1.2Issuance ofCompliance Systems' Common Stock. Simultaneous with the execution of this Agreement and tender of the Subsidiary Stock, Compliance Systems will issue to the Subsidiary Shareholders Compliance Systems Common Stock in exchange for the capital contribution described in Section 1.1 above in the amounts set forth in Column "II" of Exhibit A.
1.3Representations by Subsidiary Shareholders. In connection with the issuance of shares of Common Stock of Compliance Systems, each of the Subsidiary Stockholders hereby makes the following representations:
| a) | Subsidiary Shareholder acknowledges that that the Common Stock is being acquired pursuant to an exemption under applicable securities laws and accordingly represents that he is acquiring such securities for his own account, for investment and not for distribution or resale to others. |
| The Subsidiary Shareholder agrees that he will not sell, assign, hypothecate or otherwise transfer such securities unless they are registered under applicable securities laws or unless an exemption from such registration is available and acknowledges that the Company will permit the transfer of the Common Stock out of his name only when his request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results or will result in a violation of applicable Federal and state securities laws. | |
| b) | Subsidiary Shareholder acknowledges that the Company has filed an election as an "5" corporation under the Internal Revenue Code of 1986, as amended, and plans to file in such other jurisdictions where it does business, as permitted. Subsidiary Shareholder agrees not to transfer the Common Stock without the Company's prior written consent. |
| c) | Subsidiary Shareholder acknowledges that to the extent it is receiving shares of Class B Common Stock in connection herewith, a portion of such shares are subject to an option ("Option"). If Subsidiary Shareholder sells, assigns, hypothecates or otherwise transfers any Class B Common Stock, to the extent permitted, the transferee shall be required, as a condition precedent to agree to the terms of the Option. |
| d) | The Subscriber consents to the placement of a legend on any certificate or other document evidencing the Common Stock stating that such shares have not been registered under the Securities Act of 1933, as amended, and setting forth or referring to the restrictions on transferability and sale thereof set forth in subsections (a) and (b) above and sub section (c) above, in the case of shares of Class B Common Stock. |
| 2 |
158293.5
| MISCELLANEOUS |
2.1OtherDocuments. Each of the Subsidiary Shareholders shall execute and deliver such other and further documents and instruments, and take such other and further actions, as may be requested of them for the implementation and consummation of this Agreement and the transactions herein contemplated.
2.2Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the Subsidiary Shareholders, and the heirs, personal representatives, successors and assigns of all of them, but shall not confer, expressly or by implication, any rights or remedies upon any other party.
2.3Governing Law. This Agreement is made and shall be governed in all respects, includingvalidity,interpretation and effect, by the laws of the State of New York.
2.4Entire Agreement. This Agreement and the Exhibits attached hereto contain the entire agreement by and among the Subsidiary Shareholders and Compliance Systems and supersede all prior agreements, understandings and writings between the parties hereto with respect to the subject matter hereof. Each Subsidiary Shareholder acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, which are not embodied herein or in the Exhibits attached hereto, and that no other agreement, statement or promise may be relied upon or shall be valid or binding. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally. This Agreement may be amended or any term hereof may be changed, waived, discharged, or terminated by an agreement in writing signed by the parties hereto.
2.5Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which taken together shall constitute but one and the same document.
iN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.
| COMPLIANCE SYSTEMS CORPORATION |
| By: _____________________ |
| Dean Garfmkel Chairman of the Board and Secretary |
| 3 |
158293.5
| ARTICLE 2 |
SUBSIDIARY SHAREHOLDERS: Dean Garfinkel Alison Garfmkel Barry Brookstein Stefan Dunigan
Louis Potters Alan ilberman Robert Reiner
Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan Steven Wolfe
| 4 |
158293.5
| ARTICLE 2 |
Lorraine Chinnici Jack Karp Henry Ponzio
Barry Brookstein, as custodian Robert Brookstein Judi LiVigni Dean Garfinkel, as custodian Alison Garfinkel, as custodian
158293.5
| -S 4 |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Dean Garfinkel
| L | iL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class A Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation | ||||
| Call | 3,000,001 | 2,010,001 | ||
| Compliance.com, | ||||
| Inc. | ||||
| AMS Network Inc. | 48 | |||
| Jasmin | 48 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
| Lnke | YSHAREHOLDERS: | |
| l | Alison Garfinkel |
| Barry Brookstein Stefan Dunigan Louis Potters Alan ilberman Robert Reiner Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan Steven Wolfe |
| 4 |
158293.5
| * |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Alison Garfinkel
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class A Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation | ||||
| Call | 3,000,001 | 2,010,001 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 48 | |||
| Jasmin | 48 | |||
| Communications, Inc. | ||||
1582935
| EXHIBITA |
| SUBSIDIARY SHAREHOLDERS: |
| Dean Garfinkel |
| Barry Brookstein Stefan Dunigan Louis Potters |
| Alan ilberman |
| Robert Reiner Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan Steven Wolfe |
| 4 |
1582935
| EXHIBITA |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: BarryBrookstein
| i~ | 1L | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class A Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation | ||||
| Call | 1,875,001 | 1,256,251 | ||
| Compliance.com, Inc. | ||||
| AMSNetwork Inc. | 30 | |||
| Jasmin | 30 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
Capital Contribution and Issuance of Shares
Name ofSubsidiaryShareholder: BarryBrookstein
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call Compliance.com, | 1,250,000 | 837,500 | ||
| Inc. | ||||
| AMS Network Inc. | 20 | |||
| Jasmin | 20 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
| Ji~La42 |
| airy rookstein |
| ~efan Dunigan DU1SPotters lan ilberman |
158293.5
| EXHIBITA |
| SUBSIDIARY SHAREHOLDERS: |
| Dean Alison Garfinkel Brookstein |
| Stefan Dunigan Louis Potters Alan ilberman Robert Reiner |
| Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan |
| Steven Wolfe 4 |
obert Reiner
| EXHIBITA |
Capital Contribution and Issuance of Shares
Name ofSubsidiaryShareholder: Stefan Duniga~~
| L | & | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class A Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation | ||||
| Call | 250,000 | 167,500 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 4 | |||
| Jasmin | 4 | |||
| Communications, Inc. | ||||
1582935
| EXHIBiTA |
| SUBSIDIARY SHAREHOLDERS: |
| Dean Garfinkel Alison Garfinkel Barry Brookstein |
| Stefan tiunigan |
| Louis Potters Alan ilberman Robert Reiner |
| Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan |
| Steven Wolfe 4 |
1582935
| EXHIBiTA |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Louis Potters
| L | L | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation | ||||
| Call | 125,000 | 83,750 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 2 | |||
| Jasmin | 2 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
| SUBSIDIARY SHAREHOLDERS: Dean Garfinkel Alison Garfinkel Barry Brookstein |
| StefanDu Louis Potters |
| o Alan ilberman |
| Robert Reiner |
| Nettie Hanover Revocable Trust Judith Felsen Robert Greenspan |
| Steven Wolfe 4 |
158293.5
| EXHIBITA |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Alan Ilberman
| J | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call Compliance.com, | 187,500 | 125,625 | ||
| Inc. | ||||
| AMS Network Inc. | 3 | |||
| Jasmin | 3 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBiTA |
| Dean Garfinkel Alison Garfinkel Barry Brookstein Stefan Dunigan |
| Louis Potters Alan ilberman Robert Reiner |
| Nettie Hanover Revocable Trust |
| Judith Felsen |
| Robert Greenspan |
| Steven Wolfe 4 |
158293.5
| SUBSIDIARY SHAREHOLDERS: |
| S. |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: RobertReiner
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call Compliance.com, | 250,000 | 167,500 | ||
| Inc. | ||||
| AMS Network Inc. | 4 | |||
| Jasmin | 4 | |||
| Communications, Inc. | ||||
158293.5
| EXIIIBILA |
| Dean Garfinkel |
| Alison Garfinkel Barry Brookstein Stefan Dunigan Louis Potters Alan ilberman |
| M~~44t~ Robert Reiner Nettie Hanover Revocable Trust |
| Judith Felsen Robert Greenspan Steven Wolfe 4 |
158293.5
| SUBSIDIARY SHAREHOLDERS: |
| & | EXHIBIT | |
| A |
| Capital Contribution and Issuance of Shares |
Name ofSubsidiaryShareholder: Nettie Hanover Revocable Trust
| L | & | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call Compliance.com, | 250,000 | 167,500 | ||
| Inc. | ||||
| AMS Network Inc. | 4 | |||
| Jasmin | 4 | |||
| Communications, Inc. | ||||
158293.5
SUBSIDIARY SHAREHOLDERS:
SUBSIDIARY SHAREHOLDERS:
| Dean Garfinkel Alison Garfinkel Barry Brookstein Stefan Dunigan Louis. Potters Alan ilberman Robert Reiner |
NVettie Hanovef'Revocable Trust
| Judith Felsen |
| Robert Greenspan |
| Steven Wolfe |
| 4 |
158293.5
| S. |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Judith Felsen
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call Compliance.com, | 375,000 | 251,250 | ||
| Inc. | ||||
| AMS Network Inc. | 6 | |||
| Jasmin | 6 | |||
| Communications, Inc. | ||||
158293.5
| EXBIBITA |
| SUBSIDIARY SHAREHOLDERS: |
| Dean Garfinkel Alison Garfinkel Barry Brookstein Stefan Dunigan Louis Potters Alan ilberman Robert Reiner |
| Nettie Hanover Revocable Trust |
| Qc~' |
| ~(dith Felsen |
| Robert Greenspan |
| Steven Wolfe |
| 4 |
158293.5
| S. | ||||||
| Capital Contribution and Issuance of Shares | EXIUBITA | |||||
| Name of Subsidiary Shareholder: Robert Greenspan | ||||||
| L | JL | |||||
| Name of Company | Number of | Number of Shares of | ||||
| Shares | Class B Common | |||||
| Contributed | Stock | |||||
| of Compliance Systems | ||||||
| Corporation to be | ||||||
| Issued | ||||||
| Call Compliance.com, | 187,500 | 125,625 | ||||
| Inc. | ||||||
| AMS Network Inc. | 3 | |||||
| Jasmin | 3 | |||||
| Communications, Inc. | ||||||
158293.5
| S. |
| Steven Wolfe |
158293.5
| S. |
Capital Contribution and Issuance of Shares
Name ofSubsidiaryShareholder: Steven Wolfe
| ~L | iL | |||
| Name of Company | Number of | |||
| ' | ||||
| Shares | ||||
| Contributed | Number of Shares of | |||
| Class B Common | ||||
| Stock | ||||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 62,500 | 41,875 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | I | |||
| Jasmin | I | |||
| Communications, Inc. | ||||
158293.5SUBSIDIARY SHAREHOLDERS:Dean GarfinkelAlison GarfinkelBarry BrooksteinStefan DuniganLOuis PottersAlan IlbermanRobert ReinerNettie Hanover Revocable TrustJudith Felsen4
| S | EXHIBIT A | |
| SUBSIDIARY SHAREHOLDERS: | ||
| Dean Garfinkel | ||
| Alison Garfinkel | ||
| Barry Brookstein | ||
| Stefan Dunigan | ||
| Louis Potters | ||
| o Alan ilberman | ||
| Robert Reiner | ||
| Nettie Hanover Revocable Trust | ||
| Judith Felsén | ||
| RobertGeen an | ||
| Stehn Wolfe | ||
V
158293.5SUBSIDIARY SHAREHOLDERS:Dean GarfinkelAlison GarfinkelBarry BrooksteinStefan DuniganLOuis PottersAlan IlbermanRobert ReinerNettie Hanover Revocable TrustJudith Felsen4
| S |
| 4 |
158293.5
| S |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Lorraine Chinnici
| L | ||||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 62,500 | 41,875 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 1 | |||
| Jasmin | I | |||
| Communications, Inc. | ||||
158293.5
EXHIBITA
158293.5
| EXHIBITA | ||
| S | EXHIBIT | |
| A |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: JackKarp
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 62,500 | 41,875 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 1 | |||
| Jasmin | 1 | |||
| Communications, Inc. | ||||
158293.5Jack KarpHenryPonzioo Barry Brookstein, as custodianRobertBrooksteinJudi LiVigniDean Garfinkel,as custodianAlison Garfinkel, as custodian5
| EXHIBITA |
| UI |
158293.5Jack KarpHenryPonzioo Barry Brookstein, as custodianRobertBrooksteinJudi LiVigniDean Garfinkel,as custodianAlison Garfinkel, as custodian5
| EXHIBITA |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: HenryPonzio
| L | JL | |||
| Name of Com~anv | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 125,000 | 83,750 | ||
| Compliance.com, | ||||
| Inc. | ||||
| AMS Network Inc. | 2 | |||
| Jasmin | 2 | |||
| Communications, Inc. | ||||
1582935Lorraine Chinnici Henry PonzioBarry Brookstein, as custodianRobert BrooksteinJudi LiVigniDean Garfinkel, as custodianAlison Garfinkel, as custodian5
| EXHIBITA |
| Jack Karp |
| HenkPdo |
| Barry Brookstein, as custodian |
| Robert Brookstein |
| Judi LiVigni |
| Dean Garfinkel, as custodian |
| Ailson Garfinkel, as custodian |
| 5 |
1582935Lorraine Chinnici Henry PonzioBarry Brookstein, as custodianRobert BrooksteinJudi LiVigniDean Garfinkel, as custodianAlison Garfinkel, as custodian5
| Lorraine Chinnici |
Capital Contribution and Issuance of Shares
Name ofSubsidiary Shareholder: Barry Brookstein as custodian
| L | JL | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 15,625 | 10,468 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | ¼ | |||
| Jasmin | Y4 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
| Capital Contribution and Issuance of | EXHIBI | |
| Shares | T A |
Name ofSubsidiaryShareholder: BarryBrookstein as custodian
| L | & | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 15,625 | 10,468 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 14 | |||
| Jasrnin | ~'% | |||
| Communications, Inc. | ||||
158293.5
| Pt |
| Capital Contribution and Issuance of Shares | EXHIBIT | |
| A | ||
| Name of Subsidiary Shareholder: Robert Brookstein | ||
| I | I | |||
| I | ||||
| Number of | ||||
| Shares | Number of Shares of | |||
| Name of | Contribute | Class B Common | ||
| Company | d | Stock | ||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | AMS Network Inc. | 1/8 | ||
| Compliance.com, | 7,813 | |||
| Inc. | 5,235 | |||
| Jasmin | 1/8 | |||
| Communications, | ||||
| Inc. | ||||
158293.5
| Pt |
| Jack Karp HenryPonzio |
| Barry Brookstein, as custodian |
| Robert Brookstein |
| Judi LiVigni |
| Dean Garfinkel, as custodian Alison Garfinkel, as custodian |
| 5 |
158293.5
| Lorraine Chinnici |
Capital Contribution and Issuance of Shares
NameofSubsidiary Shareholder: JudiLiVigni
| L | & | |||
| Name of Company | Number of | Number of Shares of | ||
| Shares | Class B Common | |||
| Contributed | Stock | |||
| of Compliance Systems | ||||
| Corporation to be | ||||
| Issued | ||||
| Call | 7,812 | 5,234 | ||
| Compliance.com, Inc. | ||||
| AMS Network Inc. | 1/8 | |||
| Jasmin | 1/8 | |||
| Communications, Inc. | ||||
158293.5
| EXHIBITA |
| Lorraine Chinnici Jack Karp HenryPonzio Barry Brookstein, as custodian Robert Brookstein |
| Dean Garfinkel, as custodian Alison Garfinkel, as custodian |
| 5 |
158293.5
| o1 | ||||||
| Capital | ||||||
| L | iL | |||||
| Number of | ||||||
| Shares | Number of Shares of | Contribution and Issuance of | ||||
| Name of Company | Contributed | Class B Common | ||||
| Stock | ||||||
| of Compliance Systems | SharesName of Subsidiary | |||||
| Corporation to be | ||||||
| Issued | ||||||
| Shareholder: Dean and | ||||||
| Call | 31,250 | |||||
| Compliance.com, | Alison Garfinkel as | |||||
| Inc. | 20,938 | |||||
| AMS Network Inc. | V2 | |||||
| custodians | ||||||
| Jasmin | ||||||
| Communications, | ||||||
1582935
| EXHIBITA |
Inc.