OMNIBUS AMENDMENT AND SECURITIES PURCHASE AGREEMENT
OMNIBUS
AMENDMENT
AND
This
OMNIBUS AMENDMENT AND SECURITIES PURCHASE AGREEMENT, dated as of September 18,
2009 (this "Amendment"),
is entered into by and among (i) Compliance Systems
Corporation, a Nevada corporation (the “Company”
or the “Debtor”),
(ii) Spirits Management
Inc. (“Spirits”),
(iii) Xxxxx Xxxxxxxxxx,
a natural person (“Xxxxxxxxxx”),
(iv) Xxxx Xxxxxxxxx, a
natural person (“Xxxxxxxxx”),
and (vii) Agile Opportunity
Fund, LLC, a Delaware limited liability company, ("Agile"
or the “Investor”
or the “Secured
Party”). Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Original Securities Purchase
Agreement (as defined below).
W
I T N E S S E T H :
WHEREAS, the Company and the
Investor entered into a Securities Purchase Agreement, dated as May 6, 2008 (the
“Original
Securities Purchase Agreement”), pursuant to which, among other things,
the Investor purchased from the Company Secured Convertible Debentures in an
aggregate principal amount of $600,000 (the “Original
Debentures”) and received from the Company an aggregate of 5,000,000
shares of the common stock, par value $.001 (the “Common
Stock”), of the Company (the “Original
Incentive Shares”); and
WHEREAS, in connection with
the Original Securities Purchase Agreement, the Company executed a Security
Agreement in favor of Agile (the “Company
Security Agreement”) granting Agile a first priority security interest in
the Collateral (as defined therein) to secure the Obligations (as defined
therein); and
WHEREAS, in connection with
the Original Securities Purchase Agreement, (i) each of Spirits, Xxxxxxxxxx and
Xxxxxxxxx executed a Limited Non-Recourse Guaranty Agreement in favor of the
Investor guaranteeing all obligations of the Company under the Original
Debentures (collectively, the “Guaranty
Agreements”) and (ii) Spirits, Xxxxxxxxxx and Xxxxxxxxx executed a Stock
Pledge Agreement, dated May 6, 2008 (the “Pledge
Agreement”), securing their obligations under the Guaranty Agreements by
a pledge of shares of preferred stock of the Company owned by them as set forth
on Schedule I to the Pledge Agreement; and
WHEREAS, pursuant to an
Agreement to Amend and Restate Secured Convertible Debentures, dated as of
January 31, 2009 (the “Amendment
Agreement”),
certain terms of the Original Debentures were amended and restated (the Original
Debentures as so amended and restated, the “Original
Amended Debentures”); and
WHEREAS, the Original
Securities Purchase Agreement, the Amendment Agreement, Company Security
Agreement, the Guaranty Agreements, the Pledge Agreement and the Original
Amended Debentures are collectively referred to herein as the “Existing
Transaction Documents”; and
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WHEREAS, the Company desires
to sell to the Investor, and the Investor desires to purchase from the Company,
an additional Convertible Debenture and make certain amendments to the Existing
Transaction Documents as set forth herein.
NOW, THEREFORE, in
consideration of the foregoing and the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Parties, the Parties covenant and agree as
follows:
1. Issuance
of New Debenture.
(a) Subject
to the terms and conditions of this Amendment and in reliance on the
representations and warranties set forth or referred to herein, at the Closing
(as hereinafter defined), the Company shall sell to Agile and Agile shall
purchase from the Company a Secured Convertible Debenture in the original
principal amount of $100,000 (the “New
Debenture Purchase Price”), such Secured Convertible Debenture to be in
the form attached hereto as Exhibit A
(the “New
Debenture”; and, collectively with the Original Amended Debentures, the
"Debentures")
with a maturity date of six months from its date of issue (the “Maturity
Date”). The New Debenture, including accrued but unpaid
interest thereon, will be convertible into shares of Common Stock at an initial
conversion price of $0.05 per share, subject to adjustment as provided therein,
at the option of the holder(s) of the New Debenture (the “New
Common Stock Debenture Shares”).
(b) In
connection with the purchase and sale of the New Debenture hereunder and in
addition thereto, the Company agrees to issue to the Investor at the Closing Two
Million (2,000,000) shares of Common Stock (the “New
Incentive Shares”; together with the New Common Stock Debenture Shares,
the “Registrable
Shares”). The New Debenture and the New Incentive Shares are
collectively referred to herein as the “New
Securities”.
(c) The
closing of the purchase, sale and issuance of the New Securities shall take
place at the offices of Xxxxxxxxx Ball Xxxxxx Xxxxxx & Xxxxxxxxxx, LLP
(“WBEMS”),
000 Xxx Xxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx 00000, or at such other
location as agreed to between the parties, simultaneous with the execution
hereof (the "Closing"). At
the Closing:
(i) the
Company shall deliver to the Investor the duly executed New Debenture and one or
more stock certificates evidencing the number of New Incentive Shares registered
in the name of Investor to be delivered pursuant to Section 1(b) hereof against
delivery by the Investor to the Company of the New Debenture Purchase Price
therefor by wire transfer of immediately available funds in the amount thereof
to the Company’s bank account at Capital One Bank, 000 Xxxx Xxxx Xxxxxx, Xxxx
Xxxxx, Xxx Xxxx 00000 (Account Number: 7924030518) (the “Company
Bank Account”) or by such other method agreed to in writing by the
Investor and the Company; and
(ii) the
Company shall pay all fees due to third party agents and expenses incurred by
Agile and/or Agile Investments, LLC in connection with the transactions
hereunder, including, without limitation, (x) the legal fees and expenses of
WBEMS incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, which legal fees are
agreed to be $3,000, and (y) $5,000 payable to Agile Investments, LLC for due
diligence costs, structuring work and ongoing debt monitoring fees.
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(d) The
parties agree that the net proceeds from the sale of the New Debenture shall be
used for working capital purposes, including those related to the accounting and
legal fees associated with the Company’s proposed merger transaction with
Execuserve Corporation.
2. Amendments
to Original Transaction Documents.
(a) Each
of the Company Security Agreement, the Guaranty Agreements and the Pledge
Agreement is hereby amended by (i) amending the definition of the term
“Obligations” contained in the Company Security Agreement and the Guaranty
Agreement and the term “Debenture Obligations” contained in the Pledge Agreement
to include collectively all obligations of the Debtor to the Secured Party under
all of the Debentures, whether for principal, interest, costs, fees or otherwise
(collectively, the “Obligations”). The
Company Security Agreement is further amended by amending Section 20 thereof
(Termination) to include and extend to all of the
Debentures. Consequently, and upon the taking of all actions to be
taken at the Closing pursuant to Section 1(c) hereof, repayment of each of the
Original Amended Debentures and of the New Debenture and the performance by the
Company of all its obligations thereunder shall be secured with a first priority
lien (except as set forth in the Company Security Agreement) and security
interest in the Collateral pursuant to the Company Security Agreement on a pari passu
basis.
(b) The
Pledge Agreement is hereby further amended by amending the date contained in
Section 5 thereof (regarding the permissibility of the conversion by the
Pledgors thereunder of shares of preferred stock into Common Stock and the sale
of such shares of Common Stock) to March 21, 2010.
(c) The
Existing Transaction Documents are hereby further amended: (i) to include the
obligations of the Company under this Amendment as obligations of the Company
for all purposes under the Existing Transaction Documents and (ii) as further
necessary to conform them to any potentially conflicting provisions contained in
this Amendment, the provisions of this Amendment prevailing in any such
conflict.
3. Representations
and Warranties of the Company. Except as set forth on Schedule
3 to this Amendment, the Company hereby represents and warrants to the Investor
that the representations and warranties made by the Company to Agile in the
Existing Transaction Documents are true and correct as of the date hereof as if
made on and as of the date hereof and with respect to this Amendment and the New
Securities, except that representations with respect to the capitalization of
the Company are subject to the issuance of securities pursuant to the Existing
Transaction Documents, this Amendment and the New Debenture.
4. Representations
and Warranties of the Investor. The Investor hereby represents
and warrants to the Company that the representations and warranties made by the
Investor to the Company in the Original Transaction Documents are true and
correct as of the date hereof as if made on and as of the date hereof and with
respect to this Amendment and the New Securities.
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5. Existing
Transaction Documents in Effect. Except as specifically
amended hereby, all of the terms and provisions of the Existing Transaction
Documents are and shall remain and continue in full force and
effect.
6. Miscellaneous
6.1 Registration
Rights. The New
Registrable Shares shall be entitled to the registration rights provided for
under Section 5.1 of the Original Securities Purchase Agreement
6.2 Successors
and Assigns. The terms and
conditions of this Amendment shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the
parties. Nothing in this Amendment, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Amendment, except as may be expressly provided
herein.
6.3 Governing
Law. This Amendment
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of law.
6.4 Counterparts. This Amendment
may be executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.
6.5 Titles
and Subtitles. The titles and
subtitles used in this Amendment are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
6.6 Confidentiality. This Agreement is
confidential, and none of its provisions or terms shall be disclosed to anyone
who is not an Investor or an officer or director of the Company or their agents,
advisers or legal counsel, unless required by law.
6.7 Notices. Any notice
required or permitted by this Amendment shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally (against written receipt
therefor), one business day following the business day on which such notice is
forwarded by overnight courier, or two business days following the business day
of deposit in the U.S. mail, as certified or registered mail, with postage
prepaid, addressed to the party to be notified at such party’s address as set
forth on the signature page hereto, or as subsequently modified by written
notice, and if to the Investor, with a copy to Xxxxxxxxx Ball Xxxxxx Xxxxxx and
Xxxxxxxxxx, LLP, 000 Xxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxx 00000,
Attn: Xxxx Xxxxxx, Esq., and if to the Company, Spirits, Xxxxxxxxxx or
Xxxxxxxxx, with a copy to Moritt Xxxx Hamroff & Xxxxxxxx, 000 Xxxxxx Xxxx
Xxxxx, Xxxxxx Xxxx, Xxx Xxxx, 00000 Attn: Xxxxxx X’Xxxxxx, Esq.
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6.8 Entire
Agreement. This Amendment,
together with the Existing Transaction Documents as modified hereby and the New
Debenture, constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled. This Amendment may be modified or amended only
with the written consent of all of the parties hereto.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, each of
the undersigned has caused this Omnibus Amendment and Securities Purchase
Agreement to be executed by their respective duly authorized officer as of the
date first above written.
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COMPLIANCE
SYTSTEMS CORPORATION
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By:
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/s/ Xxxx Xxxxxxxxx | |
| Name: Xxxx Xxxxxxxxx | |||
| Title: President | |||
| Address: | |||
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00
Xxxxx Xxxx
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Xxxx
Xxxx, Xxx Xxxx 00000
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| /s/ Xxxxx Xxxxxxxxxx | |||
| Xxxxx Xxxxxxxxxx | |||
| Address: | |||
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00
Xxxxx Xxxx
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Xxxx
Xxxx, Xxx Xxxx 00000
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| /s/ Xxxx Xxxxxxxxx | |||
| Xxxx Xxxxxxxxx | |||
| Address: | |||
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00
Xxxxx Xxxx
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Xxxx
Xxxx, Xxx Xxxx 00000
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SPIRITS
MANAGEMENT INC.
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By:
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/s/ Xxxxx Xxxxxxxxxx | |
| Name: Xxxxx Xxxxxxxxxx | |||
| Address: | |||
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000
Xxx Xxxx Xxxxxx – Suite A
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Xxxxxxxxxx,
Xxx Xxxx 00000
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[Omnibus
Amendment and Securities Purchase Agreement Counterpart Signature
Page]
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AGILE
OPPORTUNITY FUND, LLC
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| By: | AGILE INVESTMENTS, LLC, Managing Member | ||
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By:
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/s/ Xxxxx X. Xxxxxx | |
| Name: Xxxxx X. Xxxxxx | |||
| Title: Managing Member | |||
| Address: | |||
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0000
Xxxx Xxxxxxx Xxxx, Xxxxx 000X
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Xxxxxxxx,
XX 00000
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[Omnibus
Amendment and Securities Purchase Agreement Counterpart Signature
Page]
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