Attached files
| file | filename |
|---|---|
| 8-K - Seaniemac International, Ltd. | v167906_8k.htm |
| EX-10.1 - Seaniemac International, Ltd. | v167906_ex10-1.htm |
| EX-10.3 - Seaniemac International, Ltd. | v167906_ex10-3.htm |
NEITHER
THIS DEBENTURE NOR ANY SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”),
OR UNDER THE SECURITIES LAWS OF ANY STATE. NEITHER THIS DEBENTURE NOR ANY SHARES
OF STOCK ISSUABLE UPON CONVERSION OF THIS DEBENTURE MAY BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THIS DEBENTURE OR SHARES OF STOCK ISSUABLE UPON
CONVERSION OF THIS DEBENTURE UNDER SUCH ACT UNLESS SUCH REGISTRATION IS NOT
REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE ACT.
COMPLIANCE
SYSTEMS CORPORATION
SECURED
CONVERTIBLE DEBENTURE
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$80,000.00
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November
23, 2009
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FOR VALUE
RECEIVED, the undersigned Compliance Systems
Corporation, a Nevada corporation (referred to herein as “Borrower”
or the “Company”),
promises to pay to the order of Agile Opportunity Fund, LLC,
its successors or assigns (the “Lender”),
the principal sum of Eighty Thousand Dollars ($80,000.00) or such lesser
principal amount as is then outstanding on May 22, 2010 (the “Maturity
Date”), and interest thereon at a rate equal to fifteen percent (15%) per
annum (the “Interest
Rate”). Interest shall be payable on the last day of each
calendar month prior to the Maturity Date with the first interest payment to be
made on December 31, 2009. Borrower shall pay the principal balance
then outstanding under this Secured Convertible Debenture (this “Debenture”)
plus accrued but unpaid interest in full on the Maturity Date along with payment
of any other amounts due hereunder or under the other Loan Documents (as defined
below). The Borrower acknowledges that in addition to the interest
due hereunder, Lender shall be entitled to an additional payment, on the
Maturity Date or whenever the principal of this Debenture is paid (including in
connection with any earlier redemption), such that Lender’s annualized rate of
return on such principal payment shall be equal to thirty (30%)
percent. Notwithstanding any other provision hereof, interest paid or
becoming due hereunder and any other payments hereunder which may constitute
interest shall in no event exceed the maximum rate permitted by applicable
law.
Interest
and any other amounts due hereunder are payable in lawful money of the United
States of America to the Lender at the address set forth in that certain Second
Omnibus Amendment and Securities Purchase Agreement executed by the Borrower and
the Lender dated as of the date hereof (the “Second
Omnibus Amendment”) and pursuant to which this Debenture is
issued. The terms and conditions of the Second Omnibus Amendment,
Securities Purchase Agreement and the Existing Transaction Documents and all
other documents and instruments delivered in connection therewith (collectively,
the “Loan
Documents”) are incorporated by reference herein and made a part
hereof. All capitalized terms not otherwise defined herein shall have
the respective meanings as set forth in the Second Omnibus
Amendment.
1
Section
1. Conversion.
(a) At
any time from the original issue date hereof through the date that this
Debenture is paid in full, Lender shall have the right, in its sole discretion,
to convert the principal balance of this Debenture then outstanding plus accrued
but unpaid interest, in whole or in part, into shares (each, a “Conversion
Share”) of Common Stock at a conversion price equal to $0.05 per
Conversion Share, subject to adjustment as provided in Section 2 herein (the
“Conversion
Price”).
(b) Lender
may convert this Debenture at the then applicable Conversion Price by the
surrender of this Debenture (properly endorsed) to the Company at the principal
office of the Borrower, together with the form of Notice of Conversion attached
hereto as Annex A (a
“Notice of
Conversion”) duly completed, dated and executed, specifying therein the
principal amount of Debenture and/or outstanding interest to be
converted. The “Conversion Date” shall be the date that such Notice
of Conversion and this Debenture is duly provided to Borrower hereunder (or, at
Lender's option, the next interest payment date with respect to Lender's
conversion of any scheduled interest payment).
(c) On
the date of receipt by the Company of the duly completed, dated and executed
Notice of Conversion and this Debenture in accordance with Section 1(b) with
respect to a conversion of any portion of this Debenture, the Lender (and any
person(s) receiving Conversion Shares in lieu of the Lender) shall be deemed to
have become the holder of record for all purposes of the Conversion Shares to
which such valid conversion relates.
(d) As
soon as practicable, but not in excess of five business days, after the valid
conversion of any portion of this Debenture, the Company, at the Company’s
expense (including the payment by Company of any applicable issuance and similar
taxes), will cause to be issued in the name of and delivered to the Lender
(and/or such other person(s) identified in the Notice of Conversion with respect
to such conversion), certificates evidencing the number of duly authorized,
validly issued, fully paid and non-assessable Conversion Shares to which the
Lender (and/or such other person(s) identified in such Notice of Conversion,
shall be entitled to receive upon the conversion), as adjusted to reflect the
effects, if any, of the anti-dilution provisions of Section 2, such certificates
to be in such reasonable denominations as Lender may request when delivering the
Notice of Conversion.
(e) If
less than the entire principal and accrued interest under this Debenture is
being converted, the Company shall execute and deliver to the Lender a new
Debenture (dated as of the date hereof) evidencing the principal balance of this
Debenture that has not been so converted.
2
Section 2. Conversion Price
Adjustment.
(a) If and whenever the
Company issues or sells any Additional Stock (as defined below) for
consideration per share less than the Conversion Price in effect immediately
prior to such issuance or sale, then immediately upon such issuance or sale the
Conversion Price shall be reduced to a new Conversion Price determined by
dividing (i) amount equal to the sum of (a) the number of shares of Common Stock
(on a fully-diluted basis) outstanding immediately prior to such issuance or
sale, multiplied by the then existing Conversion Price, plus (b) the
consideration, if any, received by the Company in connection with such issuance
or sale, by (ii) the total number of shares of Common Stock (on a fully-diluted
basis) outstanding immediately after such issuance or sale, rounded to the
nearest one ten-thousandth ($0.0001) of a dollar. As used herein,
“Additional
Stock” means any securities issued (or deemed to have been issued
pursuant to Section 2(b)) by the Company after the original issue date hereof
other than: (i) pursuant to the exercise of any rights, warrants or options
directly or indirectly to subscribe for, purchase or otherwise acquire Common
Stock (“Options”),
which Options are outstanding as of the original issue date hereof including the
Company’s outstanding convertible preferred stock and convertible promissory
notes; (ii) the first 15,000,000 shares of Common Stock issued pursuant to an
equity incentive plan for employees, officers, directors and independent
contractors of the Company adopted by the Board of Directors of the Company;
provided such
Common Stock is sold at or above the market price for the Common Stock as of the
date of grant of the Option to purchase such Common Stock or date of issuance of
such Common Stock, if no Option is being exercised in connection with such sale;
(iii) shares of Common Stock issuable upon conversion of any Debentures issued
under the First Omnibus Amendment, the Second Omnibus Amendment or the Original
Securities Purchase Agreement; and (iv) as a stock dividend or upon any
subdivision of shares of Common Stock, provided that the securities issued
pursuant to such stock dividend or subdivision are limited to additional shares
of Common Stock.
(b) For
purposes of determining the adjusted Conversion Price under Section 2(a) above,
the following shall be applicable:
(i) Issuance of Rights or
Options. If the Company in any manner grants or sells any Options and the
price per share for which Additional Stock is issuable upon the exercise of such
Options, or upon conversion or exchange of any convertible securities issuable
upon exercise of such Options, is less than the Conversion Price in effect
immediately prior to such grant or sale, then the total maximum number of shares
of Additional Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Options for such price per share. For purposes of this
paragraph, the “price per share for which Additional Stock is issuable” shall be
determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the granting or sale of such Options, plus
the minimum aggregate amount of additional consideration payable to the Company
upon exercise of all such Options, plus in the case of such Options which relate
to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the
total maximum number of shares of Additional Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of
the Conversion Price shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Additional Stock is actually
issued upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
3
(ii) Issuance of Convertible
Securities. If the Company in any manner issues or sells any convertible
securities and the price per share for which Additional Stock is issuable upon
conversion or exchange thereof is less than the Conversion Price in effect
immediately prior to such issuance or sale, then the maximum number of shares of
Additional Stock issuable upon conversion or exchange of such convertible
securities shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such convertible securities
for such price per share. For the purposes of this subparagraph, the
“price per share for which Additional Stock is issuable” shall be determined by
dividing (A) the total amount received or receivable by the Company as
consideration for the issue or sale of such convertible securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Additional Stock issuable upon the conversion or exchange of
all such convertible securities. No further adjustment of the
Conversion Price shall be made when Additional Stock is actually issued upon the
conversion or exchange of such convertible securities, and if any such issue or
sale of such convertible securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 2, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price,
Conversion Rate or Shares Issuable. If the purchase price provided for in
any Options, the additional consideration, if any, payable upon the conversion
or exchange of any convertible securities, the rate at which any convertible
securities are convertible into or exchangeable for Additional Stock, and/or the
quantity of Additional Stock issuable upon the conversion, exercise or exchange
of any such Option or convertible security, changes at any time, then the
Conversion Price in effect at the time of such change shall be immediately
adjusted to the Conversion Price which would have been in effect at such time
had such Options or convertible securities still outstanding provided for such
changed purchase price, additional consideration, conversion rate or quantity,
as the case may be, at the time initially granted, issued or sold; provided that
no such change shall at any time cause the Conversion Price hereunder to be
increased. If the terms of any Option or convertible security which
was outstanding as of the original issue date hereof are changed in the manner
described in the immediately preceding sentence, then such Option or convertible
Security and the Additional Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change.
(iv) Calculation of Consideration
Received. If any Additional Stock is issued or sold or deemed to have
been issued or sold for cash, the consideration will be deemed to be the amount
of cash paid therefor. In the case of the issuance of Additional
Stock for a consideration in whole or in part other than cash, the consideration
other than cash will be deemed to be the fair value thereof as determined in
good faith by the Board of Directors of the Company irrespective of any
accounting treatment.
4
(v) Record Date. If the
Company takes a record of the holders of any securities for the purpose of
entitling them (A) to receive a dividend or other distribution payable in
Additional Stock, Options or in convertible securities or (B) to subscribe for
or purchase Additional Stock, Options or convertible securities, then such
record date shall be deemed to be the date of the issue or sale of the shares of
Additional Stock deemed to have been issued or sold upon the declaration of such
dividend or upon the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.
(c) If
the Borrower, at any time while this Debenture is outstanding, (i) shall pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into a
larger number of shares, (iii) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of shares of the Common Stock any shares of capital
stock of the Borrower, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event. Any adjustment made
pursuant to this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
(d) In
case of any consolidation or merger of the Borrower with or into another
corporation or the conveyance of all or substantially all of the assets of the
Borrower to another corporation, this Debenture shall thereafter be convertible
(to the extent such conversion is permitted hereunder) into the number of shares
of stock or other securities or property to which a holder of the number of
shares of Common Stock of the Borrower deliverable upon conversion of this
Debenture would have been entitled upon such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interest thereafter of the holders of this Debenture, to the end that the
provisions set forth herein shall be thereafter applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Debenture.
Section 3. Redemption. (a) The
Borrower at its option shall have the right, upon 15 business days’
advance written notice, to redeem a portion or all amounts outstanding under
this Debenture prior to the Maturity Date.
(b) Notwithstanding
the foregoing in the event that the Borrower has elected to repay any
outstanding principal amount and accrued interest under this Debenture the
Lender shall still be entitled to effectuate conversions as contemplated
hereunder through the date of redemption.
5
Section 4. Transferability. Neither
this Debenture nor any shares of stock issuable upon conversion of this
Debenture have been registered under the Securities Act of 1933, as amended (the
“Act”),
or under the securities laws of any state. Neither this Debenture nor any shares
of stock issuable upon conversion of this Debenture may be sold, offered for
sale, pledged or hypothecated in the absence of a registration statement in
effect with respect to this Debenture or shares issuable upon conversion of this
Debenture under such Act unless such registration is not required pursuant to a
valid exemption therefrom under the Act. Provided the foregoing
requirements are satisfied, this Debenture and any of the rights granted
hereunder are freely transferable by the Lender in its sole
discretion.
Section 5. Reservation of
Stock. The Borrower covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of this Debenture as
herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Lender, not less than such number of
shares of the Common Stock as shall be issuable upon the conversion of the
outstanding principal of this Debenture and accrued and unpaid interest
thereon. If at any time, the Company does not have available an
amount of authorized but unissued Common Stock or Common Stock held in treasury
necessary to satisfy any conversion of all amounts outstanding under this
Debenture, the Company shall call and hold a special meeting of its stockholders
within 30 days of the occurrence of any shortfall in authorized shares for the
purpose of approving an increase in the number of shares of authorized Common
Stock to an amount sufficient to enable conversion all amounts outstanding under
this Debenture, subject in all respects to compliance with the requirements of
Section 14 of the Securities Exchange Act of 1934 to which the Borrower is
subject. The Board of Directors of the Company shall recommend that
stockholders vote in favor of increasing the number of authorized shares of
Common Stock at any such meeting. Each Member of the Board of
Directors of the Company shall also vote all of such Director’s voting
securities of the Company in favor of such increase in authorized
shares. The Borrower covenants that all shares of Common Stock that
may be issuable upon conversion of this Debenture shall, upon issue, be duly and
validly authorized, issued and fully paid and nonassessable. No
consent of any other party and no consent, license, approval or authorization
of, or registration or declaration with, any governmental authority, bureau or
agency is required in connection with the execution, delivery or performance by
the Borrower, or the validity or enforceability of this Debenture other than
such as have been met or obtained. The execution, delivery and performance of
this Debenture and all other agreements and instruments executed and delivered
or to be executed and delivered pursuant hereto or thereto or the securities
issuable upon conversion of this will not violate any provision of any existing
law or regulation or any order or decree of any court, regulatory body or
administrative agency or the certificate of incorporation or by-laws of the
Borrower or any mortgage, indenture, contract or other agreement to which the
Borrower is a party or by which the Borrower or any property or assets of the
Borrower may be bound.
Section 6. No Fractional
Shares. Upon a conversion hereunder the Borrower shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, and in lieu of any fractional shares which would otherwise be issuable,
the Borrower shall issue the next highest whole number of shares of Common
Stock, as the case may be.
Section
7. Event of
Default. (a) In the event that any one 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):
6
(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 Original
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, 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 Debenture, to be an “Event of
Default.”
7
(b) Following
an Event of Default, the Interest Rate shall increase to twenty percent (20%)
per annum (but not exceeding the maximum rate permitted by law) immediately
following such Event of Default. During
the time that any portion of this Debenture is outstanding, if (i) any Event of
Default has occurred and has not been cured by the Borrower or (ii) an event
described in Section 2(d) occurs, the full principal amount of this Debenture,
together with interest and other amounts owing in respect thereof, to the date
of acceleration shall become at the Lender's election, immediately due and
payable. The Lender need not provide and the Borrower hereby waives
any presentment, demand, protest or other notice of any kind, and the Lender may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law.
Section 8. Registration
Rights. The Lender is entitled to certain registration rights
with respect to the Common Stock issuable upon conversion of this Debenture as
set forth in the Second Omnibus Amendment.
Section
9. Notices. Any
and all notices, requests, documents or other communications or deliveries
required or permitted to be given or delivered hereunder shall be delivered in
accordance with the notice provisions of the Original Securities Purchase
Agreement. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, an Event of Default Notice may be given by
Lender to Borrower via email addressed to: barry@callcompliance.com
and shall be deemed given, if prior to 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.
Section 10. Governing
Law. This Debenture and the provisions hereof are to be
construed according to and are governed by the laws of the State of New York,
without regard to principles of conflicts of laws thereof. Borrower
agrees that the New York State Supreme Court located in the County of Nassau,
State of New York shall have exclusive jurisdiction in connection with any
dispute concerning or arising out of this Debenture, the Loan Documents, or
otherwise relating to the parties relationship. In any action,
lawsuit or proceeding brought to enforce or interpret the provisions of this
Debenture, the Loan Documents and/or arising out of or relating to any dispute
between the parties, the Lender shall be entitled to recover all of his or its
costs and expenses relating to such issue (including without limitation,
reasonable attorney’s fees and disbursements) in addition to any other relief to
which the Lender may be entitled.
Section 11. Successors and
Assigns. Subject to applicable securities laws, this Debenture
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and assigns
of Lender.
Section 12. Amendment. This
Debenture may be modified or amended or the provisions hereof waived only with
the written consent of the Lender and the Company.
Section 13. Severability. Wherever
possible, each provision of this Debenture shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Debenture shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Debenture.
8
IN
WITNESS WHEREOF, the Borrower has caused this Debenture to be duly executed by a
duly authorized officer as of the date first above indicated.
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COMPLIANCE
SYSTEMS CORPORATION
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By:
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/s/ Dean Garfinkel
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Name: Dean
Garfinkel
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Title: President
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9
ANNEX
A
NOTICE OF
CONVERSION
To Be
Executed by the Lender
in Order
to Convert Debenture
The
undersigned Lender hereby elects to convert $__________ principal and $_____
interest currently outstanding and owed under the Secured Convertible Debenture
issued to Agile Opportunity
Fund, LLC at a Conversion Price of $___ (the “Debenture”)
and to purchase ___________ shares of Common Stock of Compliance Systems Corporation
issuable upon conversion of such Debenture, and requests that certificates for
such securities shall be issued in the name of:
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(please
print or type name and address)
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(please
insert social security or other identifying number)
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and
be delivered as follows:
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please
print or type name and address)
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(please
insert social security or other identifying number)
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Lender
Name:
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By:
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Name:
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Title:
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Conversion
Date:
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10