SUBORDINATION AGREEMENT
THIS
SUBORDINATION AGREEMENT
(this
“AGREEMENT”)
is
dated as of September 30, 2006, by and between XXXXXXXXXX EQUITY PARTNERS,
LTD.,
a Cayman Island exempted Company (“Xxxxxxxxxx”)
and
NASCAP
CORP.,
a New
York corporation (the “Nascap”)
(collectively,
referred to hereinafter as the “Parties”).
RECITALS:
WHEREAS,
contemporaneously to the execution of this Agreement, Call Compliance, Inc.,
a
New York corporation (“Call
Compliance”),
is
granting a Promissory Note (the “Nascap
Note”)
in the
amount of One Hundred Fifty Thousand Dollars ($150,000.00) to Nascap;
and
WHEREAS,
in
connection with the Nascap Note, Call Compliance and Nascap are entering into
(i) a Security Agreement, dated September 30, 2006 (the “Nascap
Security Agreement”),
pursuant to which Call Compliance will grant to Nascap a security interest
in
the Secured Obligations, as defined in the Nascap Security Agreement;
and
WHEREAS,
in
connection with the Nascap Note, Compliance Systems Corporation (“Compliance
Systems”),
a
Nevada corporation which owns 100% of the issued and outstanding shares of
Call
Compliance, entered into a Guaranty Agreement, dated September 30, 2006, (the
“Nascap
Guaranty Agreement”),
made
by Compliance Systems in favor of Nascap, pursuant to which Compliance Systems
unconditionally and irrevocably guarantees to Nascap the payment and performance
of Call Company under the Nascap Note and the Nascap Security Agreement;
and
WHEREAS,
in
connection with the Nascap Note, Xxxxxxxxxx, Call Compliance and Compliance
Systems entered into a Consent, dated September 30, 2006, whereby Xxxxxxxxxx
consented to Call Compliance to enter into the Nascap Note and the Nascap
Security Agreement, and consented to Compliance Systems to enter into the Nascap
Guaranty Agreement; and
WHEREAS,
Xxxxxxxxxx
has a first priority security interest in various assets of Call Compliance,
including the Secured Obligations.
NOW,
THEREFORE,
for and
in consideration of the mutual and reciprocal covenants and agreements
hereinafter contained and other good and valuable consideration, the receipt
and
sufficiency of which is hereby acknowledged, the Parties hereto, intending
to be
legally bound, hereby agree as follows:
1.
Recitals.
The
recitals set forth above are true and are hereby incorporated by this
reference.
2.
Subordination.
Xxxxxxxxxx hereby subordinates its first priority security interest solely
with
respect to the Secured Obligations to Nascap, as defined in the Nascap Security
Agreement.
3.
Counterparts.
This
Agreement may be executed in one or more counterparts, and by the Parties hereto
in separate counterparts, each of which when executed shall be deemed to be
an
original but all of which taken together shall constitute one and the same
instrument.
4.
Governing
Law.
This
Agreement shall be governed by the laws of the State of New Jersey, excluding
its choice of law principles.
IN
WITNESS WHEREOF,
the
Parties hereto, through their duly authorized representatives, have executed
this instrument as of the day and year first written above.
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XXXXXXXXXX
EQUITY PARTNERS, LTD.,
a
Cayman Island exempted Company
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Printed Name:
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Title:
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Date:
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NASCAP
CORP.,
a
New York corporation
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Printed Name:
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Title:
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Date:
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