Compliance Systems Corporation

18% Senior Subordinated Secured Promissory Note
 
Dated:  June 24, 2009
Principal Amount: $50,000.00
Glen Cove, New York
 

For Value Received, the undersigned, Compliance Systems Corporation (together
with its successors and assigns, “Borrower”), a Nevada corporation, hereby
promises to pay to Barry M. Brookstein, an individual residing in the State of
New York (“Lender”), the principal sum of  $50,000.00, together with interest as
set forth below.  This 18% Senior Subordinated Secured Promissory Note (this
“Note”) is issued (a) pursuant to, and is the “New Note” referred to, in that
certain Promissory Note Exchange Agreement, dated June 24, 2009 (the “Note
Exchange Agreement”), between Borrower and Lender, and (b) in connection with,
and is the “New Note” referred to in, that certain Security Agreement, dated
June 24, 2009 (the “Security Agreement”), between Borrower and Lender.  This
Note is made subject to the terms and conditions of the Security Agreement as if
set forth in full in this Note.

1.           Interest Rate.  Until an event of Default shall have occurred, the
principal amount evidenced by this Note shall bear interest at the rate of 18%
per annum, computed on the basis of a 360-day year for the actual number of days
elapsed (the “Applicable Interest Rate”).  Upon the occurrence of an event of
Default, the outstanding principal amount and any accrued but unpaid interest
thereon shall bear interest until paid at the Applicable Interest Rate plus an
additional 2% per annum (the “Default Interest Rate”).

2.           Payment Date; Payment Method; Prepayment.

(a)           Payment Dates.  Payment of all accrued and unpaid interest due
under this Note shall be payable monthly, in arrears, on the first business day
(each, an “Interest Payment Date”) of each calendar month in which any principal
amount evidenced by this Note remains outstanding, commencing with July 1,
2010.  Payment of any outstanding principal amount evidenced by this Note shall
be made on January 1, 2011 (the “Maturity Date”).  Upon payment in full of the
principal evidenced by this Note (and any accrued but unpaid interest thereon),
Lender, by Lender’s acceptance of this Note, agrees to mark this Note
“CANCELLED” and return this Note as so marked to Borrower within five days after
such payment in full is received.  Notwithstanding the immediately preceding
sentence, the failure of Lender to mark this Note “CANCELLED” and/or return this
Note to Borrower upon payment in full of the principal amount evidenced by this
Note (and all accrued interest thereon) shall not affect the fact that no
amounts are due under this Note.  For purposes of this Note, the term “business
day” shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.

(b)           Payment Method.  Payment of the principal evidenced by this Note
(and any accrued but unpaid interest thereon) shall be made by check, subject to
collection, tendered to Lender, via postage-paid, first class mail, at the
address for the giving of notices as set forth in Section 8 of this Note.
 
 
 

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(c)           Voluntary Prepayment.  Borrower may pay, without penalty or
premium, the principal amount evidenced by this Note (and any accrued but unpaid
interest thereon), in whole or part, at any time up to the Maturity Date.  Any
partial prepayment shall first be applied against any accrued and unpaid
interest due under this Note and then to the principal amount evidenced by this
Note.  In the event of a voluntary prepayment being less than the full amount
outstanding under this Note (including any accrued but unpaid interest), upon
surrender of this Note in connection with said partial prepayment, Borrower
shall deliver to Lender a new note substantially in the form of this Note and
evidencing as principal any amount not so prepaid.  Notwithstanding the
immediately preceding sentence, following any partial prepayment of principal
evidenced by this Note, this Note shall be deemed to evidence a debt of Borrower
only to the extent of the remaining principal amount outstanding following such
partial repayment(s) (plus any accrued and unpaid interest).

3.           Default; Acceleration.

(a)           Any of the following shall constitute an “event of Default” under
this Note:
(i)          the failure by Borrower to pay any amounts required to be paid
under this Note on or before the date on which such payment was due and such
failure is not cured within five business days of the giving of notice to
Borrower by Lender of such failure;
(ii)          the breach or noncompliance by Borrower of any of its material
representations, warranties or covenants contained in the Security Agreement and
such breach or noncompliance is not cured within five business days of the
giving of notice to Borrower by Lender of such breach or noncompliance;
(iii)          Borrower shall:
(A)          apply for or consent to the appointment of a receiver or trustee of
Borrower’s assets,
(B)           make a general assignment for the benefit of creditors,
(C)           file a petition or other request no matter how denominated
(“Petition”) seeking relief under Title 11 of the United States Code or under
any other federal or state bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute (“Bankruptcy Statute”), or
(D)           file an answer admitting the material allegations of a Petition
filed against it in any proceeding under any Bankruptcy Statute;
(iv)          there shall have entered against Borrower an order for relief
under any Bankruptcy Statute; or
(v)          a Petition seeking an order for relief under any Bankruptcy Statute
is filed by any one other than Borrower and without Borrower’s consent or
agreement which is not dismissed or stayed within 60 days after the date of such
filing, or such Petition is not dismissed upon the expiration of any stay
thereof.
 
 
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(b)           Upon the occurrence of an event of Default, the unpaid principal
amount evidenced by this Note (and any accrued but unpaid interest thereon)
shall be immediately due and payable.

(c)           Until the occurrence of an event of Default, the principal amount
evidenced by this Note shall bear interest at the Applicable Interest Rate and
upon an event of Default, any unpaid principal amount under this Note and any
accrued but unpaid interest through the date of effectiveness of such event of
Default shall bear interest until paid at the Default Interest Rate.

4.           Subordination.

(a)           Subordination.  This Note shall at all times be wholly subordinate
and junior in right of payment to all Senior Indebtedness (as such capitalized
term is defined below) to the extent and in the manner provided in this section
4.

(b)           Definitions.  As used in this section 4 and section 12, the
following capitalized terms shall have the following meanings:
(i)          “Indebtedness” shall mean:
(A)           all indebtedness of Borrower for borrowed money or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices),
(B)           any other indebtedness of Borrower that is evidenced by a note,
bond, debenture or similar instrument,
(C)           all obligations of Borrower under financing leases,
(D)           all obligations of Borrower in respect of acceptances issued or
created,
(E)           all obligations of Borrower secured by any lien on property, other
than Senior Indebtedness, and
(F)           all guarantee obligations of Borrower;
(ii)          “Senior Covenant Default” shall mean any event of default as
defined under any agreement pertaining to Senior Indebtedness, other than a
Senior Payment Default;
(iii)          “Senior Indebtedness” means all Indebtedness of Borrower
currently or in the future outstanding to:
(A)           Agile Opportunity Fund, LLC (“Agile”) under those certain Amended
and Restated Secured Convertible Debentures of Borrower payable to Agile, each
in the principal amount of $300,000.00 and dated May 6, 2008 and September 2,
2008,
(B)           Nascap Corp. under that certain Guaranty Agreement, dated
September 30, 2006, by Borrower in favor of Nascap Corp., and
(C)           Henry Ponzio (“Ponzio”) under that certain 18% Senior Subordinated
Secured Promissory Note of Borrower, dated June 24, 2009, in the principal
amount of 150,000 and payable to Ponzio;
(iv)          “Senior Default” shall mean a Senior Payment Default or a Senior
Covenant Default;
 
 
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(v)          “Senior Payment Default” shall mean any default in the payment of
any Senior Indebtedness; and
(vi)          “Subordinated Indebtedness” shall mean all Indebtedness and other
debt of  Borrower other than Senior Indebtedness, and shall include Borrower’s
obligations under this Note.
 
(c)           General.  Upon the maturity of any Senior Indebtedness by lapse of
time, acceleration, required prepayment or otherwise, such Senior Indebtedness
shall first be paid in full in cash or in a manner satisfactory to the payees of
such Senior Indebtedness, or such payment duly provided for in cash or in a
manner satisfactory to the payees of such Senior Indebtedness, before any
payment is made on account of the Subordinated Indebtedness or by Borrower or
Affiliates (as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as
amended) of Borrower to acquire this Note.  Notwithstanding any provision in
this section 4 to the contrary,
(i)           for so long as no Senior Default has occurred and is continuing,
or would occur as a result of such a payment, Borrower may pay and Lender may
receive and retain all regularly scheduled payments of principal and interest
(other than at the Default Interest Rate) under this Note, and
(ii)          for so long as no Senior Default has occurred and is continuing,
or would occur as a result of any such prepayment, Borrower may prepay the
principal amount evidenced by this Note, in accordance with the provisions of
paragraph 2(c), and Lender may receive such prepayments.

(d)           Limitation on Payment.
(i)           Upon receipt by Borrower and Lender of a Blockage Notice (as such
capitalized term is defined below), then, unless and until
(A)           all Senior Defaults that gave rise to the Blockage Notice shall
have been remedied or effectively waived or shall have ceased to exist or
(B)           the Senior Indebtedness in respect of which such Senior Defaults
shall have occurred shall have been paid in full in cash or in a manner
satisfactory to the payees of such Senior Indebtedness, no direct or indirect
payment (in cash, property, securities or by set-off or otherwise) of or on
account of the principal evidenced by this Note, or accrued and unpaid interest
or as a sinking fund for this Note, or in respect of any redemption, retirement,
purchase or other acquisition of Note, shall be made.
Notwithstanding the foregoing, in the case of a Blockage Notice that relates to
a Senior Covenant Default, the foregoing restrictions shall commence upon
Borrower’s receipt of such Blockage Notice and shall expire 270 days
thereafter.  Any principal and interest paid by Lender with respect to this Note
prior to the receipt of the subject Blockage Notice may be kept by Lender.
(ii)           For purposes of this Section 4, a “Blockage Notice” is a notice
of the holder of Senior Indebtedness given to Borrower and Lender that a Senior
Default has in fact occurred and is continuing.
 
 
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Notwithstanding any provision contained herein to the contrary, once all Senior
Defaults which gave rise to the subject Blockage Notice shall have been remedied
or effectively waived or shall have ceased to exist, or the Senior Indebtedness
in respect of which such Senior Defaults shall have occurred shall have been
paid in full in cash or in a manner satisfactory to the payees of such Senior
Indebtedness, thereafter (unless another Blockage Period shall then be in
effect) all amounts which would have been payable under this Note, but for the
existence of the Blockage Notice delivered with respect to the subject Senior
Default, shall be payable in their entirety.

(e)           Limitation on Remedies.
(i)           As long as any Senior Indebtedness remains outstanding, upon the
occurrence of an event of Default under this Note, Lender shall not, unless the
payees of any Senior Indebtedness shall have caused such Senior Indebtedness to
become due prior to its stated maturity or any event of Default pursuant to
subparagraphs 3(a)(iii) through (v) of this Note shall have commenced, declare
or join in any declaration of this Note to be due and payable by reason of such
event of Default or otherwise take any action against Borrower (including,
without limitation, commencing any legal action against Borrower or filing or
joining in the filing of any insolvency petition against Borrower) or exercise
or cause to be exercised any other contractual rights available to Lender prior
to the expiration of 30 days after the written notice of Lender’s ability to
accelerate on account of the occurrence of such event of Default (a “Remedy
Notice”) shall have been given by Lender to Borrower and, to the extent known by
Lender, the payees of the Senior Indebtedness (a “Remedy Standstill Period”).
(ii)          The Remedy Standstill Period shall be inapplicable or cease to be
effective if the payees of any Senior Indebtedness shall have caused such Senior
Indebtedness to become due prior to its stated maturity or an event of Default
pursuant to subparagraphs 3(a)(iii) through (v) shall have occurred.
(iii)          Upon the expiration or termination of any Remedy Standstill
Period, Lender shall be entitled to exercise any of Lender’s rights with respect
to this Note other than any right to accelerate the maturity date of this Note
based upon the occurrence of any event of Default in respect thereto which has
been cured or otherwise remedied during the Remedy Standstill Period.

(f)           Subordination Upon Certain Events.  Upon the occurrence of any
event of Default with respect to Borrower under subparagraphs 3(a)(iii) through
(v) of this Note:
(i)          upon any payment or distribution of assets of Borrower to creditors
of Borrower, payees of Senior Indebtedness shall be entitled to receive
indefeasible payment in full of all obligations with respect to the Senior
Indebtedness before Lender shall be entitled to receive any payment in respect
of the Subordinated Indebtedness,
(ii)          until all Senior Indebtedness is paid in full in cash or in a
manner satisfactory to the payees of such Senior Indebtedness, any distribution
to which Lender would be entitled but for this section 4 shall be made to the
payees of Senior Indebtedness, as their interests may appear, except that Lender
may, pursuant to a plan of reorganization under Chapter 11 of the Bankruptcy
Code of 1978, as amended, or any similar provision of any successor legislation
thereto, receive securities that are subordinate to the Senior Indebtedness to
at least the same extent as this Note if pursuant to such plan the distributions
to the payees of the Senior Indebtedness in the form of cash, securities or
other property, by set-off or otherwise, provide for payment of the full amount
of the allowed claim of the payees of the Senior Indebtedness,
 
 
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(iii)           for purposes of this section 4, a distribution may consist of
cash, securities or other property, by set-off or otherwise, and
(iv)           notwithstanding the foregoing provisions of paragraphs 4(c) and
(d) and this paragraph 4(f), if payment or delivery by Borrower of cash,
securities or other property to Lender is authorized by an order or decree
giving effect, and stating in such order or decree that effect is given, to the
subordination of this Note to the Senior Indebtedness, and made by a court of
competent jurisdiction in a proceeding under any applicable bankruptcy or
reorganization law, payment or delivery by such Borrower of such cash,
securities or other property shall be made to Lender in accordance with such
order or decree.

(g)           Payments and Distributions Received.  If Lender shall have
received any payment from or distribution of assets of Borrower in respect of
the Subordinated Indebtedness in contravention of the terms of this section 4
before all Senior Indebtedness is paid in full in cash or in a manner
satisfactory to the payees of such Senior Indebtedness, then, and in such event,
such payment or distribution shall be received and held in trust for and shall
be promptly paid over or delivered to the payees of Senior Indebtedness to the
extent necessary to pay all such Senior Indebtedness in full in cash or in a
manner satisfactory to the payees of such Senior Indebtedness.

(h)           Proofs of Claim.  If, while any Senior Indebtedness is
outstanding, any event of Default under subparagraphs 3(a)(iii) through (v)
occurs with respect to Borrower, Lender shall duly and promptly take such action
as any payee of Senior Indebtedness may reasonably request to collect any
payment with respect to this Note for the account of the payees of the Senior
Indebtedness and to file appropriate claims or proofs of claim in respect of
this Note.  Upon the failure of Lender to take any such action, each payee of
Senior Indebtedness is hereby irrevocably authorized and empowered (in its own
name or otherwise), but shall have no obligation, to demand, sue for, collect
and receive every payment or distribution referred to in respect of this Note
and to file claims and proofs of claim and take such other action as it may deem
necessary or advisable for the exercise or enforcement of any of the rights or
interests of Lender with respect to this Note.

(i)           Subrogation.  After all amounts payable under or in respect of
Senior Indebtedness are paid in full in cash or in a manner satisfactory to the
payees of such Senior Indebtedness, Lender shall be subrogated to the rights of
payees of Senior Indebtedness to receive payments or distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to Lender
have been applied to the payment of Senior Indebtedness.  A distribution made
under this section 4 to a payee of Senior Indebtedness which otherwise would
have been made to Lender is not, as between Borrower and Lender, a payment by
Borrower on Senior Indebtedness.
 
 
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(j)           Relative Rights.  By acceptance of this Note, Lender agrees that
this section 4 defines the relative rights of Lender and the payees of Senior
Indebtedness.  Nothing in this section 4 shall:
(i)           impair, as between Borrower and Lender, the obligations of
Borrower, which are absolute and unconditional, to pay the principal amount
evidenced by this Note (and accrued and unpaid interest, including default
interest) in accordance with its terms;
(ii)           affect the relative rights of Lender and creditors of Borrower
other than payees of Senior Indebtedness or
(iii)           prevent Lender from exercising Lender’s available remedies upon
an event of Default, subject to the rights, if any, under this section 4 of
payees of Senior Indebtedness.

(k)           Subordination May Not Be Impaired by Borrower.  No right of any
payee of any Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by this Note shall be impaired by any failure to act by
Borrower or such payee of Senior Indebtedness or by the failure of Borrower or
such payee to comply with the terms of the Secured Notes, including this
Note.  The provisions of this section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any payee of Senior
Indebtedness as a result of the insolvency, bankruptcy or reorganization of
Borrower or any of its subsidiaries or otherwise, all as though such payment had
not been made.

(l)           Payments.  A payment with respect to principal of or interest on
the Subordinated Indebtedness shall include, without limitation, payment of
principal evidenced by this Note (and accrued and unpaid interest), any
depositing of funds for the defeasance of the Subordinated Indebtedness, any
sinking fund and any payment on account of mandatory prepayment or optional
prepayment provisions.

(m)           Section Not to Prevent Events of Default.  The failure to make a
payment on account of principal of or interest on or other amounts constituting
Subordinated Indebtedness by reason of any provision of this section 4 shall not
be construed as preventing the occurrence of an event of Default under section
3.

(n)           Subordination Not Impaired; Benefit of Subordination.  By
acceptance of this Note, Lender acknowledges and consents that, without notice
to or assent by Lender, and without affecting the liabilities and obligations of
Borrower and the rights and benefits of the payees of  Senior Indebtedness set
forth in this section 4:
(i)           the obligations and liabilities of Borrower and any other party or
parties for or upon the Senior Indebtedness may, from time to time, be
increased, renewed, refinanced, extended, modified, amended, restated,
compromised, supplemented, terminated, waived or released;
(ii)           the payees of Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may exercise or refrain from
exercising any right, remedy or power granted by or in connection with any
agreements relating to Senior Indebtedness; and
 
 
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(iii)           any balance or balances of funds with any payee of Senior
Indebtedness at any time outstanding for the credit of Borrower may, from time
to time, in whole or in part, be surrendered or released;
all as the payees of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Subordinated Indebtedness to the Senior Indebtedness provided for herein.

(o)          Modification of Section 4.  The provisions of this section 4 are
for the benefit of the payees of Senior Indebtedness and, so long as any Senior
Indebtedness remains unpaid, may not be modified, rescinded or canceled in whole
or in part without the prior written consent thereto of all payees of Senior
Indebtedness.

(p)          Covenants of Lender.  By acceptance of this Note, Lender is
agreeing and consenting that, until all of the Senior Indebtedness has been
fully paid:
(i)           Lender shall not give any subordination in respect of this Note;
(ii)           Lender shall not release, exchange, extend the time of payment
of, compromise, set off or otherwise discharge any part of this Note or modify
or amend this Note; and
(iii)           for the benefit of the payees of Senior Indebtedness, upon the
occurrence and during the continuance of a Senior Default, Lender shall take any
actions reasonably requested by any payee of Senior Indebtedness to effectuate
the full benefit of the subordination contained herein.

(q)          Miscellaneous.
(i)           To the extent permitted by applicable law, Lender and Borrower
hereby waive:
(A)           notice of acceptance of the terms of this Agreement by the payees
of the Senior Indebtedness and
(B)           all diligence in the collection or protection of or realization
upon the Senior Indebtedness.
(ii)           Borrower and Lender hereby expressly acknowledge that the payees
of Senior Indebtedness may enforce any and all rights derived herein by suit,
either in equity or law, for specific performance of any agreement contained in
this section 4 or for judgment at law and any other relief whatsoever
appropriate to such action or procedure.
(iii)           Lender acknowledges and consents that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each payee of Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the issuance of this Note,
and each payee of Senior Indebtedness shall be deemed conclusively to have
relied upon such subordination provisions in acquiring and continuing to hold
such Senior Indebtedness.
 
 
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5.           Enforcement.  All disputes regarding the enforcement or
construction of this Note shall be resolved in accordance with the Security
Agreement and may not be resolved independently of the enforcement or
construction of the Security Agreement which has been made a part hereof.

6.           Applicable Law; Jurisdiction; Waiver Of Jury Trial.  THIS NOTE
SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN, WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW.  BORROWER HEREBY IRREVOCABLY CONSENTS
THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS AGREEMENT MAY BE INSTITUTED IN ANY STATE COURT OF
GENERAL JURISDICTION LOCATED IN EITHER THE COUNTIES OF NASSAU OR SUFFOLK OF THE
STATE OF NEW YORK, OR THE UNITED STATES FEDERAL COURT FOR THE EASTERN DISTRICT
OF NEW YORK AND BORROWER HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF SUCH
COURTS.  BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS ARISING
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY POSTAGE PREPAID CERTIFIED OR REGISTERED FIRST-CLASS
MAIL, RETURN RECEIPT REQUESTED, TO BORROWER.  THE FOREGOING, HOWEVER, SHALL NOT
LIMIT THE RIGHT OF LENDER TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE ANY LEGAL ACTION OR PROCEEDING OR TO OBTAIN EXECUTION OF
JUDGMENT IN ANY APPROPRIATE JURISDICTION.  IN THE EVENT OF LITIGATION BETWEEN
THE PARTIES OVER ANY MATTER CONNECTED WITH THIS AGREEMENT, THE RIGHT TO A TRIAL
BY JURY IS HEREBY WAIVED BY SUCH PARTIES.

7.           Parties in Interest.  This Note is non-negotiable and may not be
sold, assigned or otherwise transferred (except under will or laws of succession
applicable to Lender) without the prior written consent of Borrower and Lender
and shall bind both parties hereto and their respective heirs, successors and
permitted assigns.

8.           Notices.  All requests, demands, notices and other communications
required or otherwise given under this Agreement shall be sufficiently given if
(a) delivered by hand, against written receipt therefor, (b) forwarded by
overnight courier requiring acknowledgment of receipt or (c) mailed by postage
prepaid, registered or certified mail, return receipt requested, addressed, in
the case of clauses (b) or (c) of this section 8 as follows:

              If to Borrower, to:
Dean Garfinkel, President
 
Compliance Systems Corporation
 
90 Pratt Oval
 
Glen Cove, New York 11542

 
 
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                            with a copy to:
Dennis C. O’Rourke, Esq.
 
Moritt Hock Hamroff & Horowitz LLC
 
400 Garden City Plaza
 
Garden City, New York 11530
   
              If to Lender, to:
Barry M. Brookstein
 
780 New York Avenue
 
Huntington, New York 11743

or, in the case of any of the parties hereto, at such other address as such
party shall have furnished in writing, in accordance with this section 8, to the
other parties hereto.  Each such request, demand, notice or other communication
shall be deemed given (x) on the date of delivery by hand, (y) on the first
business day following the date of delivery to an overnight courier or (z) three
business days following mailing by registered or certified mail.

9.           Waiver.

(a)           The rights and remedies of Lender under this Note shall be
cumulative and not alternative.  No waiver by Lender of any right or remedy
under this Note shall be effective unless in writing signed by Lender.  Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Lender will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege.  To the maximum extent permitted by
applicable law,
(i)           no claim or right of the Lender arising out of this Note can be
discharged by the Lender, in whole or in part, by a waiver or renunciation of
the claim or right unless in a writing, signed by the Lender;
(ii)           no waiver that may be given by the Lender will be applicable
except in the specific instance for which it is given; and
(iii)           no notice to or demand on the Borrower will be deemed to be a
waiver of any obligation of the Borrower or of the right of the Lender to take
further action without notice or demand as provided in this Note.

(b)           Borrower hereby waives all right to notice of acceptance, default,
presentment, and notice of dishonor.

10.           Severability.  If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect.  Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
 
 
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11.           Section Headings; Construction.  The headings of sections and
paragraphs in this Note are provided for convenience only and will not affect
its construction or interpretation.  All references to "section," “paragraph,”
“subparagraph" and “clause” refer to the corresponding section, paragraph,
subparagraph or clause of this Agreement, as the case may be, unless otherwise
specified.  All words used in this Note will be construed to be of such gender
or number as the circumstances require.  Unless otherwise expressly provided,
the words "hereof" and "hereunder" and similar references refer to this Note in
its entirety and not to any specific section or subsection hereof.

12.           Usury.  Anything in this Note to the contrary notwithstanding, the
obligation of Borrower to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to the
extent that Lender’s receipt of such payments of interest would not be
permissible under the law or laws applicable to Lender limiting rates of
interest which may be charged or collected by Lender.  Any such amount of
interest which is not paid as a result of the limitation referred to in the
preceding sentence shall be carried forward and paid, if ever, by Borrower to
Lender on the earliest date or dates on which any interest is payable under this
Note and on which the receipt of such payment is permissible under the laws
applicable to Lender limiting rates of interest which may be charged or
collected by Lender.

13.           Time is of the Essence.  Wherever time is specified for the doing
or performance of any act herein, time shall be considered of the essence.

14.           Security.  The obligations of Borrower under this Note are secured
pursuant to the terms of that certain Security Agreement, dated June 24, 2009,
between Borrower and Lender.
 
IN WITNESS WHEREOF, this Note has been duly executed and delivered as of the
date first above written.

Compliance Systems Corporation
   
By:
/s/ Dean Garfinkel
 
Dean Garfinkel, President

ATTEST:

By:
/s/ Barry M. Brookstein
 
Barry M. Brookstein, Secretary

 
 
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