Document:

Unassociated Document

    NEITHER
      THIS DEBENTURE NOR ANY SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS
      DEBENTURE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE
“ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. NEITHER THIS DEBENTURE NOR
      ANY SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS DEBENTURE MAY BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
      STATEMENT IN EFFECT WITH RESPECT TO THIS DEBENTURE OR SHARES OF STOCK ISSUABLE
      UPON CONVERSION OF THIS DEBENTURE UNDER SUCH ACT UNLESS SUCH REGISTRATION IS
      NOT
      REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE ACT.

    

    COMPLIANCE
      SYSTEMS CORPORATION

    SECURED
      CONVERTIBLE DEBENTURE

    

    
      	$300,000.00	
              September
                2,
                2008

            

    

            

    FOR
      VALUE
      RECEIVED, the undersigned Compliance
      Systems Corporation,
      a
      Nevada corporation (referred to herein as “Borrower”
or
      the
“Company”),
      promises to pay to the order of Agile
      Opportunity Fund, LLC, its
      successors or assigns (the “Lender”),
      the
      principal sum of Three Hundred Thousand Dollars ($300,000.00) or such lesser
      principal amount as is then outstanding on November 6, 2009 (the “Maturity
      Date”),
      and
      interest thereon at a rate equal to fifteen percent (15%) per annum (the
“Interest
      Rate”).
      Interest shall be payable on the last day of each calendar month prior to the
      Maturity Date with the first interest payment to be made on September 30, 2008.
      Borrower shall pay the principal balance then outstanding under this Secured
      Convertible Debenture (this “Debenture”)
      plus
      accrued but unpaid interest in full on the Maturity Date along with payment
      of
      any other amounts due hereunder or under the other Loan Documents (as defined
      below). The Borrower acknowledges that in addition to the interest due
      hereunder, Lender shall be entitled to an additional payment, on the Maturity
      Date or whenever the principal of this Debenture is paid (including in
      connection with any earlier redemption), such that Lender’s annualized rate of
      return on such principal payment shall be equal to thirty (30%) percent.
      Notwithstanding any other provision hereof, interest paid or becoming due
      hereunder and any other payments hereunder which may constitute interest shall
      in no event exceed the maximum rate permitted by applicable law. 

    

    Interest
      and any other amounts due hereunder are payable in lawful money of the United
      States of America to the Lender at the address set forth in that certain
      Securities Purchase Agreement executed by the Borrower and the Lender dated
      as
      of May 6, 2008, as amended from time to time (the “Securities
      Purchase Agreement”)
      and
      pursuant to which this Debenture is issued. The terms and conditions of the
      Securities Purchase Agreement and all other documents and instruments delivered
      in connection therewith (collectively, the “Loan
      Documents”)
      are
      incorporated by reference herein and made a part hereof. All capitalized terms
      not otherwise defined herein shall have the respective meanings as set forth
      in
      the Securities Purchase Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      Section
        1. Conversion.

    

    

    (a) At
      any
      time from the original issue date hereof through the date that this Debenture
      is
      paid in full, Lender shall have the right, in its sole discretion, to convert
      the principal balance of this Debenture then outstanding plus accrued but unpaid
      interest, in whole or in part, into shares (each, a “Conversion
      Share”)
      of
      Common Stock at a conversion price equal to $0.05 per Conversion Share, subject
      to adjustment as provided in Section 2 herein (the “Conversion
      Price”).

    

    (b) Lender
      may convert this Debenture at the then applicable Conversion Price by the
      surrender of this Debenture (properly endorsed) to the Company at the principal
      office of the Borrower, together with the form of Notice of Conversion attached
      hereto as Annex
      A
      (a
“Notice
      of Conversion”)
      duly
      completed, dated and executed, specifying therein the principal amount of
      Debenture and/or outstanding interest to be converted. The “Conversion Date”
shall be the date that such Notice of Conversion and this Debenture is duly
      provided to Borrower hereunder (or, at Lender's option, the next interest
      payment date with respect to Lender's conversion of any scheduled interest
      payment). 

    

    (c) On
      the
      date of receipt by the Company of the duly completed, dated and executed Notice
      of Conversion and this Debenture in accordance with Section 1(b) with respect
      to
      a conversion of any portion of this Debenture, the Lender (and any person(s)
      receiving Conversion Shares in lieu of the Lender) shall be deemed to have
      become the holder of record for all purposes of the Conversion Shares to which
      such valid conversion relates.

    

    (d) As
      soon
      as practicable, but not in excess of five business days, after the valid
      conversion of any portion of this Debenture, the Company, at the Company’s
      expense (including the payment by Company of any applicable issuance and similar
      taxes, will cause to be issued in the name of and delivered to the Lender
      (and/or such other person(s) identified in the Notice of Conversion with respect
      to such conversion), certificates evidencing the number of duly authorized,
      validly issued, fully paid and non-assessable Conversion Shares to which the
      Lender (and/or such other person(s) identified in such Notice of Conversion,
      shall be entitled to receive upon the conversion), as adjusted to reflect the
      effects, if any, of the anti-dilution provisions of Section 2, such certificates
      to be in such reasonable denominations as Lender may request when delivering
      the
      Notice of Conversion.

    

    (e) If
      less
      than the entire principal and accrued interest under this Debenture is being
      converted, the Company shall execute and deliver to the Lender a new Debenture
      (dated as of the date hereof) evidencing the principal balance of this Debenture
      that has not been so converted.

    

    
      
         

      

      
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    Section
      2. Conversion
      Price Adjustment.

    

    (a)
      If
      and whenever the Company issues or sells any Additional Stock (as defined below)
      for consideration per share less than the Conversion Price in effect immediately
      prior to such issuance or sale, then immediately upon such issuance or sale
      the
      Conversion Price shall be reduced to a new Conversion Price determined by
      dividing (i) amount equal to the sum of (a) the number of shares of Common
      Stock
      (on a fully-diluted basis) outstanding immediately prior to such issuance or
      sale, multiplied by the then existing Conversion Price, plus (b) the
      consideration, if any, received by the Company in connection with such issuance
      or sale, by (ii) the total number of shares of Common Stock (on a fully-diluted
      basis) outstanding immediately after such issuance or sale, rounded to the
      nearest one ten-thousandth ($0.0001) of a dollar. As used herein, “Additional
      Stock”
means
      any securities issued (or deemed to have been issued pursuant to Section 2(b))
      by the Company after the original issue date hereof other than: (i) any rights,
      warrants or options directly or indirectly to subscribe for or purchase Common
      Stock (“Options”)
      outstanding as of the original issue date hereof including the Company’s
      outstanding convertible preferred stock; (ii) the first 15 million of Common
      Stock issued pursuant to an equity incentive plan for employees, officers,
      directors and independent contractors of the Company adopted by the Board of
      Directors of the Company; provided
      such
      Common Stock is sold at or above the market price for the Common Stock as of
      the
      date of grant of the Option to purchase such Common Stock or date of issuance
      of
      such Common Stock, if no Option is being exercised in connection with such
      sale;
      (iii) shares of Common Stock issuable upon conversion of any Debentures issued
      under the Securities Purchase Agreement; and (iv) as a stock dividend or upon
      any subdivision of shares of Common Stock, provided that the securities issued
      pursuant to such stock dividend or subdivision are limited to additional shares
      of Common Stock.

     

    (b)
      For
      purposes of determining the adjusted Conversion Price under Section 2(a) above,
      the following shall be applicable:

    

    (i) Issuance
      of Rights or Options.
      If the
      Company in any manner grants or sells any Options and the price per share for
      which Additional Stock is issuable upon the exercise of such Options, or upon
      conversion or exchange of any convertible securities issuable upon exercise
      of
      such Options, is less than the Conversion Price in effect immediately prior
      to
      such grant or sale, then the total maximum number of shares of Additional Stock
      issuable upon the exercise of such Options or upon conversion or exchange of
      the
      total maximum amount of such Convertible Securities issuable upon the exercise
      of such Options shall be deemed to be outstanding and to have been issued and
      sold by the Company at the time of the granting or sale of such Options for
      such
      price per share. For purposes of this paragraph, the “price per share for which
      Additional Stock is issuable” shall be determined by dividing (A) the total
      amount, if any, received or receivable by the Company as consideration for
      the
      granting or sale of such Options, plus the minimum aggregate amount of
      additional consideration payable to the Company upon exercise of all such
      Options, plus in the case of such Options which relate to Convertible
      Securities, the minimum aggregate amount of additional consideration, if any,
      payable to the Company upon the issuance or sale of such Convertible Securities
      and the conversion or exchange thereof, by (B) the total maximum number of
      shares of Additional Stock issuable upon the exercise of such Options or upon
      the conversion or exchange of all such Convertible Securities issuable upon
      the
      exercise of such Options. No further adjustment of the Conversion Price shall
      be
      made when Convertible Securities are actually issued upon the exercise of such
      Options or when Additional Stock is actually issued upon the exercise of such
      Options or the conversion or exchange of such Convertible Securities.

    

    
      
         

      

      
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    (ii)
      Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any convertible securities and the price
      per share for which Additional Stock is issuable upon conversion or exchange
      thereof is less than the Conversion Price in effect immediately prior to such
      issuance or sale, then the maximum number of shares of Additional Stock issuable
      upon conversion or exchange of such convertible securities shall be deemed
      to be
      outstanding and to have been issued and sold by the Company at the time of
      the
      issuance or sale of such convertible securities for such price per share. For
      the purposes of this subparagraph, the “price per share for which Additional
      Stock is issuable” shall be determined by dividing (A) the total amount
      received or receivable by the Company as consideration for the issue or sale
      of
      such convertible securities, plus the minimum aggregate amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      thereof, by (B) the total maximum number of shares of Additional Stock
      issuable upon the conversion or exchange of all such convertible securities.
      No
      further adjustment of the Conversion Price shall be made when Additional Stock
      is actually issued upon the conversion or exchange of such convertible
      securities, and if any such issue or sale of such convertible securities is
      made
      upon exercise of any Options for which adjustments of the Conversion Price
      had
      been or are to be made pursuant to other provisions of this Section 2, no
      further adjustment of the Conversion Price shall be made by reason of such
      issue
      or sale. 

    

    (iii)
      Change
      in Option Price, Conversion Rate or Shares Issuable.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the conversion or exchange of any convertible securities,
      the
      rate at which any convertible securities are convertible into or exchangeable
      for Additional Stock, and/or the quantity of Additional Stock issuable upon
      the
      conversion, exercise or exchange of any such Option or convertible security,
      changes at any time, then the Conversion Price in effect at the time of such
      change shall be immediately adjusted to the Conversion Price which would have
      been in effect at such time had such Options or convertible securities still
      outstanding provided for such changed purchase price, additional consideration,
      conversion rate or quantity, as the case may be, at the time initially granted,
      issued or sold; provided that no such change shall at any time cause the
      Conversion Price hereunder to be increased. If the terms of any Option or
      convertible security which was outstanding as of the original issue date hereof
      are changed in the manner described in the immediately preceding sentence,
      then
      such Option or convertible Security and the Additional Stock deemed issuable
      upon exercise, conversion or exchange thereof shall be deemed to have been
      issued as of the date of such change.

    

    (iv)
      Calculation
      of Consideration Received.
      If any
      Additional Stock is issued or sold or deemed to have been issued or sold for
      cash, the consideration will be deemed to be the amount of cash paid therefor.
      In the case of the issuance of Additional Stock for a consideration in whole
      or
      in part other than cash, the consideration other than cash will be deemed to
      be
      the fair value thereof as determined in good faith by the Board of Directors
      of
      the Company irrespective of any accounting treatment.

     

    
      
         

      

      
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    (v)
      Record
      Date.
      If the
      Company takes a record of the holders of any securities for the purpose of
      entitling them (A) to receive a dividend or other distribution payable in
      Additional Stock, Options or in convertible securities or (B) to subscribe
      for
      or purchase Additional Stock, Options or convertible securities, then such
      record date shall be deemed to be the date of the issue or sale of the shares
      of
      Additional Stock deemed to have been issued or sold upon the declaration of
      such
      dividend or upon the making of such other distribution or the date of the
      granting of such right of subscription or purchase, as the case may
      be.

    

    (c)
      If
      the Borrower, at any time while this Debenture is outstanding, (i) shall pay
      a
      stock dividend or otherwise make a distribution or distributions on shares
      of
      its Common Stock or any other equity or equity equivalent securities payable
      in
      shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into
      a
      larger number of shares, (iii) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (iv)
      issue by reclassification of shares of the Common Stock any shares of capital
      stock of the Borrower, then the Conversion Price shall be multiplied by a
      fraction of which the numerator shall be the number of shares of Common Stock
      (excluding treasury shares, if any) outstanding before such event and of which
      the denominator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding after such event. Any adjustment made
      pursuant to this paragraph shall become effective immediately after the record
      date for the determination of stockholders entitled to receive such dividend
      or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or reclassification.

    

       (d) In
      case
      of any consolidation or merger of the Borrower with or into another corporation
      or the conveyance of all or substantially all of the assets of the Borrower
      to
      another corporation, this Debenture shall thereafter be convertible (to the
      extent such conversion is permitted hereunder) into the number of shares of
      stock or other securities or property to which a holder of the number of shares
      of Common Stock of the Borrower deliverable upon conversion of this Debenture
      would have been entitled upon such consolidation, merger or conveyance; and,
      in
      any such case, appropriate adjustment shall be made in the application of the
      provisions herein set forth with respect to the rights and interest thereafter
      of the holders of this Debenture, to the end that the provisions set forth
      herein shall be thereafter applicable, as nearly as reasonably may be, in
      relation to any shares of stock or other property thereafter deliverable upon
      the conversion of the Debenture.

    

        Section
      3. Redemption.
      (a) The
      Borrower at its option shall have the right, upon 15 business days’ advance
      written notice, to redeem a portion or all amounts outstanding under this
      Debenture prior to the Maturity Date.

    

    (b) Notwithstanding
      the foregoing in the event that the Borrower has elected to repay any
      outstanding principal amount and accrued interest under this Debenture the
      Lender shall still be entitled to effectuate conversions as contemplated
      hereunder through the date of redemption. 

    

        Section
      4.
Transferability.
      Neither
      this Debenture nor any shares of stock issuable upon conversion of this
      Debenture have been registered under the Securities Act of 1933, as amended
      (the
“Act”),
      or
      under the securities laws of any state. Neither this Debenture nor any shares
      of
      stock issuable upon conversion of this Debenture may be sold, offered for sale,
      pledged or hypothecated in the absence of a registration statement in effect
      with respect to this Debenture or shares issuable upon conversion of this
      Debenture under such Act unless such registration is not required pursuant
      to a
      valid exemption therefrom under the Act. Provided the foregoing requirements
      are
      satisfied, this Debenture and any of the rights granted hereunder are freely
      transferable by the Lender in its sole discretion.

    

    
      
         

      

      
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        Section
      5.
Reservation
      of Stock.
      The
      Borrower covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Debenture as herein provided, free from
      preemptive rights or any other actual contingent purchase rights of persons
      other than the Lender, not less than such number of shares of the Common Stock
      as shall be issuable upon the conversion of the outstanding principal of this
      Debenture and accrued and unpaid interest thereon. If at any time, the Company
      does not have available an amount of authorized but unissued Common Stock or
      Common Stock held in treasury necessary to satisfy any conversion of all amounts
      outstanding under this Debenture, the Company shall call and hold a special
      meeting of its stockholders within 30 days of the occurrence of any shortfall
      in
      authorized shares for the purpose of approving an increase in the number of
      shares of authorized Common Stock to an amount sufficient to enable conversion
      all amounts outstanding under this Debenture, subject in all respects to
      compliance with the requirements of Section 14 of the Securities Exchange Act
      of
      1934 to which the Borrower is subject. The Board of Directors of the Company
      shall recommend that stockholders vote in favor of increasing the number of
      authorized shares of Common Stock at any such meeting. Each Member of the Board
      of Directors of the Company shall also vote all of such Director’s voting
      securities of the Company in favor of such increase in authorized shares. The
      Borrower covenants that all shares of Common Stock that may be issuable upon
      conversion of this Debenture shall, upon issue, be duly and validly authorized,
      issued and fully paid and nonassessable. No consent of any other party and
      no
      consent, license, approval or authorization of, or registration or declaration
      with, any governmental authority, bureau or agency is required in connection
      with the execution, delivery or performance by the Borrower, or the validity
      or
      enforceability of this Debenture other than such as have been met or obtained.
      The execution, delivery and performance of this Debenture and all other
      agreements and instruments executed and delivered or to be executed and
      delivered pursuant hereto or thereto or the securities issuable upon conversion
      of this will not violate any provision of any existing law or regulation or
      any
      order or decree of any court, regulatory body or administrative agency or the
      certificate of incorporation or by-laws of the Borrower or any mortgage,
      indenture, contract or other agreement to which the Borrower is a party or
      by
      which the Borrower or any property or assets of the Borrower may be bound.
      

    

        Section
      6.
No
      Fractional Shares.
      Upon a
      conversion hereunder the Borrower shall not be required to issue stock
      certificates representing fractions of shares of Common Stock, and in lieu
      of
      any fractional shares which would otherwise be issuable, the Borrower shall
      issue the next highest whole number of shares of Common Stock, as the case
      may
      be.

    

    Section
      7. Event
      of Default.
      (a) An
“Event of Default”, wherever used herein, means any one of the following events
      (whatever the reason and whether it shall be voluntary or involuntary or
      effected by operation of law or pursuant to any judgment, decree or order of
      any
      court, or any order, rule or regulation of any administrative or governmental
      body):

    

    
      
         

      

      
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    (i) Any
      default in the payment of the principal of, interest on or other charges in
      respect of this Debenture, as and when the same shall become due and payable
      (whether on a Conversion Date or the Maturity Date or by acceleration or
      otherwise);

    

    (ii) The
      Borrower or any subsidiary of Borrower as listed on Schedule 2.7 of the
      Securities Purchase Agreement (each, a “Subsidiary”)
      shall
      fail to observe or perform any other material covenant, agreement or warranty
      contained in, or otherwise commit any breach or default of any provision of
      this
      Debenture or any Loan Document to which it is a party;

    

    (iii) The
      Borrower or any Subsidiary, shall commence, or there shall be commenced against
      the Borrower or any Subsidiary any applicable bankruptcy or insolvency laws
      as
      now or hereafter in effect or any successor thereto, or the Borrower or any
      Subsidiary commences any other proceeding under any reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction whether now or hereafter in effect relating
      to
      the Borrower or Subsidiary or there is commenced against the Borrower or
      Subsidiary any such bankruptcy, insolvency or other proceeding which remains
      undismissed for a period of 60 days; or the Borrower or Subsidiary is
      adjudicated insolvent or bankrupt; or any order of relief or other order
      approving any such case or proceeding is entered; or the Borrower or Subsidiary
      suffers any appointment of any custodian, private or court appointed receiver
      or
      the like for it or any substantial part of its property which continues
      undischarged or unstayed for a period of 60 days; or the Borrower or Subsidiary
      makes a general assignment for the benefit of creditors; or the Borrower or
      Subsidiary shall fail to pay or shall state that it is unable to pay or shall
      be
      liable to pay, its debts as they become due or by any act or failure to act
      expressly indicate its consent to, approval of or acquiescence in any of the
      foregoing; or any corporate or other action is taken by the Borrower or
      Subsidiary for the purpose of effecting any of the foregoing; or

    

    (iv) The
      Borrower or any Subsidiary shall default in any of its secured obligations
      under
      any other debenture or any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which there
      may be issued, or by which there may be secured or evidenced any indebtedness
      for borrowed money or money due under any leasing or factoring arrangement
      of
      the Borrower, whether such indebtedness now exists or shall hereafter be created
      and such default shall result in such indebtedness becoming or being declared
      due and payable prior to the date on which it would otherwise become due and
      payable.

    

    (b) Following
      an Event of Default, the Interest Rate shall increase to twenty percent (20%)
      per annum (but not exceeding the maximum rate permitted by law) immediately
      following such Event of Default. During
      the time that any portion of this Debenture is outstanding, if (i) any Event
      of
      Default has occurred and has not been cured by the Borrower or (ii) an event
      described in Section 2(d) occurs, the full principal amount of this Debenture,
      together with interest and other amounts owing in respect thereof, to the date
      of acceleration shall become at the Lender's election, immediately due and
      payable. The Lender need not provide and the Borrower hereby waives any
      presentment, demand, protest or other notice of any kind, and the Lender may
      immediately and without expiration of any grace period enforce any and all
      of
      its rights and remedies hereunder and all other remedies available to it under
      applicable law. 

    

    
      
         

      

      
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        Section
      8.
Registration
      Rights.
      The
      Lender is entitled to certain registration rights with respect to the Common
      Stock issuable upon conversion of this Debenture as set forth in the Securities
      Purchase Agreement. 

    

    Section
      9. Notices.
      Any and
      all notices, requests, documents or other communications or deliveries required
      or permitted to be given or delivered hereunder shall be delivered in accordance
      with the notice provisions of the Securities Purchase Agreement.

    

        Section
      10.
Governing
      Law.
      This
      Debenture and the provisions hereof are to be construed according to and are
      governed by the laws of the State of New York, without regard to principles
      of
      conflicts of laws thereof. Borrower agrees that the New York State Supreme
      Court
      located in the County of Nassau, State of New York shall have exclusive
      jurisdiction in connection with any dispute concerning or arising out of this
      Debenture, the Loan Documents, or otherwise relating to the parties
      relationship. In any action, lawsuit or proceeding brought to enforce or
      interpret the provisions of this Debenture, the Loan Documents and/or arising
      out of or relating to any dispute between the parties, the Lender shall be
      entitled to recover all of his or its costs and expenses relating to such issue
      (including without limitation, reasonable attorney’s fees and disbursements) in
      addition to any other relief to which the Lender may be entitled.

    

    Section
      11. Successors
      and Assigns.
      Subject
      to applicable securities laws, this Debenture and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and assigns of Lender.

     

    Section
      12. Amendment.
      This
      Debenture may be modified or amended or the provisions hereof waived only with
      the written consent of the Lender and the Company. 

     

    Section
      13. Severability.
      Wherever possible, each provision of this Debenture shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Debenture shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Debenture.

     

     

    [Signature
      page follows]

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the Borrower has caused this Debenture to be duly executed
      by a
      duly authorized officer as of the date first above indicated.

    
      
        	 	 	 
	 	COMPLIANCE
                SYSTEMS CORPORATION
	 
 	 
 	 
 
	 	By:	/s/
                Dean
                Garfinkel
	 	Name:	Dean Garfinkel
	 	Title:	President

      

       

    

    
      
         

      

      
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    ANNEX
      A

    

    NOTICE
      OF
      CONVERSION

    To
      Be
      Executed by the Lender

    in
      Order
      to Convert Debenture

    

      The
      undersigned Lender hereby elects to convert $__________ principal and $_____
      interest currently outstanding and owed under the Secured Convertible Debenture
      issued to Agile
      Opportunity Fund, LLC
      at a
      Conversion Price of $___ (the “Debenture”)
      and to
      purchase ___________ shares of Common Stock of Compliance
      Systems Corporation
      issuable
      upon conversion of such Debenture, and requests that certificates for such
      securities shall be issued in the name of:

    

    

    ___________________________________________________________

    (please
      print or type name and address)

    

    ___________________________________________________________

    (please
      insert social security or other identifying number)

    

    and
      be
      delivered as follows:

    

    

    ___________________________________________________________

    please
      print or type name and address)

    

    ___________________________________________________________

    (please
      insert social security or other identifying number)

    

    

    Lender
      Name:_______________________________________________

    

    By:________________________________________________________

    Name:

    Title:

    

    Conversion
      Date:___________________________________________Unassociated Document

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

    

    VOID
      AFTER 5:00 P.M. ON SEPTEMBER 1, 2013

    

    COMPLIANCE
      SYSTEMS CORPORATION

    WARRANT
      CERTIFICATE

    

    800,000
      Common Stock Purchase Warrants

     

    
      
        	Warrant Certificate
                No. 08 - 02
                	
                Glen
                  Cove, New York

                As
                  of September 2,
                  2008

              

      

    

     

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

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

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

    

    1. Exercise
      of Warrants.

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

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

    

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

    

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

    

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

    

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

    

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

    

    (i) pay
      a
      dividend in shares of Common Stock or make a distribution in shares of Common
      Stock or such other stock to holders of all its outstanding shares of Common
      Stock;

    (ii) subdivide,
      reclassify or recapitalize the outstanding shares of Common Stock into a greater
      number of shares; 

    (iii) combine,
      reclassify or recapitalize the outstanding shares of Common Stock into a smaller
      number of shares of Common Stock; or

    (iv) issue
      by
      reclassification of shares of Common Stock into any other securities of the
      Company (including any such reclassification in connection with a consolidation
      or merger in which the Company is the continuing corporation);

    

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

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

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

    

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

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (d) Stock
      Issuances.

    

    (i) If
      the
      Company shall, at any time or from time to time on or before the Expiration
      Time, issue (x) shares of Common Stock, (y) rights, options, warrants or other
      securities entitling the holder thereof to subscribe for, purchase, convert
      to,
      exchange for or otherwise acquire Common Stock or (z) rights, options, warrants
      or other securities entitling the holder thereof to subscribe for, purchase,
      convert to, exchange for or otherwise acquire such convertible or exchangeable
      securities (in each case, other than Excluded Securities (as defined in
      subparagraph 3(d)(iii) of this Warrant Certificate and other than issuances
      that
      result in an adjustment under paragraphs 3(a), 3(b) or 3(c) of this Warrant
      Certificate), without consideration or for a consideration per share of Common
      Stock less than the Purchase Price in effect immediately prior to the issuance
      of such Common Stock or such rights, options, warrants or other securities,
      the
      Purchase Price in effect immediately prior to each such issuance shall forthwith
      be adjusted to a price equal to the quotient obtained by dividing: (A) an amount
      equal to the sum of (I) the total number of shares of Common Stock outstanding
      immediately prior to such issuance (including any shares of Common Stock deemed
      to have been issued pursuant to subclauses (B)(1) and (B)(2) of subparagraph
      3(d)(ii) of this Warrant Certificate), multiplied
      by the
      Purchase Price in effect immediately prior to such issuance, plus
      (II) the
      consideration received by the Company upon such issuance, by (B) the total
      number of shares of Common Stock outstanding (including any shares of Common
      Stock deemed to have been issued pursuant to subclauses (B)(1) and (B)(2) of
      subparagraph 3(d)(ii) of this Warrant Certificate).

    (ii) For
      the
      purposes of any adjustment of the Purchase Price pursuant to this paragraph
      3(d), the following provisions shall be applicable:

    (A) In
      the
      case of the issuance of Common Stock for a consideration in whole or in part
      other than cash, the consideration other than cash shall be deemed to be the
      fair market value thereof as determined in good faith by the Board of Directors
      of the Company, irrespective of any accounting treatment; and

    (B) In
      the
      case of (x) the issuance of rights, options or warrants entitling the holder
      thereof to subscribe for, purchase or otherwise acquire Common Stock, (y)
      securities convertible into or exchangeable for Common Stock or (z) rights,
      options, warrants or other securities convertible into or exchangeable for
      such
      convertible or exchangeable securities -

    (1) the
      aggregate maximum number of shares of Common Stock deliverable upon exercise
      of
      such rights, options or warrants entitling the holder thereof to subscribe
      for,
      purchase or otherwise acquire Common Stock shall be deemed to have been issued
      at the time such rights, options or warrants were issued and for a consideration
      equal to the consideration (determined in the manner provided in clause (A)
      of
      this subparagraph 3(d)(ii)), if any, received by the Company upon the issuance
      of such rights, options or warrants plus
      the
      minimum purchase price provided in such rights, options or warrants for the
      Common Stock covered thereby;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (2) the
      aggregate maximum number of shares of Common Stock deliverable upon conversion
      of or in exchange for any such convertible or exchangeable securities or upon
      the exercise of rights, options or warrants to subscribe for, purchase or
      otherwise acquire such convertible or exchangeable securities and subsequent
      conversion or exchange thereof shall be deemed to have been issued at the time
      such rights, options, warrants or securities were issued and for a consideration
      equal to the consideration received by the Company for any such rights, options,
      warrants and securities (excluding any cash received on account of accrued
      interest or accrued dividends), plus
      the
      consideration, if any, to be received by the Company upon the conversion or
      exchange of such securities or the exercise of any related rights, options
      or
      warrants (the consideration in each case to be determined in the manner provided
      in clause (A) of this subparagraph 3(d)(ii);

    (3) on
      any
      change in the number of shares of Common Stock deliverable upon exercise of
      any
      such rights, options or warrants or conversions of or exchanges for such
      convertible or exchangeable securities or any change in the consideration to
      be
      received by the Company upon the exercise of any such rights, options or
      warrants or conversions of or exchanges for such convertible or exchangeable
      securities, other than a change resulting from the anti-dilution provisions
      thereof, the Purchase Price shall forthwith be readjusted to such Purchase
      Price
      as would have obtained had the adjustment made upon the issuance of such rights,
      options, warrants or securities not converted prior to such change been made
      upon the basis of such change; and

    (4) on
      the
      expiration of any such rights, options or warrants, the termination of any
      such
      rights to convert or exchange or the expiration of any rights, options or
      warrants related to such convertible or exchangeable securities, the Purchase
      Price shall forthwith be readjusted to such Purchase Price as would have
      obtained had the adjustment made upon the issuance of such rights, options,
      warrants or securities or rights, options or warrants related to such securities
      been made upon the basis of the issuance of only the number of shares of Common
      Stock actually issued upon exercise of such rights, options or warrants, upon
      the conversion or exchange of such securities or upon the exercise of the
      rights, options or warrants related to such securities and subsequent conversion
      or exchange thereof.

    (iii) For
      the
      purposes of this paragraph 3(d), the term “Excluded Securities” shall mean (A)
      shares of Common Stock issuable upon conversion or exercise, as applicable,
      of
      the convertible securities, rights, options and warrants of the Company
      outstanding as of the Commencement Date, (B) the first 15 million shares of
      Common Stock issuable under an equity incentive plan for employees, officers,
      directors and/or independent contractors of the Company adopted by the Board
      of
      Directors of the Company, provided
      such
      Common Stock is sold at or above the lower of the Current Market Price as of
      the
      date of grant or issuance of the option or other right granted or issued under
      such plan or date of issuance of such Common Stock and (C) any securities of
      the
      Company issued by the Company (1) pursuant to or in connection with the
      Securities Purchase Agreement, dated as of the Commencement Date, between the
      Company and Agile Opportunity Fund, LLC or (2) to any party in connection
      therewith Cresta Capital Strategies LLC (“Cresta”) is entitled to a fee pursuant
      to the Exclusive Investment Banking Agreement, dated as of March 17, 2008,
      between the Company and Cresta.

    

    
      
        
        

      

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

    

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

    

    (i) if
      the
      shares of Common Stock are listed or admitted for trading on a national
      securities exchange, the last reported sales price or, in case no such reported
      sale takes place on such day or days, the average of the reported closing bid
      and asked prices, in either case on the principal national securities exchange
      on which the shares of the Common Stock are listed or admitted for trading,
      or

    (ii) if
      the
      shares of Common Stock are not listed or admitted for trading on a national
      securities exchange,

    (A) the
      average of the closing bid and asked prices of the Common Stock as quoted on
      the
      Over-The-Counter Bulletin Board (the “Bulletin Board”) maintained by the
      Financial Industry Regulatory Authority (“FINRA”), or

    (B) if
      the
      shares of Common Stock are not quoted on the Bulletin Board, the average of
      the
      closing bid and asked prices of the common stock in the over-the-counter market,
      as reported by The Pink Sheets, LLC, or an equivalent generally accepted
      reporting service, or

    (iii) if
      on any
      such day the shares of Common Stock are not listed on a national securities
      exchange nor quoted on the Bulletin Board or by The Pink Sheets, LLC, the fair
      market value of the shares of Common Stock as determined in good faith by the
      Board of Directors of the Company.

    

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

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

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

    

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

    

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

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

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

    

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

    

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

    

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

    

    7. Transfer.

    

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

    

    
      
        
        

      

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

    

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

    

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

    

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

    

    
      
        
        

      

      
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    10. Registration
      Rights.

    

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

    

    (i) Registerable
      Securities.
      The
      term “Registerable Securities” shall mean any of the Warrant Shares or other
      securities issuable upon exercise of any of the Warrants originally issued
      to
      Cresta as of the Commencement Date and represented, in whole or part, by this
      Warrant Certificate. For the purposes of this Section 10, securities will cease
      to be Registerable Securities when:

    (A)
      a
      registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), covering such Registerable Securities has been declared
      effective and (1) such Registerable Securities have been disposed of pursuant
      to
      such effective registration statement or (2) such registration statement has
      remained effective for 270 consecutive days, or

    (B)
      such
      Registerable Securities are distributed to the public pursuant to the Securities
      Act or pursuant to an exemption from the registration requirements of the
      Securities Act, including, without limitation, Rules 144 and 144A promulgated
      under the Securities Act and the Company has delivered new certificates or
      other
      evidences of ownership for such securities which are not subject to any stop
      transfer order or other restriction on transfer;

    (ii) Rightsholders.
      The
      term “Rightsholders” shall include the Warrantholder, all successors and assigns
      of the Warrantholders and all transferees of Registerable Securities where
      such
      transfer affirmatively includes the transfer and assignment of the rights of
      the
      transferor-Warrantholder under this Warrant Certificate with respect to the
      transferred Registerable Securities and such transferee agrees in writing to
      assume all of the transferor-Warrantholder’s agreements, obligations and
      liabilities under this section 10 with respect to the transferred Registerable
      Securities; and

    (iii) Interpretations
      of Terms.
      The
      words “hereof,” “herein” and “hereunder” and words of similar import when used
      in this section 10 shall refer to this section 10 as a whole and not to any
      particular provision of this section 10, and subsection, paragraph, clause,
      schedule and exhibit references are to this section 10 unless otherwise
      specified.

    

    (b) Piggy-Back
      Registration.

    

    (i) Piggy-Back
      Rights.
      If, at
      any time on or prior to the first anniversary of the Expiration Time, the
      Company (or any successor of the Company, by merger or otherwise) proposes
      to
      file a registration statement under the Securities Act with respect to an
      offering by the Company or any other party of any class of equity security
      similar to any Registerable Securities (other than a registration statement
      on
      Form S-4 or S-8 or any successor form or a registration statement filed solely
      in connection with an exchange offer, a business combination transaction or
      an
      offering of securities solely to the existing shareholders or employees of
      the
      Company), then the Company, on each such occasion, shall give written notice
      (each, a “Company Piggy-Back Notice”) of such proposed filing to all of the
      Rightsholders owning Registerable Securities at least twenty days before the
      anticipated filing date of such registration statement, and such Company
      Piggy-Back Notice also shall be required to offer to such Rightsholders the
      opportunity to register such aggregate number of Registerable Securities as
      each
      such Rightsholder may request. Each such Rightsholder shall have the right,
      exercisable for the fifteen days immediately following the giving of a Company
      Piggy-Back Notice, to request, by written notice (each, a “Holder Notice”) to
      the Company, the inclusion of all or any portion of the Registerable Securities
      of such Rightsholders in such registration statement. The Company shall use
      commercially best efforts to cause the managing underwriter(s) of a proposed
      underwritten offering to permit the inclusion of the Registerable Securities
      which were the subject of all Holder Notices in such underwritten offering
      on
      the same terms and conditions as any similar securities of the Company included
      therein. Notwithstanding anything to the contrary contained in this subparagraph
      10(b)(i), if the managing underwriter(s) of such underwritten offering or any
      proposed underwritten offering delivers a written opinion to the Rightsholders
      of Registerable Securities which were the subject of all Holder Notices that
      the
      total amount and kind of securities which they, the Company and any other person
      intend to include in such offering is such as to materially and adversely affect
      the success of such offering, then the amount of securities to be offered for
      the accounts of such Rightsholders and persons other than the Company shall
      be
      eliminated or reduced pro rata (based on the amount of securities owned by
      such
      Rightsholders and other persons which carry registration rights) to the extent
      necessary to reduce the total amount of securities to be included in such
      offering to the amount recommended by such managing underwriter(s) in the
      managing underwriter’s written opinion.

     

    
      
        
        

      

      
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    (ii) Number
      of Piggy-Back Registrations; Expenses.
      The
      Rightsholders shall be entitled, in the aggregate, to two Piggy-Back
      Registrations. Subject to the provisions of paragraph 10(d) of this Warrant
      Certificate, the Company will pay all Registration Expenses in connection with
      any registration of Registerable Securities effected pursuant to this paragraph
      10(b), but the Company shall not be responsible for the payment of any
      underwriter’s discount, commission or selling concession in connection
      therewith.

    (iii) Withdrawal
      or Suspension of Registration Statement.
      The
      Company shall have the absolute right, whether before or after the giving of
      a
      Company Piggy-Back Notice or Holder Notice, to determine not to file a
      registration statement to which the Rightsholders shall have the right to
      include their Registerable Securities therein pursuant to this paragraph 10(b),
      to withdraw such registration statement or to delay or suspend pursuing the
      effectiveness of such registration statement. In the event of such a
      determination after the giving of a Company Piggy-Back Notice, the Company
      shall
      give notice of such determination to all Rightsholders and, thereupon, (A)
      in
      the case of a determination not to register or to withdraw such registration
      statement, the Company shall be relieved of its obligation under this paragraph
      10(b) to register any of the Registerable Securities in connection with such
      registration and (B) in the case of a determination to delay the registration,
      the Company shall be permitted to delay or suspend the registration of
      Registerable Securities pursuant to this paragraph 10(b) for the same period
      as
      the delay in the registration of such other securities. No registration effected
      under this paragraph 10(b) shall relieve the Company of its obligation to effect
      any registration upon demand otherwise granted to a Rightsholder under any
      other
      agreement with the Company.

    

    
      
        
        

      

      
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    (c) Registration
      Procedures.

    

    (i) Obligations
      of the Company.
      The
      Company will, in connection with any registration pursuant to paragraph 10(b)
      of
      this Warrant Certificate, as expeditiously as possible:

    (A) prepare
      and file with the Commission a registration statement under the Securities
      Act
      on any appropriate form chosen by the Company, in the Company’s sole discretion,
      which shall be available for the sale of all Registerable Securities in
      accordance with the intended method(s) of distribution thereof set forth in
      all
      applicable Holder Notices, and use the Company’s commercially best efforts to
      cause such registration statement to become effective as soon thereafter as
      reasonably practicable but in no event more than 100 days after receipt of
      such
      notices or requests; provided,
      that,
      at least five business days before filing with the Commission of such
      registration statement, the Company shall furnish to each Rightsholder whose
      Registerable Securities are included therein draft copies of such registration
      statement, including all exhibits thereto and documents incorporated by
      reference therein, and, upon the reasonable request of any such Rightsholder,
      shall continue to provide drafts of such registration statement until filed,
      and, after such filing, the Company shall, as diligently as practicable, provide
      to each such Rightsholders such number of copies of such registration statement,
      each amendment and supplement thereto, the prospectus included in such
      registration statement (including each preliminary prospectus), all exhibits
      thereto and documents incorporated by reference therein and such other documents
      as such Rightsholder may reasonably request in order to facilitate the
      disposition of the Registerable Securities owned by such Rightsholder and
      included in such registration statement; provided,
      further,
      the
      Company shall modify or amend the registration statement as it relates to such
      Rightsholder as reasonably requested by such Rightsholder on a timely basis,
      and
      shall reasonably consider other changes to the registration statement (but
      not
      including any exhibit or document incorporated therein by reference) reasonably
      requested by such Rightsholder on a timely basis, in light of the requirements
      of the Securities Act and any other applicable laws and regulations; and
provided,
      further,
      that
      the obligation of the Company to effect such registration and/or cause such
      registration statement to become effective, may be postponed for (1) such period
      of time when the financial statements of the Company required to be included
      in
      such registration statement are not available (due solely to the fact that
      such
      financial statements have not been prepared in the regular course of business
      of
      the Company) or (2) any other bona
      fide
      corporate purpose, but then only for a period not to exceed 60 calendar
      days;

    (B) prepare
      and file with the Commission such amendments and post-effective amendments
      to a
      registration statement as may be necessary to keep such registration statement
      effective for up to nine months; and cause the related prospectus to be
      supplemented by any required prospectus supplement, and as so supplemented
      to be
      filed to the extent required pursuant to Rule 424 promulgated under the
      Securities Act, during such nine-month period; and otherwise comply with the
      provisions of the Securities Act with respect to the disposition of all
      Registerable Securities covered by such registration statement during the
      applicable period in accordance with the intended method(s) of disposition
      of
      such Registerable Securities set forth in such registration statement,
      prospectus or supplement to such prospectus;

     

    
      
        
        

      

      
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    (C) notify
      the Rightsholders whose Registerable Securities are included in such
      registration statement and the managing underwriter(s), if any, of an
      underwritten offering of any of the Registerable Securities included in such
      registration statement, and confirm such advice in writing, (1) when a
      prospectus or any prospectus supplement or post-effective amendment has been
      filed, and, with respect to a registration statement or any post-effective
      amendment, when the same has become effective, (2) of any request by the
      Commission for amendments or supplements to a registration statement or related
      prospectus or for additional information, (3) of the issuance by the Commission
      of any stop order suspending the effectiveness of a registration statement
      or
      the initiation of any proceedings for that purpose, (4) if at any time the
      representations and warranties of the Company contemplated by subclause (J)(1)
      of subparagraph 10(c)(i) of this Warrant Certificate cease to be true and
      correct, (5) of the receipt by the Company of any notification with respect
      to
      the suspension of the qualification of any of the Registerable Securities for
      sale in any jurisdiction or the initiation or threatening of any proceeding
      for
      such purpose and (6) of the happening of any event which makes any statement
      made in the registration statement, the prospectus or any document incorporated
      therein by reference untrue or which requires the making of any changes in
      the
      registration statement or prospectus so that such registration statement,
      prospectus or document incorporated by reference will not contain any untrue
      statement of material fact or omit to state any material fact required to be
      stated therein or necessary to make the statements therein not
      misleading;

    (D) make
      commercially best efforts to obtain the withdrawal of any order suspending
      the
      effectiveness of such registration statement at the earliest possible moment
      and
      to prevent the entry of such an order;

    (E) use
      commercially best efforts to register or qualify the Registerable Securities
      included in such registration statement under such other securities or blue
      sky
      laws of such jurisdictions as any Rightsholder whose Registerable Securities
      are
      included in such registration statement reasonably requests in writing and
      do
      any and all other acts and things which may be necessary or advisable to enable
      such Rightsholder to consummate the disposition in such jurisdictions of such
      Registerable Securities; provided,
      that
      the Company will not be required to (1) qualify generally to do business in
      any
      jurisdiction where it would not otherwise be required to qualify but for this
      clause (E), (2) subject itself to taxation in any such jurisdiction or (3)
      take
      any action which would subject it to general service of process in any such
      jurisdiction;

    (F) make
      available for inspection by each Rightsholder whose Registerable Securities
      are
      included in such registration, any underwriter(s) participating in any
      disposition pursuant to such registration statement, and any representative,
      agent or employee of or attorney or accountant retained by any such Rightsholder
      or underwriter(s) (collectively, the “Inspectors”), all financial and other
      records, pertinent corporate documents and properties of the Company
      (collectively, the “Records”) as shall be reasonably necessary to enable them to
      exercise their due diligence responsibility (or establish a due diligence
      defense), and cause the officers, directors and employees of the Company to
      supply all information reasonably requested by any of the Inspectors in
      connection with such registration statement; provided,
      that
      records which the Company determines, in good faith, to be confidential and
      which it notifies the Inspectors are confidential shall not be disclosed by
      the
      Inspectors, unless (1) the release of such Records is ordered pursuant to a
      subpoena or other order from a court of competent jurisdiction or (2) the
      disclosure of such Records is required by any applicable law or regulation
      or
      any governmental regulatory body with jurisdiction over such Rightsholder or
      underwriter; provided,
      further,
      that
      such Rightsholder or underwriter(s) agree that such Rightsholder or
      underwriter(s) will, upon learning the disclosure of such Records is sought
      in a
      court of competent jurisdiction, give notice to the Company and allow the
      Company, at the Company’s expense, to undertake appropriate action to prevent
      disclosure of the Records deemed confidential;

     

    
      
        
        

      

      
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    (G) cooperate
      with the Rightsholders whose Registerable Securities are included in such
      registration statement and the managing underwriter(s), if any, to facilitate
      the timely preparation and delivery of certificates representing Registerable
      Securities to be sold thereunder, not bearing any restrictive legends, and
      enable such Registerable Securities to be in such denominations and registered
      in such names as such Rightsholder or any managing underwriter(s) may reasonably
      request at least two business days prior to any sale of Registerable
      Securities;

    (H) comply
      with all applicable rules and regulations of the Commission and promptly make
      generally available to its security holders an earnings statement covering
      a
      period of twelve months commencing, (1) in an underwritten offering, at the
      end
      of any fiscal quarter in which Registerable Securities are sold to
      underwriter(s), or (2) in a non-underwritten offering, with the first month
      of
      the Company’s first fiscal quarter beginning after the effective date of such
      registration statement, which earnings statement in each case shall satisfy
      the
      provisions of Section 10(a) of the Securities Act;

    (I) provide
      a
      CUSIP number for all Registerable Securities not later than the effective date
      of the registration statement relating to the first public offering of
      Registerable Securities of the Company pursuant hereto;

    (J) enter
      into such customary agreements (including an underwriting agreement in customary
      form) and take all such other actions reasonably requested by the Rightsholders
      holding a majority of the Registerable Securities included in such registration
      statement or the managing underwriter(s) in order to expedite and facilitate
      the
      disposition of such Registerable Securities and in such connection, whether
      or
      not an underwriting agreement is entered into and whether or not the
      registration is an underwritten registration, (1) make such representations
      and
      warranties, if any, to the holders of such Registerable Securities and any
      underwriter(s) with respect to the registration statement, prospectus and
      documents incorporated by reference, if any, in form, substance and scope as
      are
      customarily made by issuers to underwriter(s) in underwritten offerings and
      confirm the same if and when requested, (2) obtain opinions of counsel to the
      Company and updates thereof addressed to each such Rightsholder and the
      underwriter(s), if any, with respect to the registration statement, prospectus
      and documents incorporated by reference, if any, covering the matters
      customarily covered in opinions requested in underwritten offerings and such
      other matters as may be reasonably requested by such Rightsholders and
      underwriter(s), (3) obtain a “cold comfort” letter and updates thereof from the
      Company’s independent certified public accountants addressed to such
      Rightsholders and to the underwriter(s), if any, which letters shall be in
      customary form and cover matters of the type customarily covered in “cold
      comfort” letters by accountants in connection with underwritten offerings, and
      (4) deliver such documents and certificates as may be reasonably requested
      by
      the Rightsholders holding a majority of such Registerable Securities and
      managing underwriter(s), if any, to evidence compliance with any customary
      conditions contained in the underwriting agreement or other agreement entered
      into by the Company; each such action required by this clause (J) shall be
      done
      at each closing under such underwriting or similar agreement or as and to the
      extent required thereunder; and

     

    
      
        
        

      

      
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    (K) if
      requested by the holders of a majority of the Registerable Securities included
      in such registration statement, use its best efforts to cause all Registerable
      Securities which are included in such registration statement to be listed,
      subject to notice of issuance, by the date of the first sale of such
      Registerable Securities pursuant to such registration statement, on each
      securities exchange, if any, on which securities similar to the Registered
      Securities are listed.

    (ii) Obligations
      of Rightsholders.
      In
      connection with any registration of Registerable Securities of a Rightsholder
      pursuant to paragraph 10(b) of this Warrant Certificate:

    (A) The
      Company may require that each Rightsholder whose Registerable Securities are
      included in such registration statement furnish to the Company such information
      regarding the distribution of such Registerable Securities and such Rightsholder
      as the Company may from time to time reasonably request in writing;

    (B) Each
      Rightsholder, upon receipt of any notice from the Company of the happening
      of
      any event of the kind described in subclauses (2), (3), (5) and (6) of clause
      10(c)(i)(C) of this Warrant Certificate, shall forthwith discontinue disposition
      of Registerable Securities pursuant to the registration statement covering
      such
      Registerable Securities until such Rightsholder’s receipt of the copies of the
      supplemented or amended prospectus contemplated by subclause (1) of said clause
      10(c)(i)(C), or until such Rightsholder is advised in writing (the “Advice”) by
      the Company that the use of the applicable prospectus may be resumed, and until
      such Rightsholder has received copies of any additional or supplemental filings
      which are incorporated by reference in or to be attached to or included with
      such prospectus, and, if so directed by the Company, such Rightsholder will
      deliver to the Company (at the expense of the Company) all copies, other than
      permanent file copies then in the possession of such Rightsholder, of the
      current prospectus covering such Registerable Securities at the time of receipt
      of such notice; the Company shall have the right to demand that such
      Rightsholder or other holder verify its agreement to the provisions of this
      clause (B) in any Holder Notice of the Rightsholder or in a separate document
      executed by the Rightsholder; and

     

    
      
        
        

      

      
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    (C)
       Each
      Rightsholder agrees that in a underwritten offering it will not, without the
      consent of the managing underwriter, dispose of or offer any securities of
      the
      Company for the period of restrictions on the sale or disposal of securities
      of
      the Company imposed, or consented to, by any principal shareholder of the
      Company.

    

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

    

    (e) Indemnification:
      Contribution.

    

    (i) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless, to the full extent permitted
      by
      law, each Rightsholder, its officers and directors and each person who controls
      such Rightsholder (within the meaning of the Securities Act), if any, and any
      agent thereof against all losses, claims, damages, liabilities and expenses
      incurred by such party pursuant to any actual or threatened suit, action,
      proceeding or investigation (including reasonable attorney’s fees and expenses
      of investigation) arising out of or based upon any untrue or alleged untrue
      statement of a material fact contained in any registration statement, prospectus
      or preliminary prospectus or any omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of a prospectus, in the light of the circumstances under
      which they were made) not misleading, except insofar as the same arise out
      of or
      are based upon, any such untrue statement or omission based upon information
      with respect to such Rightsholder furnished in writing to the Company by such
      Rightsholder expressly for use therein.

    (ii) Indemnification
      by Rightsholder.
      In
      connection with any registration statement in which a Rightsholder is
      participating, each such Rightsholder will be required to furnish to the Company
      in writing such information with respect to such Rightsholder as the Company
      reasonably requests for use in connection with any such registration statement
      or prospectus, and each Rightsholder agrees to the extent it is such a holder
      of
      Registerable Securities included in such registration statement, and each other
      such holder of Registerable Securities included in such Registration Statement
      will be required to agree, to indemnify, to the full extent permitted by law,
      the Company, the directors and officers of the Company and each person who
      controls the Company (within the meaning of the Securities Act) and any agent
      thereof, against any losses, claims, damages, liabilities and expenses
      (including reasonable attorney’s fees and expenses of investigation incurred by
      such party pursuant to any actual or threatened suit, action, proceeding or
      investigation arising out of or based upon any untrue or alleged untrue
      statement of a material fact or any omission or alleged omission of a material
      fact necessary, to make the statements therein (in the case of a prospectus,
      in
      the light of the circumstances under which they are made) not misleading, to
      the
      extent, but only to the extent, that such untrue statement or omission is based
      upon information relating to such Rightsholder or other holder furnished in
      writing to the Company expressly for use therein.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    (iii) Conduct
      of Indemnification Proceedings.
      Promptly after receipt by an indemnified party under this paragraph 10(e) of
      written notice of the commencement of any action, proceeding, suit or
      investigation or threat thereof made in writing for which such indemnified
      party
      may claim indemnification or contribution pursuant to this Warrant Certificate,
      such indemnified party shall notify in writing the indemnifying party of such
      commencement or threat; but the omission so to notify the indemnifying party
      shall not relieve the indemnifying party from any liability which the
      indemnifying party may have to any indemnified party (A) hereunder, unless
      the
      indemnifying party is actually prejudiced thereby, or (B) otherwise than under
      this paragraph 10(e). In case any such action, suit or proceeding shall be
      brought against any indemnified party, and the indemnified party shall notify
      the indemnifying party of the commencement thereof, the indemnifying party
      shall
      be entitled to participate therein and the indemnifying party shall assume
      the
      defense thereof, with counsel reasonably satisfactory to the indemnified party,
      and the obligation to pay all expenses relating thereto. The indemnified party
      shall have the right to employ separate counsel in any such action, suit or
      proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such indemnified party unless (A)
      the
      indemnifying party has agreed to pay such fees and expenses, (B) the
      indemnifying party shall have failed to assume the defense of such action,
      suit
      or proceeding or to employ counsel reasonably satisfactory to the indemnified
      party therein or to pay all expenses relating thereto or (C) the named parties
      to any such action or proceeding (including any impleaded parties) include
      both
      the indemnified party and the indemnifying party and the indemnified party
      shall
      have been advised by counsel that there may be one or more legal defenses
      available to the indemnified party which are different from or additional to
      those available to the indemnifying party and which may result in a conflict
      between the indemnifying party and such indemnified party (in which case, if
      the
      indemnified party notifies the indemnifying party in writing that the
      indemnified party elects to employ separate counsel at the expense of the
      indemnifying party, the indemnifying party shall not have the right to assume
      the defense of such action or proceeding on behalf of the indemnified party;
      it
      being understood, however, that the indemnifying party shall not, in connection
      with any one such action, suit or proceeding or separate but substantially
      similar or related actions, suits or proceedings in the same jurisdiction
      arising out of the same general allegations or circumstances, be liable for
      the
      fees and expenses of more than one separate firm of attorneys at any time for
      the indemnified party, which firm shall be designated in writing by the
      indemnified party).

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    (iv) Contribution.
      If the
      indemnification provided for in this paragraph 10(e) from the indemnifying
      party
      is unavailable to an indemnified party hereunder in respect of any losses,
      claims, damages, liabilities or expenses referred to therein, then the
      indemnifying party, in lieu of indemnifying such indemnified party, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such losses, claims, damages, liabilities or expenses (A) in such proportion
      as is appropriate to reflect the relative benefits received by the indemnifying
      party on the one hand and the indemnified party on the other or (B) if the
      allocation provided by clause (A) above is not permitted by applicable law,
      in
      such proportion as is appropriate to reflect not only the relative benefits
      received by the indemnifying party on the one hand and the indemnified party
      on
      the other but also the relative fault of the indemnifying party and indemnified
      party, as well as any other relevant equitable considerations. The relative
      fault of such indemnifying party and the indemnified parties shall be determined
      by reference to, among other things, whether any action in question, including
      any untrue or alleged untrue statement of a material fact or omission or alleged
      omission to state a material fact, has been made by, or relates to information
      supplied by, such indemnifying party or indemnified parties, and the parties’
relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action. The amount paid or payable by a party as a result of the
      losses, claims, damages, liabilities and expenses referred to above shall be
      deemed to include, subject to the limitation set forth in subparagraph 10(e)(v)
      of this Warrant Certificate, any legal or other fees or expenses reasonably
      incurred by such party in connection with any investigation or
      proceeding.

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this subparagraph 10(e)(iv) were determined by pro rata allocation
      or by any other method of allocation which does not take into account the
      equitable considerations referred to in clauses (A) and (B) of the immediately
      preceding paragraph. No person guilty of fraudulent misrepresentation (within
      the meaning of Section 10(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation.

    (v) Limitation.
      Anything to the contrary contained in this paragraph 10(e) or in paragraph
      10(f)
      of this Warrant Certificate notwithstanding, no holder of Registerable
      Securities shall be liable for indemnification and contribution payments
      aggregating an amount in excess of the maximum dollar amount of the net proceeds
      received by such holder in connection with any sale of Registerable Securities
      as contemplated herein.

    

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

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

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

    

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

    

    13. No
      Rights as Shareholder; Notice to Warrantholder.

    

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

    

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

    

    (i) the
      Company shall authorize the payment of any distributions upon Common Stock
      payable in any securities or authorize the making of any distribution (other
      than a cash distribution subject to the second parenthetical set forth in
      section 3(c) of this Warrant Certificate) to all holders of Common
      Stock;

    (ii) the
      Company shall authorize the issuance to all holders of Common Stock of any
      additional shares of Common Stock or of rights, options or warrants to subscribe
      for or purchase Common Stock or of any other subscription rights, options or
      warrants;

    (iii) a
      dissolution, liquidation or winding up of the Company (including, without
      limitation, a consolidation, merger, or sale or conveyance of the property
      of
      the Company as an entirety or substantially as an entirety); or

    (iv) a
      capital
      reorganization or reclassification of the Common Stock (other than a subdivision
      or combination of the outstanding Common Stock) or any consolidation or merger
      of the Company with or into another corporation (excluding any consolidation
      or
      merger in which the Company is the continuing company and that does not result
      in any reclassification of, or change to, the Common Stock then outstanding)
      or
      in the case of any sale or conveyance to another corporation of the property
      of
      the Company as an entirety or substantially as an entirety.

    

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

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

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

    

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

    

    
      	 	 	 
	Dated:
              As of September 2, 2008	Compliance
              Systems Corporation
	 
 	 
 	 
 
	 	By:  	/s/
              Dean
              Garfinkel
	 	
              
Dean
              Garfinkel,
              President

    ATTEST:

    

    
      	
              /s/
                Barry
                Brookstein

            	 	 	 
	
              Barry
                Brookstein,
                Secretary

            	 	 	 

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    EXERCISE
      FORM

    

    Dated:____________,
      20__

    

    TO:
      Compliance Systems Corporation:

    

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

    

    ________________________________________________

    

    INSTRUCTIONS
      FOR REGISTRATION OF STOCK

    (Please
      type or print in block letters)

    

    
      	
              Name:

            	 	   	 
	
              Taxpayer

            	 	 	 
	
              Identification

            	 	 	 
	
              Number:

            	 	   	 
	 	 	 	 
	
              Address:

            	 	   
              	 
	 	 	   	 
	 	 	   
              	 
	 	 	   	 
	 	 	 	 
	
              Signature:

            	 	   
              	 
	 	 	
              (Signature
                must conform in all respects to

              the
                name of the Warrantholder as set forth on the

              face
                of this Warrant Certificate.)

            	 

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    (Please
      type or print in block letters)

    

    FOR
      VALUE
      RECEIVED, _____________________________________

    

    hereby
      sells, assigns and transfers unto:

     

    
      	
              Name:

            	 	   	 
	
              Taxpayer

            	 	 	 
	
              Identification

            	 	 	 
	
              Number:

            	 	   	 
	 	 	 	 
	
              Address:

            	 	   
              	 
	 	 	   	 
	 	 	   
              	 
	 	 	   	 
	 	 	 	 

    

     

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

     

    
      	
               Dated:

            	 	   
              	 
	 	 	 	 
	
              Signature:

            	 	   
              	 
	 	 	
              (Signature
                must conform in all respects to

              the
                name of the Warrantholder as set forth on the

              face
                of this Warrant Certificate.)

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