Attached files
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| EX-10.8 - Seaniemac International, Ltd. | v203845_ex10-8.htm |
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): November 18, 2010
Compliance
Systems Corporation
(Exact
name of registrant as specified in its charter)
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Nevada
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000-54007
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20-4292198
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(State
or other jurisdiction of
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(Commission
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(IRS
Employer
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incorporation)
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File
Number)
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Identification
No.)
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50
Glen Street, Suite 308
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Glen
Cove, NY 11542
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11542
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (516)
674-4545
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d 2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e 4(c))
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Introductory
Comment - Use of Terminology
Throughout
this Current Report on Form 8-K, the terms “we,” “us” and “our” refers to the
registrant, Compliance Systems Corporation and, where applicable, its
wholly-owned subsidiaries, including Call Compliance Inc. and Execuserve Corp.,
on a consolidated basis.
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Item
2.04
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Triggering
Events that Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet
Arrangement.
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On
November 18, 2010, we received a notice from Agile Opportunity Fund, LLC
(“Agile”), the owner of record of two Secured Convertible Debentures of our
company in the aggregate principal amount of $1.94 million (collectively, the
“Agile Debentures”), that Agile has declared us to be in default under the Agile
Debentures. The default relates to our failure to make interest
payments under the Agile Debentures. The amount of accrued and unpaid
interest due under the Agile Notes is $ $281,939.01, as of October 31, 2010, the
most recent interest payment date under the Agile Debentures. We have
five business days in which to cure such default and, if we fail to so cure the
default, an Event of Default will be deemed to have occurred. Upon
the occurrence of an Event of Default, the interest rate on the Agile Debentures
increases to 24.99% per annum from 20% per annum. (It is noted that
the Agile Debentures include provisions that require us to make an additional
payment when the Agile Debentures are repaid, such that Agile’s annualized rate
of return on the principal amounts loaned to us equals 30%.) Our
obligations under the Agile Debentures are secured by all of our assets pursuant
to an Amended and Restated Security Agreement, dated as of February 9, 2010, we
entered into with Agile. Accordingly, upon the occurrence of an Event
of Default, Agile is entitled to enforce its rights as a secured lender,
including the right to foreclose on all of our assets up to the amount owing
under the Agile Debentures. We do not believe that the value of our
assets subject to foreclosure by Agile is equal to or exceeds the amount owing
under the Agile Debentures.
The Agile
Debentures consist of two separate secured convertible
debentures. The first, issued as of February 9, 2010, is in the
principal amount of $1.765 million and was issued pursuant to Amended and
Restated Securities Purchase Agreement, dated as of February 5, 2010, among
Agile, us and others; and the second, issued on July 1, 2010, is in the
principal amount of $175,000 and was issued pursuant to an Omnibus Amendment and
Securities Purchase Agreement, dated as of July 1, 2010, between the Corporation
and Agile.
Dean
Garfinkel, currently our president and chief executive officer, Barry
Brookstein, currently our chief financial officer, and Spirits Management, Inc.,
a company in which Mr. Brookstein is the sole officer and stockholder, each
granted Agile a limited non-recourse guaranty with respect to the amounts due
under the Agile Debentures. Such non-recourse guarantees are limited
to preferred stock of our company held by the guarantors. The
preferred stock subject to the limited guarantees consists of:
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•
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200,000
shares of our Series A Senior Convertible Voting Non-Redeemable Preferred
Stock (the “Series A Preferred Stock”), 500,000 shares of our Series B
Senior Subordinated Convertible Voting Redeemable Preferred Stock (the
“Series B Preferred Stock”) and 406,992 shares of Series C Senior
Subordinated Convertible Voting Redeemable Preferred Stock (the “Series C
Preferred Stock”) owned by Mr.
Brookstein;
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•
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466,750
shares of Series C preferred Stock owned by Mr. Garfinkel;
and
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750,000
shares of Series B Preferred Stock and 450,601 shares of Series C
Preferred Stock owned by Spirits Management,
Inc.
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At the
current exchange rate, the preferred stock subject to the non-recourse
guarantees is convertible into a total of 282,855,707 shares of our common
stock.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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We have
received from Dean Garfinkel his resignation as a director and as our president
and chief executive officer, all effective upon our filing of this Current
Report on Form 8-K. A copy of Mr. Garfinkel’s resignation letter,
dated November 23, 2010, has been made Exhibit 10.8 to this Form
8-K.
We
believe that there was no disagreement between Mr. Garfinkel and us on any
matter relating to our operations, policies or practices. We have
furnished Mr. Garfinkel with a copy of the disclosure made in this Item 5.02 and
are providing Mr. Garfinkel with the opportunity to furnish us as promptly as
possible with a letter addressed to us stating whether he agrees with the
statements disclosed in this Item 5.02 and, if not, stating the respects in
which he does not agree. Should Mr. Garfinkel provide us with such a
letter, we will file the letter as an exhibit in an amendment to this Form
8-K.
Upon Mr.
Garfinkel’s resignation becoming effective, Barry M. Brookstein, our current
chief financial officer and director, will assume the position of our chief
executive officer on an interim basis. Information concerning Mr.
Brookstein and his background and business experience has previously been
disclosed in our Annual Report on Form 10-K for the year ended December 31,
2009, filed with the Securities and Exchange Commission (the “SEC”) on May 17,
2010.
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Item
9.01
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Financial
Statements and Exhibits.
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The
following exhibits are being filed as part of this Current Report on Form
8-K.
3
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Exhibit
Number
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Exhibit
Description
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10.1
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Amended
and Restated Secured Convertible Debenture of Compliance Systems
Corporation, dated February 9, 2010, payable to Agile Opportunity Fund,
LLC and in the principal amount of $1,765,000. [Incorporated by
reference to Exhibit 10.22 to the Current Report on Form 8-K (Date of
Report: February 5, 2010) of Compliance Systems Corporation, filed with
the SEC on February 17, 2010.]
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10.2
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Amended
and Restated Security Agreement, dated as of February 9, 2010, between
Compliance Systems Corporation and Agile Opportunity Fund,
LLC. [Incorporated by reference to Exhibit 10.8 to the Current
Report on Form 8-K (Date of Report: February 5, 2010) of Compliance
Systems Corporation, filed with the SEC on February 17,
2010.]
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10.3
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Secured
Convertible Debenture of Compliance Systems Corporation, dated July 1,
2010, in the principal amount of $175,000 and payable to Agile Opportunity
Fund, LLC. [Incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K (Date of Report: June 30, 2010) of Compliance
Systems Corporation, filed with the SEC on July 12,
2010.]
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10.4
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Limited
Non-Recourse Guaranty Agreement, dated as of May 6, 2008, between Dean
Garfinkel and Agile Opportunity Fund, LLC. [Incorporated by
reference to Exhibit 10.4 to the Current Report on Form 8-K (Date of
Report: May 6, 2008) of Compliance Systems Corporation, filed with the SEC
on May 12, 2008.]
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10.5
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Limited
Non-Recourse Guaranty Agreement, dated as of May 6, 2008, between Barry
Brookstein and Agile Opportunity Fund, LLC. [Incorporated by
reference to Exhibit 10.5 to the Current Report on Form 8-K (Date of
Report: May 6, 2008) of Compliance Systems Corporation, filed with the SEC
on May 12, 2008.]
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10.6
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Limited
Non-Recourse Guaranty Agreement, dated as of May 6, 2008, between Spirits
Management, Inc. and Agile Opportunity Fund, LLC. [Incorporated
by reference to Exhibit 10.6 to the Current Report on Form 8-K (Date of
Report: May 6, 2008) of Compliance Systems Corporation, filed with the SEC
on May 12, 2008.]
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10.7
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Stock
Pledge Agreement, dated as of May 6, 2008, between (sic) Agile Opportunity
Fund, LLC, Dean Garfinkel and Barry Brookstein. [Incorporated
by reference to Exhibit 10.7 to the Current Report on Form 8-K (Date of
Report: May 6, 2008) of Compliance Systems Corporation, filed with the SEC
on May 12, 2008.]
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10.8
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Letter
of Dean R. Garfinkel, dated November 23,
2010.
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4
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
| Dated: November 23, 2010 | Compliance Systems Corporation | ||
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By:
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/s/ Barry M. Brookstein | |
| Barry M. Brookstein | |||
| Chief Financial Officer | |||
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