Agreement to Amend and Restate Secured Convertible Debentures
Agreement
to Amend and Restate Secured Convertible Debentures
This Agreement to Amend and Restate
Secured Convertible Debentures, dated as of January 31, 2009, is by and
between Compliance Systems
Corporation, a Nevada corporation (“Borrower”), and Agile Opportunity Fund, LLC, a
Delaware limited liability company “Lender”).
WHEREAS, pursuant to that
certain Securities Purchase Agreement, dated as of May 6, 2008 (the “Securities
Purchase Agreement”), between Borrower and Lender, amongst other matters,
Borrower sold and issued to Lender, and Lender purchased and received from
Borrower, (a) a Secured Convertible Debenture of Borrower, dated May 6, 2008, in
the principal amount of $300,000, payable to Lender and maturing on November 6,
2009 (the “Initial Debenture”), and (b) a second Secured Convertible Debenture
of Borrower, dated September 2, 2008, in the principal amount of $300,000,
payable to Lender and maturing on November 6, 2009 (the “Additional Debenture”
and, collectively with the Initial Debenture, the “Agile
Debentures”);
WHEREAS, Borrower has
requested, and Lender has agreed, that each of the Agile Debentures be amended
to allow for the Borrower to cure any default prior to the declaration of an
“Event of Default” under either of the Agile Debentures.
NOW, THEREFORE, in
consideration of the mutual premises and agreements contained herein, and for
other good and valuable consideration, the adequacy and receipt of which is
hereby acknowledged by each of the parties to this Agreement, the parties agree
as follows:
1. Amendment of the Agile
Debentures. (a) Paragraph (a) of Section 7 of each of the
Agile Debentures is, effective as of the date of this Agreement, amended (the
“Default Amendment”) to read as follows:
(a) In
the event that any of the following events shall occur (whatever the reason and
whether it shall be voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):
(i) Any
default in the payment of the principal of, interest on or other charges in
respect of this Debenture, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise);
(ii) The
Borrower or any subsidiary of Borrower as listed on Schedule 2.7 of the
Securities Purchase Agreement (each, a “Subsidiary”) shall fail to observe or
perform any other material covenant, agreement or warranty contained in, or
otherwise commit any breach or default of any provision of this Debenture or any
Loan Document to which it is a party;
(iii) The
Borrower or any Subsidiary, shall commence, or there shall be commenced against
the Borrower or any Subsidiary any applicable bankruptcy or insolvency laws as
now or hereafter in effect or any successor thereto, or the Borrower or any
Subsidiary commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Borrower or Subsidiary or there is commenced against the Borrower or
Subsidiary any such bankruptcy, insolvency or other proceeding which remains
undismissed for a period of 60 days; or the Borrower or Subsidiary is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Borrower or Subsidiary
suffers any appointment of any custodian, private or court appointed receiver or
the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Borrower or Subsidiary
makes a general assignment for the benefit of creditors; or the Borrower or
Subsidiary shall fail to pay or shall state that it is unable to pay or shall be
liable to pay, its debts as they become due or by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Borrower or
Subsidiary for the purpose of effecting any of the foregoing; or
(iv) The
Borrower or any Subsidiary shall default (subject to all applicable cure
periods) in any of its secured obligations under any other debenture or any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due
under any leasing or factoring arrangement of the Borrower, whether such
indebtedness now exists or shall hereafter be created and such default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable,
then, and in any such
event, a default by Borrower shall be deemed to occur under this
Debenture, which, unless such default is cured (in the case of clause (i) or
(ii) of this paragraph (a) only) by Borrower within five business days from
delivery of notice (an “Event of Default Notice”) to Borrower of such default,
shall be deemed, for the purposes of this Agreement, to be an “Event of
Default.”
(b) Section
9 of each of the Agile Debentures is, effective as of the date of this
Agreement, amended (the “Notice Amendment”) to add the following final
sentence:
Notwithstanding
anything to the contrary contained in the immediately preceding sentence, an
Event of Default Notice may be given by Lender to Borrower via e-mail addressed
to: xxxxx@xxxxxxxxxxxxxx.xxx
and shall be deemed given, if prior to 4:00 p.m. New York City time on a
business day, on the date of transmission or, if delivered after 4:00 p.m. New
York City time on a business day or at any time on a nonbusiness day, on the
immediately following business day.
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2. Exchange
of Agile Debentures for Amended and Restated Agile Debentures.
(a) No
later than two business days following the execution of this Agreement by both
of Borrower and Lender, Lender shall deliver to Borrower the originally executed
Initial Debenture and Additional Debenture in exchange for Borrower delivering
to Lender an (i) originally executed Amended and Restated Secured Convertible
Debenture (the “Restated Initial Debenture”) identical in form and content
(including, but not limited to, the date and principal amount) as the Initial
Debenture, except that (x) paragraph (a) of Section 7 of the Restated Initial
Debenture shall be rewritten to give effect to the Default Amendment and (y)
paragraph 9 of the Restated Initial Debenture shall be rewritten to give effect
to the Notice Amendment, and (ii) originally executed Amended and Restated
Secured Convertible Debenture (the “Restated Additional Debenture”) identical in
form and content (including, but not limited to, the date and principal amount)
as the Additional Debenture, except that (x) paragraph (a) of Section 7 of the
Restated Amended Debenture shall be rewritten to give effect to the Default
Amendment and (y) Section 9 of the Restated Amended Debenture shall be rewritten
to give effect to the Notice Amendment.
(b) Notwithstanding
the provisions of paragraph (a) of this section 2, the failure to exchange the
Agile Debentures for the Restated Initial Debenture and Restated Additional
Debenture shall not, in any manner, effect the applicability of the
Amendment.
3.
Miscellaneous.
(a) Fees and
Expenses. Borrower shall
pay all of the reasonable costs and expenses of both Borrower and Lender in
connection with the negotiation, execution and performance of this Agreement,
including, but not limited to, the fees and expenses of counsel to
Lender.
(b) Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, 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 Agreement, except as expressly provided
in this Agreement.
(c) Governing
Law. This Agreement 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.
(d) Counterparts. This
Agreement 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.
(e) Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
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(f) Notices. Any
notice required or permitted by this Agreement 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, with a copy to Moritt
Xxxx Hamroff & Xxxxxxxx, 000 Xxxxxx Xxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxx, 00000
Attn: Xxxxxx X’Xxxxxx, Esq.
(g) Entire
Agreement. This Agreement constitutes 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.
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first indicated
above.
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Compliance Systems Corporation
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By:
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/s/
Xxxxx X. Xxxxxxxxxx
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Xxxxx
X. Xxxxxxxxxx
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Chief
Financial Officer
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Agile
Opportunity Fund, LLC
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By:
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/s/
Xxxxx Xxxxxx
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Xxxxx
Xxxxxx
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Managing
Member
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