AGREEMENT
AGREEMENT made as of the 15th day of July, 2004 by and among Call
Compliance, Inc., a company organized under the laws of New York ("CCI" or the
"Company"), Tele-Serve Inc., a company organized under the laws of New York
("Payee"), and Compliance Systems Corporation, a company organized under the
laws of Delaware ("CSC").
Reference is hereby made to that certain Promissory Note ("Note") dated
December 1, 2002, pursuant to which CCI is indebted to Payee in the aggregate
principal amount of Two Hundred and Forty-Two Thousand Dollars and
~`(degree)/ioo ($242,000.00). CCI is a wholly-owned subsidiary of CSC, a
guarantor under the Note.
Pursuant to the Note, during the five-year period which began on June 1,
2003, the Company is obligated to pay to the Payee a monthly amount of Six
Thousand One Hundred Twenty-Eight Dollars and Seventy Cents ($6,128.70) on the
last day of each month ("Monthly Payment"). All Monthly Payments through
December 31, 2003 have been made in accordance with the terms of the Note.
The Payee has advised the Company that on a retro-active basis with
respect to the Monthly Payments, commencing as of January 1, 2004, and for the
one-year period ending December 31, 2004 (the "Payment Period"), certain of its
shareholders (the "Shareholders") wish to receive their share of the
distribution from the Monthly Payment in-kind, in shares of non-voting Class B
Common Stock, $.ooi par value per share ("Common Stock"), of CSC, at a valuation
of $1.50 per share, subject to adjustment as set forth below ("Purchase Price").
In accordance herewith, the Payee hereby agrees to receive as full payment
of each Monthly Payment under the Note (1) a cash payment to Payee in the amount
of One Thousand One Hundred and Twenty-Eight Dollars and 67/100 ($1,128.67) and
(ii) Three Thousand Three Hundred and Thirty-Three (3,333) shares of Common
Stock of CSC. The shares will be issued by CSC on or about July 30, 2004 with
respect to the two quarters ended March 31 and June 30, 2004, respectively, and
on or about September 30 and December 31, 2004, with respect to the quarters
then ended, directly to the shareholders of the Payee, in the amounts set forth
beside their
185757v1/100497.0401
AGREEMENT
respective names set forth on Schedule "A" attached hereto ("Shareholders").
Notwithstanding the forgoing, if at any time during or after the Payment Period
CSC enters into any transaction involving the sale of any Common Stock or
securities exercisable, convertible or exchangeable for shares of Class A or
Class B Common Stock of CSC, and the effective purchase and br conversion,
exercise or exchange price is less than $1.50 per share ("Adjusted Price"),
185757v1/100497.0401
AGREEMENT
then the Purchase Price shall be adjusted on a retroactive and prospective
basis, as applicable, to equal the Adjusted Price, and CSC shall promptly issue
to each of the Shareholders the appropriate number of additional shares of
Common Stock.
The Payee hereby represents that each of the Shareholders has agreed to
receive its pro rata share of the Monthly Payment in shares of Common Stock and
that the payments in (i) and (ii) of the immediately preceding paragraph shall
constitute full payment by the Company to Payee of each Monthly Payment and full
compliance by the Company of its obligations under the Note. However, in the
event of an event of default under the Note, the terms of this agreement shall
automatically be null and void and the Company's cash payment obligations under
the Note shall govern in all respects.
IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto
on the date appearing on the first page.
CALL COMPLIANCE, INC.
By: /s/ [Illegible]
--------------------------
COMPLIANCE SYSTEMS CORPORATION
By: /s/ [Illegible]
--------------------------
185757v1/100497.0401
SHAREHOLDER NUMBER OF SHARES TO BE ISSUED EACH OUARTER
Xxxxxx Xxxxx 1,250.00
Xxxx Xxxxxxxx 1,250.00
Xxxxxx Xxxxxx 1,250.00
Xxxxxx Xxxxxxxxx 1,250.00
Xxxxx Xxxxxxx 1,250.00
Xxxxxx Xxxxxx 1,250.00
Xxxxxxxx Xxxxxxxx 1,250.00
Xxxxxx Xxxxxxxxxx 156.25
Xxxx Xxxxxxx 156.25
Xxxxx Xxxxxxxxxx 156.25
Xxxxx Xxxxxxxxxx 156.25
Xxxxxxx Xxxxxxxxx 156.25
Xxxxxxxxx Xxxxxxxxx 156.25
Xxxxxxxx Garflnkel 156.25
Xxxxxxx Xxxxxxxxx 156.25
Total 10,000.00
2 185757v1/100497.0401
