LIMITED NON-RECOURSE GUARANTY AGREEMENT
This
LIMITED NON-RECOURSE GUARANTY AGREEMENT is made as of the
6
th day
of May, 2008, by Dean Garfinkel, having an address at c/o 90 Pratt
Oval, Glen Cove, NY 11542 (the “Guarantor”), to and
with Agile Opportunity Fund, LLC, a New York limited liability
company (“Lender”).
WITNESSETH:
Lender
has simultaneously entered into a Securities Purchase
Agreement (the “Agreement”) with Compliance
Systems Corporation (“Borrower”), pursuant to
which Lender has purchased the Initial Debenture identified
therein and may purchase the Additional Debenture identified
therein pursuant to the terms thereof (collectively, the
“Debentures”).
NOW,
THEREFORE, in order to induce Lender to enter into the
Agreement with Borrower, Guarantor agrees as
follows:
1.
Guarantor
hereby unconditionally and irrevocably guarantees to Lender
the due and punctual payment in full of all obligations of
Borrower under the Debentures. The obligations and liabilities
of Borrower under the Debentures are collectively referred to
as the “Obligations.”
2.
This
Guaranty is irrevocable, continuing, indivisible and
unconditional and shall remain in full force and effect
regardless of, and shall not discharged, terminated, impaired
or modified in any manner by reason of (a) any amendment,
modification, extension or renewal of the Debentures; (b) the
assertion or exercise by Lender, or the failure of Lender to
assert or exercise, against Borrower any of the rights under
or interest in the Debentures or any other security
instruments ; (c) the existence or continuance, or
discontinuance, of Borrower as a legal entity; (d) the
bankruptcy, insolvency, receivership or reorganization of
Borrower, or the making by Borrower of an assignment for the
benefit of creditors; or (e) the acceptance, alteration,
release or substitution by Lender of any security for the
Obligations, whether provided by Borrower, Guarantor or any
other person. This Guaranty is and shall be a direct and
primary obligation of Guarantor, and may be enforced by the
Lender without prior resort to Borrower or the exhaustion of
any rights or remedies that Lender may have against
Borrower.
3.
Notwithstanding
anything to the contrary herein, Guarantor’s Obligations
under this Limited Guaranty Agreement are non-recourse to
Guarantor and are limited only to any net proceeds received by
Lender in connection with any exercise by Lender of
Lender’s rights under the Stock Pledge Agreement
executed by Guarantor in favor of Lender and attached as
Exhibit A hereto.
4.
Guarantor
hereby expressly waives the following: (a) acceptance and
notice of acceptance of this Guaranty by Lender; (b) notice of
extension of time of the payment, performance and compliance
with, or the renewal or alteration of the terms and conditions
of, any Obligations; (c) notice of any demand for payment,
notice of default or nonpayment as to any Obligations; (d) all
other notices to which the Guarantor might otherwise be
entitled in connection with the Guaranty or the Obligations;
and (e) trial by jury and the right thereto in any action or
proceeding of any kind or nature, arising on, under or by
reason of, or relating in any way to, this Guaranty or the
Obligations.
5.
Guarantor
has not and will not set up or claim any counterclaim, set-off
or other objection of any kind to the suit, action or
proceeding at law, in equity, or otherwise, to any demand or
claim that may be instituted or made under and by virtue of
this Guaranty. All remedies of Lender by reason of or under
this Guaranty are separate and cumulative remedies, and it is
agreed that no one of such remedies shall be deemed in
exclusion of any other remedies available to
Lender.
6.
Guarantor
represents and warrants that the Guarantor has full power and
authority to execute, deliver and perform this Guaranty, and
that neither the execution, delivery nor performance of this
Guaranty will violate any law or regulation, or any order or
decree of any court or governmental authority, or will
conflict with, or result in the breach of, or constitute a
default under, any agreement or other instrument to which
Guarantor is a party or by which Guarantor may be bound, or
will result in the creation or imposition of any lien, claim
or encumbrance upon any property of Guarantor.
7.
This
Guaranty may not be changed or terminated orally. No
modification or waiver of any provision of this Guaranty shall
be effective unless such modification or waiver shall be in
writing and signed by Lender, and the same shall then be
effective only for the period and on the conditions and for
the specific instances and purposes specified in such writing.
No course of dealing between Guarantor and Lender in
exercising any rights or remedies hereunder shall operate as a
waiver or preclude the exercise of any other rights or
remedies hereunder.
8.
This
Guaranty shall be construed in accordance with, and governed
by, the laws of the State of New York, without giving effect
to such jurisdiction’s principles of conflict of laws,
except to the extent that the validity or the perfection of
the security interest hereunder, or remedies hereunder, in
respect of any particular Collateral are governed by the laws
of a jurisdiction other than the State of New York. Each of
the parties hereto submits to the personal jurisdiction of and
each agrees that all proceedings relating hereto shall be
brought in federal or state courts located within Nassau
County in the State of New York.
9.
This
Guaranty shall be binding upon and insure to the benefit of
the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and
assigns.
IN
WITNESS WHEREOF, Guarantor has executed this Limited
Non-Recourse Guaranty Agreement as of the 6th day of May,
2008.
/s/ Dean
Garfinkel
Dean
Garfinkel
Address:
90
Pratt Oval
Glen
Cove, NY 11542
Telephone
No.:
(516)
674-4545
Tax
I.D. Number:
_____________________________
EXHIBIT A
FORM OF STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
This
Stock Pledge Agreement (this "
Pledge Agreement ")
is made as of May 6, 2008 by and between Agile Opportunity Fund,
LLC, a Delaware limited liability company (the "
Lender "),
and the parties indicated on Schedule I hereto (each, a
“
Pledgor ").
WITNESSETH
WHEREAS,
Lender has entered into a Securities Purchase Agreement, dated
as of the date hereof (the “ Securities Purchase
Agreement ”), with Compliance Systems Corporation, a
Nevada corporation (the “
Borrower ”), pursuant to which
Lender purchased the Initial Debenture identified therein and
may purchase the Additional Debenture identified therein;
and
WHEREAS,
each of the Pledgors has executed a Limited Non-Recourse
Guaranty Agreement and has agreed to secure the
Pledgor’s obligations therein by a pledge of shares of
preferred stock of the Company as set forth on Schedule I
hereto (the “ Pledgor Shares
”); and
WHEREAS,
capitalize terms not otherwise defined in this Pledge
Agreement shall have the meanings assigned to such terms in
the Securities Purchase Agreement.
NOW,
THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
Pledge. As
collateral security for the full and timely payment of the
obligations under the Debentures issued pursuant to the Securities
Purchase Agreement and the Limited Non-Recourse Guaranty Agreement
of even date herewith executed by Pledgors in connection therewith
(the “
Debenture Obligations ”),
each of the Pledgors hereby delivers, deposits, pledges, transfers
and assigns to the Lender and grants to the Lender a security
interest in all of the Pledged Shares and all certificates
evidencing the Pledged Shares owned by Pledgor and identified as
such on Schedule I hereto and all other instruments or documents
evidencing the same now owned by the Pledgor and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such Pledged Shares.
The
Pledgors herewith deliver to the Lender the certificates
evidencing the Pledged Shares together with appropriate
undated security transfer powers duly executed in blank. The
Pledgors agree that all certificates evidencing the Pledged
Shares shall be marked with the following legend:
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A STOCK PLEDGE AGREEMENT DATED AS OF MAY 6, 2008
BY AND BETWEEN AGILE OPPORTUNITY FUND, LLC, A DELAWARE LIMITED
LIABILITY COMPANY (THE "LENDER"), AND THE PLEDGORS NAMED
THEREIN, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
CORPORATION.
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