
	 
 	 
 	 
 
	 	By:  	/s/
              James D. Burchetta
	 	
              
                

              

              Name:
                James D. Burchetta

              Title:
                Co-chairman, President and CEO

            

    

     

    
      	 	
              PURCHASERS:

               

              The
                Purchasers executing the Signature Page in
                the form attached hereto as Annex
                A
                and delivering the same to the Company or its agents shall be deemed
                to
                have executed this Agreement and agreed to the terms
                hereof.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    Annex
      A

    

    Securities
      Purchase Agreement

    Purchaser
      Counterpart Signature Page

    

    The
      undersigned, desiring to: (i) enter into this Securities Purchase Agreement
      dated as of _________________ ___, 2006 (the “Agreement”),
      between the undersigned, Debt Resolve, Inc., a Delaware corporation (the
“Company”),
      and
      the other parties thereto, in or substantially in the form furnished to the
      undersigned and (ii) purchase the securities of the Company appearing next
      to
      the undersigned’s name on Schedule
      A
      to the
      Agreement, hereby agrees to purchase such securities from the Company as of
      the
      Closing and further agrees to join the Agreement as a party thereto, with all
      the rights and privileges appertaining thereto, and to be bound in all respects
      by the terms and conditions thereof.

     

    IN
      WITNESS WHEREOF,
      the
      undersigned has executed the Agreement as of _________________ ___,
      2006.

     

    
      	
              PURCHASER:

            
	 
	
              Name
                and Address, Fax No. and Social Security No./EIN of
                Purchaser:

            
	
               

              ______________________________________

               

              ______________________________________

               

              ______________________________________

               

              ______________________________________

               

              Fax
                No.: _______________________________

              Soc.
                Sec. No./EIN: _______________________

            
	 
	
              If
                a partnership, corporation, trust or other business
                entity:

            

    

     

    
      	 	 	 
	 	By:  	 
	 	
              

              Name:

              Title:

            
	 	 
	 	
              If
                an individual:

            
	 	 

              

              Signature

            
	 	 
	 	Purchase Price: 
              ________________________

      
        
          
          

        

        
          28

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