March 7, 2006
Compliance Systems Corporation
90 Pratt Oval
Glenn Cove, NY 11542
Attention: Dean Garfinkel
RE: SECURITIES PURCHASE AGREEMENT (THE "SPA") DATED AS OF NOVEMBER 30,
2005 BETWEEN COMPLIANCE SYSTEMS CORPORATION (THE "COMPANY") AND
MONTGOMERY EQUITY PARTNERS, LTD. ("MONTGOMERY"), AND RELATED
AGREEMENTS.
Dear Sirs:
This letter agreement will confirm our understanding regarding the SPA and
certain other contracts entered into in connection with the SPA. In connection
with the SPA, following agreements were executed:
o An Investor Registration Rights Agreements ("Registration Rights
Agreement") dated November 30, 2005 between the Company and Montgomery.
o Escrow Agreement ("Escrow Agreement") between the Company, Montgomery, and
David Gonzalez, Esq. (the "Escrow Agent") dated November 30, 2005.
o An Insider Pledge and Escrow Agreement among the Company, Montgomery, the
Escrow Agent, and Dean Garfinkel dated November 30, 2005 (the "Garfinkel
Pledge Agreement").
o An Insider Pledge and Escrow Agreement among the Company, Montgomery, the
Escrow Agent, and Barry Brookstein dated November 30, 2005 (the
"Brookstein Pledge Agreement").
o A Security Agreement between the Company and Montgomery dated November 30,
2005 (the "Security Agreement").
o A Security Agreement between Jasmin Communications, Inc. and Montgomery
dated November 30, 2005 (the "Jasmin Security Agreement").
o A Security Agreement between Telephone Blocking Services, Corporation and
Montgomery dated November 30, 2005 (the "TBS Security Agreement").
o A Security Agreement between Call Compliance.com, Inc. and Montgomery
dated November 30, 2005 (the "Call Compliance.com Security Agreement").
o A Security Agreement between CallCenter Tools, Inc. and Montgomery dated
November 30, 2005 (the "Call Center Security Agreement").
o A Security Agreement between Call Compliance, Inc. and Montgomery dated
November 30, 2005 (the "Call Compliance Security Agreement").
The agreements listed above, collectively, along with the SPA, shall be
referenced as the "Transaction Documents."
1. Termination of the Transaction Documents. The Transaction Documents
shall be terminated as of the date hereof.
2. This letter may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which shall constitute
one and the same instrument. This letter shall be accepted,
effective and binding, for all purposes, when the parties shall have
signed and transmitted to each other, by telecopier or otherwise,
copies of this letter. The terms of this letter supersede the terms
of any other verbal or written agreement existing prior to the date
hereof. In the event of any litigation arising hereunder, the
prevailing party or parties shall be entitled to recover its or
their reasonable attorneys' fees and court costs from the other
party or parties, including the costs of bringing such litigation
and collecting upon any judgments. This letter shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, trustees,
successors and assigns. Except for the amounts expressly set forth
herein, none of the parties hereto shall be liable to any other
party for any amounts whatsoever.
3. If the foregoing correctly sets forth the terms of our agreement,
please sign this letter on the line provided below, whereupon it
will constitute a binding agreement among us.
SIGNATURE PAGE TO FOLLOW
Sincerely,
MONTGOMERY EQUITY PARTNERS, LTD.
By:
-------------------------------------
Name: Mark Angelo
Title: Portfolio Manager
ACCEPTED AND AGREED:
COMPLIANCE SYSTEMS CORPORATION
By:
-------------------------------------
Name: Dean Garfinkel
Title: President
With Respect to the Escrow Agreement,
Garfinkel Pledge Agreement, and
Brookstein Pledge Agreement
ESCROW AGENT
- ----------------------------------
David Gonzalez, Esq.
With Respect to the Garfinkel Pledge Agreement:
- -----------------------------------
Dean Garfinkel
With respect to the Brookstein Pledge Agreement
- ---------------------------------
Barry Brookstein
With respect to the Jasmin Security Agreement:
Jasmin Communications, Inc.
By:
-------------------------------------
Name: Dean Garfinkel
Title: President
With respect to the Telephone Blocking Services Corporation Security Agreement:
Telephone Blocking Services Corporation
By:
-------------------------------------
Name: Dean Garfinkel
Title: President
With respect to the Cal Compliance.com, Inc. Security Agreement:
Cal Compliance.com, Inc.
By: __________________________
Name: Dean Garfinkel
Title: President
With respect to the CallCenter Tools, Inc. Security Agreement:
CallCenter Tools, Inc.
By:
-------------------------------------
Name: Dean Garfinkel
Title: President
With respect to the Call Compliance, Inc. Security Agreement:
Call Compliance, Inc.
By:
-------------------------------------
Name: Dean Garfinkel
Title: President