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"), Spirits Management 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 Three Hundred and Sixty-Three Thousand Dollars and
`~(degree)/ioo ($363,000.00). 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 Nine
Thousand One Hundred Ninety-Three Dollars and Four Cents ($9,193.04) 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 (i) a cash payment to Payee in
the amount of One Thousand Six Hundred and Ninety-Three Dollars ($1,693.00)
and (ii) Five Thousand (5,000) 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
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"),
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]
-----------------------------
SPII41~~ANAGEMENT INC.
By:,
SCHEDULE "A"
Shareholder Number of Shares to Be Issued Each Ouarter
Xxxxx X. Xxxxxxxxxx Total
15,000.00
15000.00
